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".
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.
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.
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Pictures from Judit Toth