Managing director shares his thoughts…
The following article was supplied by Jerry Mulle (pictured), UK managing director at Ohpen.
As a result of the pandemic, building societies and lenders have found themselves in a better position than ever to reap the benefits of modern cloud technology. COVID-19 and the remote work scramble have significantly upped the pace of digitisation, and yet, simultaneously, pandemic rescue measures have left these institutions in better financial stead than expected, meaning that they now have access to superior technology that was once the privilege of a select few.
However, pace must not be lost, and all industry players must continue on this digital trajectory in order to evolve. The benefits of doing so are immense, from ensuring speed and agility, through to meeting the ever-growing environmental concerns facing society.
The need for speed
The fight for customers has only continued to intensify and what we’re seeing, unsurprisingly, is that speed is a vital element in retaining market share. From a broker’s perspective, this is what is at the crux of their demands for lenders. Last year, or so, it was fundamentally required to respond to the lack of suitable property in the post-pandemic ‘race for space’ that brought with it the possibility of chains collapsing, gazumping and any other manner of stresses and disasters. In a busy market with historically low rates, the fragility of chains was a real issue – especially when underpinned with a stamp duty holiday.
Now, we’re seeing that speed to offer is a pre-requisite of achieving the best pricing for borrowers. In an era of rising rates, locking in pricing in a timely manner has become more important than the process itself. This has likely also been fuelled by the uplift we’ve seen in the remortgage business. Regardless, high inflation and rising rates mean the cost of borrowing is escalating, and it’s not clear when this might change.
What this means is that fast, efficient processing is here to stay. Any business who labours under slower legacy technology may well see the metaphorical tide come in around their ankles. Agile operating systems that offer the prospect of an affordable entry to a more level playing field will be a game changer for those that are able to make the change. Operational excellence is an intrinsic part of winning in a market.
The increasing need to consider how financial services reach net zero is accelerating, but so to is how these institutions can help their customers cut carbon emissions. A key consideration for this industry is how, as a collective, it can encourage householders and landlords to invest in clean energy and greater efficiency, ultimately to mitigate masses of mortgage holders being “trapped” in energy inefficient homes that are decreasing in value.
Some argue that lenders should restrict lending to homes and properties that have a high EPC rating, while others say it’s the role of lenders and building societies, among others, to help households find ways to reduce carbon emissions. These are just two schools of thought, of which both should be considered, but there is another core consideration to help accelerate the journey to net zero. Again, we come back to the role of cloud technology.
For example, moving from server-based systems to the cloud can cut a lender’s carbon footprint by 88%. That same strategic decision also gives lenders the ability to design and deliver green products quickly and securely, not least because cloud-based software-as-a-service makes the smart use of data not just possible, but easy.
The enhanced security threat
The technological abilities of scammers, and those who would pose more malicious security threats to financial institutions, have drastically improved, putting old-fashioned legacy systems at great risk. The pandemic also exposed many insufficiencies in companies’ security infrastructure outside of their office buildings: personal broadband connections used to enter central systems with access to highly sensitive personal data is a catastrophe waiting to happen.
This kind of legacy technology – both inside and outside of physical walls – simply cannot be patched. All mutuals will know the headache caused by multiple systems, many decades old and all of which store data in their own quirky format. While the fear that porting data from these legacy systems on to newer platforms that could easily address this security concern is felt greatly, it must be overcome.
Adopting true digitisation of banking processes to better protect customers’ savings and mortgages from this growing security threat is crucial, and there are solutions that offer a safe transition to faster, affordable and more secure software; embracing them is a no-brainer.
Now is the ideal time for lenders to continue on their digital journeys to truly cloud native platforms. Not only do they help to address issues of speed, security and the environment, but they future-proof the business and are well-supported for every stage, from origination to servicing. The future has arrived for this section of financial services and individual institutions must now decide whether they want to be a part of it.