Smartr365 chief technology officer Nitesh Thadani explains how the mortgage process will become streamlined with technological transformation, while laws must keep pace with change.
Q&A
Can the mortgage process be fully automated?
The mortgage process can be fully automated, that’s 100% right but there are challenges that are blocking us from embracing a fully automated process today.
Banks are responsible for conducting essential verifications such as credit checks, background checks, and screening for PEPs and sanctions. Additionally, they assess affordability. However, many of these checks may already have been completed by advisers earlier in the mortgage process.
The idea of having a reusable identity, credit search, and affordability that can be shared through a distributor channel will streamline the mortgage process. If banks can accept the compliance of such a system, it will lead to the creation of a faster mortgage process and significantly reduce the time to approvals.
Exactly how will technology change the mortgage process?
As technology continues to advance, the mortgage approval process is becoming more streamlined. For example, bank statements are now shared via Open Banking and technology can analyse your outgoings for six months, while also projecting your finances up to 72 months in the future.
All this is being automated and it makes information available with the click of a button. Even payslips are being automated today by some providers in the UK market, so you don’t need to supply much at all.
Whilst we will see transformative technological and legal changes, it will take time because we have a system which has worked for decades but the fact is we are moving toward much slicker processes. There are going to be new risks at first and the changes will require a lot of learning. Fraudsters will inevitably try to game the system, so we’ll have to be vigilant. A government policy review might also be needed to drive this in the right direction.
How is AI going to play a part in this Fintech?
AI has great potential in the Fintech and mortgage industries. One particular application that I find promising is the use of visual contracts. Often, the average person may struggle to comprehend the technical language and lengthy documentation of their mortgage terms. With the help of AI, these contracts can be transformed into visual representations that are easier to understand. Additionally, AI can analyse various mortgage products and recommend the best option based on the customer’s specific circumstances.
Imagine an interactive contract rather than depending only on advisors. You can ask the AI more questions and interact with your mortgage offer, to understand if the offer meets your needs. You can ask questions like, ‘Can I port this to a new mortgage?’, or ‘Can I rent out, and buy a new house?’ and playing with AI in this way will allow a lot more understanding of what an offer means to an individual.
Can technology help coordinate all the stakeholders?
Certainly, technology can play a role in coordinating all the stakeholders involved in the mortgage process. However, it’s important to note that this coordination should be achieved in a decentralised manner. Tight integration can lead to increased complexity and higher costs.
When coordination is decentralised, compliance and risk management become more challenging. For instance, if a bank relies on a shared identity that comes from an external source, the bank would have to take the identity at face value, potentially exposing them to risks if the borrower has PEPs and sanctions against them. In such cases, coordination between stakeholders is crucial, and it may also require changes in laws to manage such risks effectively.
How will banks, buyers and estate agents benefit from this technology?
All these players could reap financial and management benefits through the improved journey. Time and cost savings will result from the streamlined processes. The number of mortgage applications will also increase and the result will likely be a much better marketplace for everybody.
Nitesh Thadani is chief technology officer at Smartr365
