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Technological innovations are making the ‘instant loan' a reality - we just need mankind to catch up.
Kym Rampal
Head of Loankit
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Instant communication, instant bookings, instant plans, instant love... we are living in the instant world - just add an appropriate electronic device.
There is no doubt the rate of technological development is accelerating. As we give birth to inventions we amalgamate the new technologies with existing technologies to create even newer technologies. There is even a theory for it, propounded by Kurzweil in his essay ‘The Law of Accelerating Returns'.
An interesting aspect of the theory is that technologies hit barriers and obstacles during their progression. Whenever this happens a new paradigm shift occurs to cross the barrier and a new technology evolves. Where there is social resistance to certain changes gradually that resistance weakens and erodes to enable a paradigm shift.
For example, just a couple of years ago brokers were loathe to submit loans electronically. The general suspicion was that lenders had outsourced their back-office data entry to the brokers. This psychology has now changed thanks to the changing needs of customers and our businesses; we understand the value of such a service. Now if a lender does not have electronic lodgement capability they are less likely to receive an application.
To further see the theory in practice, one simply has to look at the invention of mobile phones. Initially, to be able to detect where a phone was, mobile providers had tracking dishes. This was superseded by global positioning satellites (GPS) to accurately pinpoint the location of the device.
Marry to this an information database of road maps and voila you have just created a road navigation system on your mobile phone. Two separate technologies (mobile device and a GPS) and a database combined together to provide a new technology and a very useful device - the mobile road map with an annoying voice!
So, how do we continue to benefit from the growth of technology in our humble mortgage industry? We already see quite a few examples of advanced technology being put to use.
Consider when a simple iPhone is married to a property sales history database with simple software to do some predictive price analysis - all of a sudden a shopper standing in front of a property for sale can analyse many of its aspects, both current and historical. The information provided by their iPhone ranges from the previous sales price to how long the current owners have had the property, prices of other properties recently sold in the vicinity, current competing properties for sale in the area and so on.
This is called ‘augmented reality' (think of the movie Minority Report). It is already here. It is not the future, it is the now.
What can we expect to see in the future? The ‘holy grail' for the mortgage industry would have to be an instant loan. Visit a client and grant them a loan on the spot. Unfortunately for us brokers, there are some barriers to this occurring. Validation of documentation, identity checking, insurer approval, valuation checks and so the list goes on. But is it really impossible?
I can see many heads shaking - "Tell him he's dreaming!" But honestly just because it seems an insurmountable task right now does not mean that it won't happen.
Technology already exists to automatically value property - a ‘predictive pricing' software that assesses sales in area, sales of similar property, etc to arrive at a value.
We already submit most loans electronically and a reasonable degree of credit scoring takes place automatically rather than utilising the time of a credit officer.
Lenders also have intelligent programs that detect fraud and highlight applications that may have more than an acceptable level of discrepancies. The list of advancements goes on.
Wouldn't it be wonderful to work in a world where loans were settled in a couple of weeks or even quicker? It would certainly lead to a higher rate of client conversions and quicker payments, immensely improving the cash flow of broker businesses.
