A software-driven future

Making better use of technology is no longer optional: the need to enhance customer service – and the emergence of a younger, more tech-savvy client base – now demand it.

The technology is already here

Entirely paperless mortgages could be available to the public within three years, according to Brett Spencer, CEO of Stargate.

Mr Spencer believes the broker software industry has traditionally been slow and reactive; however, with Generation Y borrowers moving to secure their place in the housing market, there is an increased focus on technological innovations.

Indeed, Simon Dehne, CEO of LoanKit, is surprised the broking industry isn’t demanding more. With the range of technologies now available, brokers could be servicing more clients more easily and at this stage, he believes, it is the lenders’ requirements that are preventing them from doing so.

In the future, Mr Dehne would like to see forms sent electronically to borrowers and populated prior to an internet video conferencing meeting. Everything could be monitored and conducted online, with no need for a face to face meeting.

“You could actually be sitting in the office and be doing video interviews to anywhere in the world,” Mr Dehne tells The Adviser.

To overcome borrower identification issues, Mr Dehne suggests there could be more collaboration with other, relevant parties.

“Why can’t you link directly to the ATO to confirm a borrower’s income; directly to the White Pages to confirm their address and ID; and maybe to an agency within the government in terms of passports to validate key facts?” he asks.

By relying on face to face interviews and paper-based ID checks, the industry is really just tweaking what it was already doing in the 1990s, he says.

Add to this that the Australian government and most states and territories have enacted legislation to give electronic communications the same status as written communications, and an entirely online loan transaction could be just over the horizon.

Online security group VeriSign, which is now part of Symantec Corp, has more than one million web servers using its SSL (‘Secure Sockets Layer’) certificates. The group processes more than two billion certificates daily.

The company points out, however, that despite a range of Australian legislation, “the validity of documents with digital signatures has never been challenged in court [so] their legal status is not yet well defined.”

Nevertheless, if shoppers can legally sign for their groceries on a computer at a Coles or Woolworths self-service checkout to save themselves time – and with increasing convenience – then the same sort of facility should be available to the mortgage market, believes Mr Dehne.

Given the technology available, he even questions why some lenders still require face to face meetings.

The future goals of broker software development should lie in easing communication, reducing distances, integrating technologies and increasing collaboration, Mr Dehne says.

Wayne Macartney, national sales manager of Loanworks Technologies, agrees: “In terms of future trends, tablet devices such as the iPad will change the way companies interact with borrowers.

“It’s early days for internet TV,” he adds, “but the ability to offer borrowers a compelling, interactive experience in the comfort of their own living room may prove to be a game-changer.”

Improving integration, increasing communication

Suggesting software developers are increasingly in touch with brokers’ needs, integration and communication are already an important focus for the broker software industry.

Glen Lees, CEO of Connective, tells The Adviser, that his company is currently developing more advanced software so that it becomes a point of interface online between the broker and their customer.

“Our view is that there should be a seamless transition between the consumer at the end, the broker in the middle and the aggregator at the back end,” Mr Lees says. “Customers more and more are expecting to interact online with suppliers – and brokers will be no different.”

Software that will allow a client to track the progress of their loan application online throughout the process will be available shortly. “A customer will be able to go to their broker’s website, log in and see where their loan is up to,” he says.

The technology will also allow them to see copies of loan documents, request additional quotes and interact more freely with their broker.

Jason Hayden, CEO of Finware, also sees a future focused on increased consumer involvement. “I don’t want to say the words ‘social media’ because people don’t always understand that in a business context,” Mr Hayden says.

“It’s more about getting the consumer involved in the transactions.”

Mr Hayden believes the consumer will be able to use broker software to drive the ‘fact find’ because people are becoming more accustomed to providing information freely.

“Customers are more than happy to get updates via various technologies, whether it’s via Facebook, email updates or SMS updates,” he says.

“This will also enable brokers to keep customers more informed along the way.”

Connective’s Mr Lees echoes this sentiment and emphasises that the future is firmly rooted online because online communications will allow more comprehensive and deeper customer engagement.

The bigger picture

So, while the benefits to brokers, aggregators and consumers of making better use of technology are clear, Mr Macartney is quick to qualify its context.

Borrowers may well have increasing expectations of free flowing and easily accessible information, but they will never be the sole drivers of the broker – and therefore the broker software – industry, he says.

“As we’ve seen in recent years, broader macro-economic and socio-demographic trends will continue to shape the industry, as will ongoing government intervention.

“These changes will drive innovation and, in turn, software will continue to evolve to meet the needs of the broker industry.”

Mr Macartney believes there have been significant advances in the past few years.

“Arguably, during the boom years pre-GFC, there was little incentive for brokers to fully leverage the benefits that the software provided,” he says.

“Post-GFC, brokers are coming to terms with increased levels of compliance associated with NCCP, increased competition for reduced volumes, and generally growing levels of professionalism within the industry.”

Software developers and aggregators, however, tend to agree there is room for improvement, including greater integration in the market.

Broker software and compliance

The introduction of NCCP provided the software industry with an opportunity to upgrade platforms and to make both compliance and data mining easier.

Having software that enables brokers to be thorough in their due diligence and in meeting their NCCP compliance obligations is extremely important, says Frank Obeido, director of Proforma Financial Solutions.

It’s not just the capacity to check compliance, “but also the ability to automatically generate a lot of the compliance documents via the system that makes a broker’s life simpler,” he says.

Automated forms, data capture and compliance checks have become integral aspects of broker software packages. They are now both essential and expected. Getting to this point was, however, not always a smooth and easy transition.

“NCCP has been the absolute bane of our life for the last 12 months because there’s such a diverse range of customers using our software,” says Stargate’s Brett Spencer.

Despite NCCP’s standardising of the mortgage and borrowing industry’s processes and documentation, he believes the aggregators are all doing something slightly different.

This left Stargate’s CRM system facing several challenges, but it also led to the development of the company’s eFind product which gives brokers access to a plain, generic NCCP form.

LoanKit has also tried to reduce the impact of NCCP on brokers’ time and workload.

“We’ve tried to not make NCCP a big issue,” Mr Dehne says.

“We have developed forms that are effectively automated. They drag the data that brokers were already putting in anyway and capture the right information.”

Head in the cloud

Along with compliance solutions, portability has been described as the most important recent development in broker software.

Mr Obeido says the shift to ‘cloud-based’ [hosted, generally internet-based] solutions is the most useful software development he has seen during his time in the industry, because “not only is it hardware independent, it’s also location independent”.

According to Mr Macartney, the broking industry is gradually accepting cloud-based solutions. However, a November 2011 survey by Stargate found that 72 per cent of the 365 respondents were concerned and confused by hosted software applications and the security implications of having their data online.

Mr Obeido believes it’s therefore time for the industry to catch up –both with the software and the benefits to be obtained. “Wherever I am, I will still have a total connection to my business and the team, both in real time, without the worry of synchronisation or any concerns about system corruptions or failures,” he says.

Connective has now been cloud-based for two years and Mr Lees believes the benefits for software providers and their users are substantial. “The administration and the burden of maintenance are so much lighter,” he says.

How did we get to here?

“At first, there was nothing,” says Mr Spencer, describing the history of broker software. “Brokers were storing information on Excel or even Lotus 1-2-3. They were storing information just in any sort of format.”

Even when standardised software was introduced, everything was desktop and program-based. But Mr Obeido believes he and Proforma Financial Solutions have benefited from the advances.

“Through software, we are now able to have an accurate and up to date view of our data,” he says. “This is very important because it tells us what’s in our pipeline, what leads are coming through and how we’re attending to them. It tells us about a work in progress, settlements and it shows us a schedule.”

In turn, this enables Mr Obeido’s business to do more forecasting, both in terms of budgets and actual income. “So, software now provides us with an up to date snapshot of our business – very much in real time,” he says. “That’s key.”

A movement to cloud-based solutions would suggest parts of the broking industry have moved forward in leaps and bounds – at least in some aspects of technology. Or have they? Mr Lees, however, sees the current situation as an extension of what was already happening.

“In some ways, the broad function settings are not too different [from five or ten years ago], but it’s the way that you can do it,” he says.

Mr Dehne agrees that the basic framework has been around for some time, but with the industry aiming to make constant improvements.

“I think the core component of the CRM-type software has basically always been there, but it’s just evolved as the market has evolved,” he says.

Playing catch up

So, has the broking industry been revolutionised by communications online and a shift, in some cases, to the cloud? Or is broker software just undergoing gradual, market-based tweaks to systems that have been in place since the 1990s?

While many in the industry are still sceptical of the cloud, and unsure of the best ways in which to use social media and to meet Generation Y’s technology expectations, the responsibility for industry improvement and advancement lies partly with brokers themselves.

If Stargate’s research is indicative of an industry-wide trend, then brokers may need to catch up with, and accept, technologies that are already available – and so reap the benefits that are there for the taking,

Responsibility for moving the lending industry forward, however, does not just lie with brokers. As Mr Dehne points out, technologies such as Skype, digital signatures and tablet portable computers are well established and widely used in online communications and transactions.

To take full advantage of these integrated technologies, lenders too need to change their requirements and – among other things – to adapt their identification checks to suit an online environment.

Software developers and providers then need to liaise with government departments, lenders, aggregators and brokers to develop a more integrated system that can support the entire process online, from initial enquiry to settlement and beyond.

“All brokers like the idea of software”, says Finware’s Mr Hayden, “yet most people don’t quite get the concept of what CRM systems are all about. They think it’s only about names and addresses with the added benefit of being able to send out Christmas and birthday cards.”

“Software offers so much more than that,” he says.

So, while there is no denying that broker software development has made incredible advances, improving process and synchronising brokers’ workflow, there still appear to be gaps between the consumers, brokers, aggregators and lenders that more effective use of technology could fill.

“The industry, as a general rule, can be very slow technology-wise,” says Stargate’s Mr Spencer.

But with tech-savvy Generation Ys catching up with the housing market and technology catching up with brokers’ needs, it’s now time for brokers and the lending industry as a whole to catch up with their use of technology.