The Intermediary – July 2025 - Flipbook - Page 72
T E C H N O L O GY
Opinion
Modern lending
platforms will
be invaluable
T
he mortgage market has
undergone a profound
transformation
2008, largely thanks
to strengthened
regulations designed to
protect consumers and ensure market
stability. Now, the Financial Conduct
Authority (FCA) is proposing a fresh
round of reforms through its Mortgage
Rule Review (MRR). The direction of
travel is towards a less onerous review
of affordability at certain points in the
process, particularly in areas such as
term reductions and remortgage.
Ultimately, the conversation is
steering towards a higher proportion
of refinancing decisions being made
on an execution-only basis. Leaving to
one side the important consideration
of advice needs at this juncture in a
borrower’s journey, a change of this
nature could reduce compliance costs
and operational burdens for lenders.
It may well be a welcome prospect
for lenders looking to maintain
competitiveness in a market
where speed and convenience
increasingly drive customer choice.
However, simplification does not
mean deregulation.
The FCA will be watching closely
to ensure that lenders are on top of
customer outcomes throughout their
contracts. It will require systems
that can rapidly assess borrowers
against new criteria, integrating data
from various sources, such as credit
referencing agencies, and potentially
even income verification via
tokenisation under the Open Banking
framework in future. Modern lending
platforms with artificial inrtelligence
(AI) or data analytics capabilities will
be invaluable here.
The fight for market share also
means that lenders need systems that
scale easily and allow staff to prioritise
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The Intermediary | July 2025
cases which need intervention by
specialist teams efficiently. Cloudbased platforms with flexible capacity
can handle these fluctuations beer
than legacy systems, many of which
cannot even throw up a sufficient
number of customer data points, let
alone make sense of them.
Clear communication with
customers is also crucial, especially
when dealing with larger volumes
of execution-only business. Lenders
will need platforms that support
automated, personalised messaging
which explains product features and
the potential risks associated with
them. Post-transaction confirmation
and ongoing reviews will become the
paradigm to ensure compliance and
good customer outcomes.
There is an added commercial
consideration for lenders here, already
visible in today’s market: pricing
competition. To a large extent, the
MRR proposals are likely to intensify
competition in the mortgage market
even further in order to maintain or
grow market share.
Time is now
This is not just a future that sits years
down the line. We are here, now. For
lenders the message is clear: adapt and
innovate or risk falling behind. What
‘behind’ looks like will differ, but there
is every chance it could mean balance
sheet consolidation for smaller lenders
across the market.
Despite the challenges, the MRR
presents lenders with some strong
strategic opportunities. Techsavvy consumers are crying out
for a straightforward application
experience, with many experienced
borrowers keen to refinance without
going through a fully advised process.
Moreover, lenders that embrace
transparency and customer
JERRY MULLE
is managing director at Ohpen
empowerment are likely to build
stronger relationships and loyalty
in a competitive market. By making
it easier for customers to interact
digitally with their mortgage
accounts, lenders could also be more
proactive in positively managing those
who fall into arrears – key under the
Consumer Duty. For those smaller
lenders currently vulnerable to being
forced to consolidate, this should be a
key strategic priority.
The regulator has every intention of
keeping pace with a rapidly evolving
market environment. Its wants not
just to protect consumer interests, but
to actively make it viable for market
players to improve their experience.
Streamlining compliance and
expanding execution-only offerings
promise efficiency gains. Traditional,
paper-heavy processes won’t cut it.
Lenders must invest in user-friendly
interfaces, automated workflows and
self-service portals that can flex as the
market does.
Balancing this with responsible
and ongoing affordability review
must underly any platform decisions
lenders make now, particularly
bearing in mind the Consumer Duty
rules, and where customers may
become vulnerable.
Many of the largest mortgage
providers are already adapting product
design and advice processes to support
a range of refinance choices. Lenders
will be under close scrutiny to ensure
they deliver positive outcomes, not
just improved processes.
Those who invest wisely in tech will
not only comply, but gain competitive
advantage by offering more flexible,
transparent, and efficient services. ●
