Interview: Phil Bailey, Director of Intermediary Solutions at Twenty7Tec

Author Livia Thimotheo
  • Date July 18, 2018
  • Reading Time 17 minutes

Phil2

 

Can you explain, in own words, what Twenty7Tec does?

Simple, at Twenty7Tec we connect the dots. We're a fintech company, we work exclusively in the mortgage space and where we really shine, is building API driven technology solutions to connect customers, to brokers, to lenders. We join the dots in the lending industry - and there are a lot of dots.

Can you tell me a bit about the products developed?

Yes, we have four core products. We have a sourcing system, MortgageSource, it's the fastest growing sourcing system in the market. Currently at around 6,500 (six and a half thousand) intermediary users. Not bad in four years.

We have SourceInsight, our analytics platform, we licence this to lenders so they can analyse the market and see what's going on. A real-time view of data. We have WebSource, which helps us work alongside business to build websites and plugins for digital mortgage journeys. A good API should be at that heart of any digital mortgage offering.

But our pièce de résistance, our bread and butter, our critical part in the future of the industry is, MortgageApply.

Ok, could you tell me more about it?

MortgageApply – It’s been a long time coming! I've been in the industry for quite a few years and it should've been here 10 years ago. But as with all change, it can take a while for all their required pieces to fall into place.

MortgageApply connects the mortgage intermediary to the lender, utilising all the data they've already captured. Look at it this way, you've filled in your fact find, you've captured all the bank statements, you've done all the getting to Know Your Customer, all the interviews etc. You've spent two or three hours doing this. Capturing notes, data and understanding your customer. Why not utilise all that rich data, seamlessly!

MortgageApply lets you package all this information and send the application to the lender, in a process that is efficient for them, the broker and lets all parties work from the same data. So there's no going to the lender's portal to rekey everything, no need to go to their website to track applications, a connected lending world that’s managed via the click of a button. It's all done through one system, our system, and sits as a central portal to transmit and manage all your mortgage applications. All built with the intermediary in mind.

And why do you think this technology has only been created now?

It's been a long time getting this here. I've tried for 10 years to connect the broker to the lender. Two things have prevented this. 1st, Mortgage lenders and banks are very big, they're slow, it takes them a long time to change anything.  2nd, They spend a lot of money on their portals / websites and we're technically telling people not to use them.

Also, there are a lot of business and organisations out there, many of whom have profit margins that depend on maintaining the status quo…

Do you think that Open Banking helped?

Ah, good old Open Banking. I think Open Banking has kicked them all into high gear a little. They realised that they should do something. But lenders are big, they're siloed and it will take a while to get going. But, Open Banking is the future of our industry.

The other big factor is there's 130+ lenders in the market. They've all got different application forms. One for purchase, one for remortgage, one for buy-to-let etc. There are a lot of forms out there. So mapping all the data, hundreds and hundreds of fields the advisor has captured and rendering this into each individual form is a lot of work. It's taken us a long time to do it and to be honest I don't think anyone really wanted to do it for the good of the industry before.

As a rule of thumb, in the past, if you're a mortgage broker you didn't have a choice. If there was no other way of putting the application form through to a lender and you wanted to get paid while doing the best thing for your customer. You had to put the application through the lender's website or portal, there was no real alternative. Or in some cases, you even completed a paper application and faxed it to them. The future, looks very different.

Phil3

We design a lot of intermediary websites and when we test them with brokers they always tell us one of the main reasons to visit the lender's website is to confirm the rates, sometimes the sourcing system is out of date. What are you guys doing to keep the rates always up to date?

The mortgage intermediary is the one giving advice, it's their responsibility to give accurate advice, and if I was a mortgage broker, I'd double-check everything. We like to make sure that the products - and we have thousands and thousands of products in the system - are updated daily. We can update in real time if needed, so there's no overnight runs, we don't get batches from the lenders. We update as and when the lender changes the product. Which means we change somewhere between four and seven thousand products a week. We have a superb data team, we have some great systems, logic and a lot of techy magic going on. It's impossible to get everything right, there's a human element sometimes and very rarely, something slips through. As can happen with any system. We always suggest someone check the lender's website and play it safe.

If you look all the sourcing systems out there, we're probably one of the most up-to-date and most accurate in the market. But, as a rule of thumb, if you're a mortgage advisor, you should check the lender's website and be sure any documents you provide to your customer, are accurate. But even lenders get it wrong. I've found websites that were wrong in the past. If there's someone typing data, it's easy enough to make a mistake.

Maybe you've already answered this, but what were the main challenge building MortgageApply?

The biggest challenge has been getting lenders to understand APIs. If you're a tech company, it's very difficult to go to a bank, that's never had to change in this way before and say "I want to talk to you about APIs", we want to make it more efficient for you to receive applications and a better journey for the intermediaries you support. Many do look at you with a blank face, "what's an API?". We've spent the last few years discussing and educating much of the mortgage community, showing the true value of this proposition. Via MortgageApply, you're supporting the intermediary world, you’re providing efficiency and access to your lending decisions in real-time and showing the value of your products and services. But if you don't do this, someone else will beat you to it. It's been very much an education piece, more than building the tech. The tech was quite easy for us to build (don’t tell our CTO that!). It's far more around educating the market. Going to lenders, explaining to them how the industry is evolving - and in some cases it's been quite painful. Some clearly embrace a connected market more than others. But there are more lenders on board with APIs than there's ever been. Many are still working on this and some haven't got all their APIs exposed yet. But, at least most are on the same page. They understand this is the future.

What were the main lessons learnt?

The big one for us - and we had a lot of challenges and things to learn along the way - it's been: put your customer first. And our customer is the mortgage broker. If you’re a broker, survived the financial crash, you're most likely doing quite well. It's a good market at the moment, it's booming. There's lots of business, lots of customers, lots of remortgages, it's a very busy and profitable market, it's never been this big.

Technology is an afterthought for a lot of people. Especially when the market is doing well. As part of educating brokers in the value of tech, we've had to step back and think "we're building something here but we're a tech company, we're not mortgage advisors". We've always worked in the mortgage industry, but we're not mortgage advisors. So we setup a user group, we had to go out and ask "how would you like it done?". The question we ask all banks, lenders, intermediaries is "how would you like this to work?". And they will all say pretty much the same thing: they want all the information in one place, connected, seamless. They want to get rid of the friction, and here at Twenty7Tec we like to call that "connecting the dots".

Phil4

What are the next steps for Twenty7Tec?

It's still very early days for us. We spent quite a lot of time developing the system. Making sure it's ready to go into the market. There's never been a system like this in the market before. Various business have tried, but no one else is based on a pure API-driven solution to connect intermediaries to lenders for the good of the industry. We've got two lenders on at the moment being piloted, checking if it all works. Another going live very soon and we are planning to on-board one new lender every month going forward. There are around 130 lenders in the market and we ideally want them all. I don't think for a second we're going to get every single one of them. Some will never want to go down that route and I wish those lender then best of luck in the future. But we're looking to get most of them over the next couple of years. But now that the ball is rolling, it's very hard to stop it. It's a snowball effect. We're piloting MortgageApply at the moment with one of our strategic partners and we'll be ready to roll out to all of our intermediaries by the end of the year. That's the plan, hopefully it will just keep going and going.

How do you imagine the mortgage process in the next 10 years?

Ten years ago, it was pretty much the same as it is now. Not a lot happened. There was a crash, some digital guys popped up and then there were some new regulations. But people actually survived and did very well in the mortgage industry. I think the next 10 years is very hard to predict. I think there will always be a need for mortgage advice, regardless of what we do in the tech world via AI, big data, Open Banking. Even if Open Banking really kicks off and gets all the data we need in a format that is usable, there will always be the need for advice.

Look at it this way, as a rule, British people do not like talking about finances and money. They don't, ever, especially to a stranger. Go to a stranger and talk about your income so you can get a mortgage? That’s not what the upcoming generations who want a house will consider. I think the tech world will change massively to accommodate this. You won't need to talk to someone about your finances in future and the likes of Open Banking will draw the required data down and it will all appear in one place, aggregated. A customer can then make a decision upfront, knowing all the facts. They will still want to talk to Bob the mortgage advisor, because if you want to buy a house, it’s a big commitment and most likely the largest debt you will ever acquire. The chances are, you will want someone to talk this through with.

Second thing I think will change. There's around 15,000 (fifteen thousand) active mortgage brokers in the market. The future doesn't need 15,000. I think that number will start to decrease quite rapidly over the next five or six years. Tech will make lead generation a lot quicker. The front-end portals, the websites, the UX out there that draws the customer in. This will become the norm. Remember, customers already expect this type of journey and engagement from other industries. I think a lot of businesses that don't embrace technology will disappear. I think we will lose 20% to 30% of mortgage brokers over the next 10 years. But actually the mortgage market will get bigger. So everyone that has embraced tech and become more efficient, will have a bigger piece of the pie.

How do you adapt the technology to the needs of the brokers?

We have a rather quirky user group that we use as a sound board. Bounce ideas off. We love tech, but it's very hard to understand how the mortgage broker works. They all do different things and have different ideas. Some brokers are late 50s and have always done things the same way and will continue to do it the same way. It's perfectly fine, it works very well for them. Some are in their 20s, just joined the market, want to do everything on their iPad and expect everything else to catch up. So you have to adapt the technology to work for both. It is very difficult.

We do everything in the cloud and there are some generations that understand this perfectly well, but for some people we need to draw a picture and explain it. There's no right or wrong way of doing this. So we setup a user group, we meet up, we have coffee, some beers - best things are always discussed over a beer. You talk to your community and ask "How’s it going? What would you like from our tech?" and we ask the question "how would you like this to happen?". We get some great feedback, as expected when you have an open user forum, a fair bit of moaning about software and tech in general, but we also get some really positive feedback which goes on to our development roadmap. We look down our list, the more people that raise an item, the higher the priority. It allows us to change it, we're very agile, we make changes all the time. We like to keep on top of things and ahead of competition. But it's impossible to please everybody. I like to belive we have a system that's flexible and intuitive enough, If someone uses it once, they see the value of it and you never want to go back.

What piece of advice would you give to a young broker?

Embrace technology. If you're a new mortgage advisor, you're probably a little younger than the majority of mortgage advisers out there. You most likely have quite different expectations on how this industry should work. Remember one thing, previously it was painful to change systems, It's pretty easy now. You're not happy with your CRM system or website, change it. Not happy with sourcing system, change it. If you get that attitude right, you'll do perfectly well and everything else will fall into place.

I saw on your website a Woman in Finance Charter badge, why is it important for Twenty7Tec?

This is a big thing for us in the business. We're a small company, around 30 employees and we have a pretty good gender split: 50/50. All the senior management team have kids, I have a 6-month old daughter, Alice, and my MD's got two daughters. But this industry is male-dominated, without a doubt, like most are unfortunately. I see a future, as do the rest of the senior management team, where my daughter should be brought up in an industry where it makes no difference which gender you are. So we signed the charter, we're looking to sponsor events and we're really trying to lead forward on this. There's quite a few firms that have signed this charter and it’s a great thing. I hear people say it’s about empowering women in our industry. I don't want to say empower... as I feel we should just be doing the right thing.

Phil5

Also, you did mention AI during our interview but on the website there's no mention of it.

We try not to talk about it. Obviously, there's only so many things I can discuss on how our systems function. But one of our main business channels is product data, gathered from the lenders and utilised in our sourcing engine. We get product data from the lender, they send us this information: thousands and thousands of bits of product criteria to allow our users to source mortgages. That's a lot of information for a team of people to load, change and edit. So we've got some logic built into the system that supports us. Looking at trends, how products are loaded into the engine to see if anything is outside parameters. Does it need changing? Does it need someone to double check? Is this part of a trend? If someone puts a product to market that is wildly different from everything else, we want to spot this and potentially question or check the features. People do crazy stuff, but as a rule of thumb, products in the mortgage industry follows trends. No one ever goes that crazy on products because margins are squeezed. There's not much room to play around. Products are actually quite predictable. So we’ve got some clever logic and although we know there is no real ‘AI’ in the mortgage industry, the benefits of machine learning is a big thing for us. I'd love to share specifics with you, but I can already see an NDA about to hit me in the head.

Finally, how do you see the future of digital mortgages?

As I said, advice is always going to be there, you'll always going to want to talk to someone. But currently, the advice process for mortgages is around eight hours, which is just ridiculous. There's no need to spend eight hours of your life trying to get a mortgage. You don't want to spend that long attempting to get a mortgage, it's crazy. Digital mortgages will eradicate most of the traditional lead generation in the future. As a customer, you'll do that on your own time, like I did this morning looking for a house on the train to London, on my phone. I didn't go to an Estate Agent, I didn't need to. Doesn't mean I won't, I probably will at some point. But I do everything on my phone and future generations will do this more and more. Searching for a mortgage will be the same. Upfront customer research will pay a huge part in shaping this industry. Lead generation will be up there too, it will be most likely be very similar to the Habito's, Trussle's, Dynamo's where you would engage digitally first. You're still going to want to talk to someone, but that's two hours of your life freed up by researching yourself or being guided via a bot. The bit in the middle, which is the two hours of fact finding, you won't need an advisor to do that in future. You'll have Open Banking Data to support this, all the bank data will come digitally, everything will be there for the intermediary. The bit in the middle, where the mortgage advisor actually gives advice, that will become a 20 minute discussion. Just to guarantee and sense check, build rapport, get to know the person and make sure they are who they say they are. Then recommend a product. Everything else will be done digitally using data and APIs. Which means everyone will be very efficient and need to embrace this, or in time many mortgage intermediaries won’t be here.

To experience Twenty7Tec for yourself check them out at www.twenty7tec.com

If you're interested in enhancing your online offering then speak to the mortgage website experts at hello@dock9.com or call us on 0207 977 9230

 

Pictures from Judit Toth