Can you tell me a bit about Knowledge Bank?
Knowledge Bank is a criteria search system which was the first in the UK. I created it because the product sourcing systems didn't have the depth of criteria that advisers needed in order to be able to place cases. My background was as a financial adviser, who wrote a lot of mortgages. I thought surely there must be a system where all of this information is together and it is searchable, we can find what we're looking for rather than having to call numerous lenders to place a case. There just wasn't anything there at all! That's why Knowledge Bank started and what Knowledge Bank is.
I saw how the industry had changed. Before 2008, you could use a product sourcing system to place a case and you generally just went with the cheapest rate. But after 2008, that changed. It was all about criteria. Lenders were setting their stalls out for a specific profile of customer, the areas they were looking to lend in and accept with regards to adverse credit, the type of income they were looking to accept and the properties they’d lend on for example. All this information was held on spreadsheets throughout the industry. “This is crazy!” I thought! I knew that we have all this technology and so a spreadsheet is not the tool for the job. I actually looked for a system that collated all of this information together in one easily accessible fully searchable place and there wasn't one. So that's why Knowledge Bank was born.
So how did you find the right people to do this?
I spoke to lots of people and it was getting the right combination in terms of personality and their desire to lead a significant change in our industry, I wasn’t interested in building a team to simply follow others. That's really, really important when you're taking on a big project like this. You have to find the right people at the outset that you're going to be working with. It's all about the personalities and to make sure that everybody is aligned to the same values. Also, the experience of the team was crucial. They've managed large scale projects involving databases and UX for people like Audi, Capita, Jet2, Halfords, O2. So with some really big projects that they've worked on before, I was really confident that they'd be the right people to do it.
Can you tell me a bit about yourself?
I was a mortgage adviser in the mid-2000s in an estate agency. Then from there, I went on to work for a bigger brokerage and then I started my own brokerage. Because I've been an adviser for lots of years, when it came to actually develop Knowledge Bank, I was able to look at it from an adviser’s perspective and didn't worry about the tech side as much. I just said, “okay, it needs to do this.” I was quite free-thinking and very focussed on the adviser's journey and the advisers’ experience. I let the tech people worry about how to make that magic happen on screen.
I was wondering if and how has criteria changed over the years?
Massively. Over the years criteria has changed dramatically in terms of the individual criteria but also in terms of the complexity of criteria. If we go back to before 2008, when mortgage advisers were able to place cases based on products predominantly, then, if criteria ever really came into place, it was adverse credit or really unusual properties. But now people are employed in different ways and they live in different ways. Their family circumstances are more complex, their income sources more complex. So there's a lot more criteria to consider now than ever was before. But also even now we're in a fairly stable environment, the criteria is still changing. The first quarter of this year there were four thousand changes to criteria across the whole mortgage market. That's a massive amount. So if you think of advisers trying to remember all that, that it's absolutely impossible and they shouldn't have to either. I mean it's not fun to try to memorise all of that. So the answer to the question is yes, we saw 4,000 changes in the first quarter alone.
How did you guys manage that?
Every lender has their own login to our system, it doesn't cost them anything. They're able to fill in their own criteria and have full access to it. So when anything changes, they can change it in real-time or schedule the change if it doesn’t go live until a few days or weeks in the future. Lenders, for the first time, get to use a system to showcase their criteria to all the thousands of brokers that use the system on a daily basis.
What was the biggest business challenge you’ve had to overcome?
I mean there have been lots of challenges. Which is all part of being a fintech startup. I think the biggest challenge was right at the beginning. Because of course to get brokers using the system, they wanted lenders on there to display that criteria. For lenders to display that criteria, they wanted brokers to be using the system. So that was the real challenge. That's a chicken and egg situation and we have to run at both equally as hard. It's one of those things when I look back now I think “How did we do that?” It started from a standing start: how do we do that? But we did. That was definitely the biggest challenge, without a doubt.
So how did you do it then?
What we did first was we got some lenders onboard and we added their criteria. We also got a group of brokers to use that and test and say “ok, functionality-wise is this what we want? Is this how it works?”. Then once we got it off the ground, then we got more lenders and more brokers. We were also able to demonstrate the benefits to both groups and so for brokers, they could easily see the benefit of using Knowledge Bank. This would save them hours and hours of ringing round and trying to place cases manually, looking at spreadsheets, ringing a help desk. They were able to do this all at the click of a button.
For the lenders, they were being asked to keep all these spreadsheets up to date. It's just a complete nightmare for them because of course, you've got helpdesks in networks sending them spreadsheets two, three, four times a year and the lenders having to fill them in. So literally hundreds and hundreds of spreadsheets. Whereas they just keep Knowledge Bank up to date and that is used by thousands of brokers. So, as we say, we have one version of the truth. So it's really, really easy. Once they’d done it initially, they could easily see the benefit. As well for lenders, we are able to give them their management information back, the insights. So now they're able to see what brokers are searching for. Whereas before in a spreadsheet they were never able to sort of keep track. So yeah, that's a big benefit to lenders. If they put that criteria on there, we're able to see and say to them “Okay, well across the country this is what brokers are searching for”. This is valuable when they're looking at developing products and policy, as they can easily identify what’s important to brokers.
There are benefits on both sides. It's making sure that we identify those and promote those benefits to both brokers and lenders.
What are you guys working on to improve the broker experience?
There are lots of things that we're doing. We've actually just launched a new style of search. We've always had the Google-style search and it's very, very intuitive. But we’ve made that even more intuitive now. For example, if somebody is looking for a property with a thatched roof, if they type in the word thatched, it knows that it's looking for a period property and sort of find that. There's so much gone into that search to make it extremely intuitive because in the mortgage industry, there are always two or three different descriptions that actually refer to one thing.
We talk to a lot of brokers and they always complain about the inconsistency of the different lending criteria terms. Some lenders call something this, some call it that.
Absolutely and we needed to overcome that. We put a lot of time and effort to go through the terms used and making sure that the search is as intuitive as possible. What we've also done is to add a new style of search and put in high-level categories. Now if they click on adverse credit, everything to do with that will be there. If they click self-employed, everything that they might want for a self-employed person is in there. They’re quite generic terms but we've done it really, really sensibly. Actually, we've had one lender that used our API to keep their own website up to date. And they’ve adopted these and said “actually, that makes so much sense. It's obvious where to look for them.'' We're hoping we set a bit of a standard with that and that other people will follow.
I guess you’ve already talked a bit about that but maybe you could talk a bit more about the hashtag #DeleteTheSpreadsheet
Yes, so that was our big campaign. Because of course spreadsheets are fantastic for certain things, certainly when you do things like accounting. But when you look at lenders criteria, spreadsheets were never the right tool. But in fairness to the industry, up until the moment Knowledge Bank was created, that's all the industry had. They’d got of all of this criteria information to try and remember and how do you store it? Of course, the spreadsheet. Brokers were keeping their own spreadsheets and of course that the problem with the spreadsheet is the second that it saved, it's out of date. If the lenders updated it one day and gave it to that mortgage or network help desk, then a week later something changes, it's out of date and potentially giving wrong information. Nothing is in real-time. As well as what I said about the management information insights that you can get.
Our mission was to sort of literally rid the industry of spreadsheets, which is the hashtag #DeleteTheSpreadsheet, because they're so inefficient. They're not the tool for the job and they're a massive drain on the resources of lenders to have to fill them in. Especially the smaller lenders with the really niche criteria. They're asked to fill in, you know, hundreds of these every year. It's a big drain on resources and they don't enjoy doing it. Of course, now they have to do it at one place and that's kept up to date for everybody, because everyone's accessing that same information.
Of course, the other really important thing about the spreadsheets is everybody was after the same information, but they were asking the questions in different ways, as we’ve highlighted earlier. If you ask a question and just word it ever so slightly differently, you get a different answer. That's the problem as well because they’re like "oh we didn't mean that". But at the other end of that, there's a customer with a mortgage application and a broker who is trying to get this through. It's that consistency of wording, we're asking the questions in the same way to every lender. The answer is worded in the same way.
Did you have to work with content designers to reach an agreement? How was it?
No. You know what? Somebody asked me that and it was literally, that was me back in the beginning. Because as a broker I had my own spreadsheet, you know? We went through all of the lenders criteria and said “okay, what are the sensible questions? What do we want to know as brokers, what are they asking?”. If it's for things like for example, if you look at CCJs. If you look at the product sourcing system, they might just have one tick box for that. But of course, there are lots of areas. What about the CCJ? Is it registered? How long ago? How much for? How many of them? We broke it down. Because when we looked at the lenders criteria, they were very much “okay, we'll accept this, if it's under or if it's over five hundred pounds.” There were sensible breakdowns that we could use and that’s where the list has been defined.
So I guess you guys were the first ones to look at everything and be like “okay, let’s organise this”.
You know what? That was great because nobody had done it before. We have this absolute plain blank canvas to say “okay, let's forget about all that and let's start from scratch, let's make it usable, make it sensible”. Of course, now is the ongoing management of that. So as criteria comes into the industry, we’re “okay, that's a thing now, we need to make a category for that”. So, for example, Open Banking. Does the lender still require bank statements? Whereas when we launched 18 months ago that was just being talked about. We have to keep on top of those categories as things become important or less important.
The other thing that we do as well is we sometimes put categories in there that are a little bit of a wild card, because we don't know if people are going to look for them. I'll give you an example: deposit coming from cryptocurrency.
Yep, that’s on there! Now, there aren't many people searching for that. But the fact that it's on there, if we see a spike in people asking for it, then there’s something's going on out there. Lenders need to be aware of that and they can react in real-time. We do put a few little wild cards in there to test the market. If it gets searched and we see the search increasing, then maybe there’s an increase in demand for it.
Is there any specific technology that you guys are excited about now that you want to explore?
I mean there's a lot of stuff that we're looking at. The question's whether it's relevant to what we're doing. I mean, personally, I'm watching with a lot of interest artificial intelligence, it is massive. The whole 5G thing as well, that's really exciting. In terms of Knowledge Bank, I'm not sure how relevant these things will be to us. Because we are ultimately a database of information. But I really genuinely think that AI in the mortgage market is going to be massive. The things that that can do… It's one of those things that if brokers embrace, it’s going to make their jobs a lot, lot easier. It will take out a lot of the repetitive stuff that they have to do and just give them time to see more clients, make better recommendations.
Do the fun stuff.
Yeah. Do the fun stuff. All the bits that they enjoy doing, which is seeing clients, talking to clients and, you know, getting their mortgage applications through. I think for the industry, I'm really excited about that. I think we'll see more and more of that and the brokers that embrace that kind of technology will be the ones that sort of, gets to the forefront, really. Especially if you think that there’s younger people coming through. It's the sort of millennials and younger still, you know? Over the next 10 years the kids that are at school are going to start buying houses. They're the ones that have grown up with this technology and so to them that will be perfectly normal.
So what is in the future of the company? What do you guys have planned for the future?
Well, I think the future for us is huge. It's absolutely huge in terms of where we want to go, what we want to achieve. I mean, our sort of mission if you like is to be the primary player, aggregator and distributor of mortgage lending criteria in the UK. We're just about to go live with some of the UK's biggest networks who are providing our services to their AR's and the clubs as well for the D.A's. I think we're going to see the changing face of the mortgage desk. So traditionally, they're sat there 9:00 to 5:00 answering the phone and looking on the spreadsheet. That's changing. That will be more of a mortgage desk that actually says “okay, we'll take the real complex cases and we will place those on behalf of the broker”.
But for us as well we are doing a lot of work with regards to our insights. Going forward, with all the searches that are being done, we can then say to lenders “okay, in this part of the country, there are X number of brokers that searching for this kind of criteria”. This is what you do. They can send their sales team and they can go “we need to speak to these brokers because they've got the kind of business that we want”. Also, it lends itself to better quality conversations. For example, BDMs going in to see brokers and saying “so what type what kind of business do you do?”. We can skip that conversation straight away and go “we do this thing you’re looking for” and have better quality conversations, because we can arm lenders and their sales teams with that information. Which they've never been able to get before.
The other thing that we're doing as well is, we are producing, is going to be kind of a plugin for websites. You've heard a lot about mortgage prisoners?
Tell me more...
The FCA talk about mortgage prisoners a lot. What happened is lenders lent to them quite irresponsibly with hindsight. At the time they didn't think it was a problem. So now they're stuck on high rates and they don't think they can change. But actually, some of these people can. Quite a lot of people think “actually, I don't think I can get a mortgage, I'm stuck paying this higher rate. I'm on interest only, because I have bad credit, because I'm self-employed, because I'm too old or whatever”. They only know what they know and they sit at home and they don't do anything about that. Actually, they are the ones paying the price because they're stuck on these high rates.
Well, there are lenders out there and brokers that are able to help them and make a massive difference to their monthly payment or pay their mortgage off earlier. We need to reach out to these people. The way that we're doing that is we have a hook in that we're going to be releasing to mortgage brokers that they can put on their website. It’s very interactive, because, of course, people like to play around. They'll be able to go on there and say “okay, well I'm self-employed, urm, have a missed payment on a credit card and an interest-only mortgage, so I'm never going to get a mortgage“ and they can put these things in. Then that'll go back to Knowledge Bank and pull the result back. But the results will be anonymised and it'll say to the customer for example: “Do you realise, in your circumstances, there are seven lenders that would consider lending to you?”. The customers might go “wow, that's amazing, I didn't realise that”. Then there'll be a call to action then on the website like “ring this number or fill this form in”. That’s an enquiry that the broker can ring or do something with a customer that's going to perhaps get them off a poor rate of interest and be a little bit better off financially. That's one of the things that will be releasing before the end of the year which will hopefully make a huge difference.
Amazing, that’s a very good idea.
Thank you. Yeah, we're really excited about it, because we can give them a bit of hope and say “okay, we can maybe get you a better mortgage”.
Having said that, it will work for people who are not necessarily mortgage prisoners. Just people that think “alright, I won't get a good mortgage, I won’t be able to buy a home, I'll always need to rent. I won't be able to buy because of this, this and this” and it gives them that bit of encouragement to actually go and see a mortgage adviser. Some people are embarrassed by their credit, you know, they've had missed or late payments or maybe after a repossession or something like that in the background. They'll just think ”oh, I don't want to go and see anybody because that's going to be embarrassing, they're going to say no”. But actually, if they see that based on the results that there are lenders that would consider lending to them, it just gets them through the door and it starts those conversations.
It's not going to be impossible to get it.
Absolutely, absolutely, yeah, yeah.
How do you imagine the mortgage experience, both for the customer and the broker?
I think it is so exciting. I think it's going to change dramatically, the digital experience is here to stay. While customers are always going to enjoy face to face experience, I think some transactions will inevitably go online. The product transfers, you know, the rate switchers, those are the things that will go online first - and already have. I was talking to somebody the other day and they said they actually did it also with their existing lender. They did it on an app on their phone without sending any documents or anything. They've actually switched their mortgage rate on to a new fixed deal quicker than they could have put their shoes and coats on and go out the front door. I mean, that's amazing, that's amazing. Yes, I appreciate that takes business away from brokers.
But not really because brokers come into their own on the more specialist cases. The analogy that I always give to brokers is, if you think of travel agencies. If you imagine, let's say, 20 years ago, if you were booking a holiday, even two weeks to Spain or something like that, a package holiday. You would have gone into the travel agency, sit on those little seats, as though you're in a plane and all that kind of thing. You would have booked your holiday with a travel agent. But now, if you're just booking two weeks to Spain, something really vanilla, very normal, you do it online. You would never think of going into a travel agent looking through a paper brochure or anything like that. Now, travel agents still exist because there is the older generation that still wants to do that. That's still going to be the case for mortgage vanilla cases. But travel agents come into their own now, where the more bespoke holidays are requested. The familiar cases like product transfers, they'll be the first to go online and the people doing them on apps. But then, of course, you've got the specialist case that is too complex to go online. Of course, you’ve got things like equity release. People at that end of the scale, they actually want to sit down with an adviser and discuss the whole options and everything like that.
I think that the industry will find its own level. But I do think we're going to see a lot more of stuff go online and for brokers as well, they can still benefit from that. They just have to have the tools in place on their websites and everything to allow customers to interact in the way that they're looking to.
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