Chief customer officer says it's important to categorise loan types at the point of application
Following months of controversy, the turnaround time discrepancy through the third-party channel has somewhat eased as a result of multiple lenders improving their systems and processes. As the chief customer officer at NextGen.Net, the company responsible for ApplyOnline, Tony Carn has developed some keen insights into the way different lenders looking to improve SLAs have been able to create “broker fast lanes” in partnership with the tech provider. Newcastle Permanent has been one such bank that has utilised services such as eSign and ApplyOnline’s document verification service to streamline the application process through the broker channel.
MPA asked Carn what the top three factors were that lenders should consider when looking to implement broker fast lanes.
Improve application quality
The first thing lenders should consider is application quality – something that is not necessarily reflective of whether the broker has done the right job, but more along the lines of how easy it is to apply for the loan, he said.
“It's actually a number of factors,” said Carn.
A big part of this is whether or not the lender has provided the broker and the applicant with digital tools to ensure that what they are providing is validated against the lender’s policy. This includes things such as e-signatures and integrated valuation.
“Quality at the point of sale is a really important factor in driving down More Information Requests (MIRs) and increasing time to yes,” he said.
Throughout the pandemic, several brokers told MPA that many lenders required paper documentation to be printed, signed and mailed – a process that proved cumbersome for borrowers without a printer in lockdown.
At the height of Melbourne’s extended lockdown last year, broker Bernard Desmond told MPA it wasn’t just timeframe that was a key consideration when arranging finance for clients in lockdown.
“When we are taking clients on board now, we are actually asking them, do you have a printer at home?” He said. “If I’ve got a 30-day settlement and the client says, ‘I don’t have a printer,’ I’m not going to take them to a bank that does not support digital documentation.”
At the time of speaking with Desmond, only one major bank and one second-tier lender offered a fully digital process according to the broker – something that has since changed over time.
Lender policy and integration with service providers
The policy of the lender is another crucial consideration when it comes to implementing a broker fast lane, said Carn. If the policy requires the lender to go through every line of an applicant’s bank statements to ascertain their living expenses, this could prove a time-consuming issue when competing with other lenders in market, he said.
The third thing lenders need to consider is the extent to which the lender’s loan application platform is integrated with other service providers critical to the approval process. A big driver of turnaround quality is when an application with supporting documents gets passed from one system to another. He said in many instances, the fidelity of the information and its categorisation is not always great.
“A number of lenders are going, you know what? It's actually easy for us to validate the documents that we receive in ApplyOnline,” he said.
Having the documents verified at the point of application enables the lender to issue a MIR more quickly if needed, thus shortening the overall time to yes.
More information requests
Carn said that MIR was a huge contributing factor to delayed turnaround times, something NextGen was able to identify using its benchmark reporting service. After they began to notice this trend, NextGen started looking at the time it took for “straight-through process (STP) loans”, those where the lender didn’t need to go back to the broker and request more information. They noticed that the turnaround times for these types of loans were quite impressive in many cases.
Read more: Biggest cause of delayed SLAs revealed
Carn also added that by categorising loans digitally at the point of application, it was possible to avoid delaying straight forward approvals.
“Lenders are realising you need to have different swim lanes for different loan types,” he said. “You need to categorise them as you consume those applications digitally and treat them differently.”
The digital treatment of applications also had the power to level the playing field among brokers in favour of quality over quantity, he said.
“I think gone are the days where lenders would give service based on how much volume a broker would provide to them,” he said. “Now it’s really around the quality of application you're putting through the door.”