Frank Eve is managing director of Frank Eve Consulting
I recently went to the Marussia F1 factory in Banbury as the guest of Avelo the systems company that sponsors our adviser information website www.tcfinfo.co.uk. We had a tour of the factory and I was interested to see the new car being built for this year’s F1 season. The thing that struck me was the level of innovation and technical expertise used to develop the car each season. Marussia are only a small F1 team but they have an army of technicians working on every piece of the car to ensure the maximum efficiencies from every piece. The balance between innovation and safety is crucial; if the technicians get too enthusiastic the driver’s life could be on the line.
This made me think how the balance of innovation and risk in the mortgage market is similar to F1, and how this balance is currently out of kilter. The mortgage market is in need of more innovative thinking; particularly around new products and systems, to overcome the challenges facing the industry and consumers alike. Since the crash, innovation has been stifled by a backlash from the reckless day’s of the pre credit crunch era and a wave of new regulation. There is no doubt that innovation outweighed risk in this period and sensible credit criteria were ignored. However, just like F1, getting the balance between innovation and risk is key to success and currently innovation is losing out to the over cautious approach of the credit department. Now is the time for lenders to reassess their systems, credit criteria and products to find new ways to improve the customer experience and find products for the new mortgage market environment.
On the positive side it was good to see Paragon recently launching the iState Systems mobile phone application for buy-to-let investors. The software allows any smartphone to be fully integrated into a lender's workflow system as a smartphone contains all the key ingredients to expedite the mortgage process including internet access, ability to download and install 'apps' and a high definition camera for photographing key documents. Another recent innovation is the wider use of Vizolution’s vScreen in the industry, which enables call centre staff and advisers to demonstrate their products on the client’s computer while working from their own office. However, we need more innovative ways to integrate systems to bring mortgage application processing into the 21st Century.
Product innovation has also been stagnant for some time, although we are seeing some focus on first-time buyers with Barclays’ innovative ‘Family Mortgage’. First-time buyers are crucial for the mortgage market and Barclays are to be congratulated on this new product. Interestingly, I’ve noticed that the CML is running an innovation conference in May, so I am looking forward to finding out the topics under discussion and what outcomes can be generated.