All mortgage lenders are on the hunt for technology to make their processes more efficient and many FinTechs have popped up, offering a huge array of technologies to cater to those needs.
However, while large organisations tend to have the skills and heft to find and adopt the right technology for them, smaller mortgage lenders can be swamped by the options available: it’s almost a tyranny of choice.
This is certainly true for many of the UK’s building societies, who are looking to modernise to help them grow and do what they do best: serving their members.
I’ve been discussing these challenges and opportunities with Lydia Coyle, a management consultant at Woodhurst. Woodhurst – with which Lenvi is a partner – works closely with building societies to help them modernise and navigate the complex yet rewarding road of sustainable transformation. In this article, I reflect on our conversation and relay some of the key themes for how we see technology transforming mortgage lending for building societies, both now and in the future.
Moving away from slow, manual processes
“Building societies have always been trusted for their personal service and commitment to their members. However, in today’s fast-paced digital world, they recognise that embracing technology is key to not only maintaining those high standards but also enhancing them to meet the evolving needs of their new and existing members.”
Lydia Coyle - Woodhurst
Building societies do a great job on customer service because they provide such personalised support. However, as they grow, a reliance on legacy systems and paper-based or manual processes means maintaining this level of service is challenging.
Nevertheless, there is certainly an awareness among building societies that by embracing the right technology they can make their processes slicker and improve the customer experience. This is often achieved in partnership with FinTechs, which can support lenders adapt innovations ranging from enhanced affordability assessments to real-time data to foresee repayment risk. Other options include automation of document management, information extraction and fact finds.
Embracing such technologies not only benefits customers— both borrowers and members—but also building society employees. By making internal processes more efficient, staff can focus more on high-value tasks, like providing even more personalised support to members.
Although building societies still have some progress to make in offering fully digital experiences, the benefits of this shift in focus could soon emerge.
The opportunities from Open Banking and Open Finance
One of the greatest opportunities for building societies and other lenders, Lydia and I agreed, is to grasp the benefits provided by Open Banking.
The latest data shows there are now 10 million consumers and small businesses regularly benefiting from using open banking technology. Research we commissioned for our 2024 Consumer Borrowing Report suggests this proportion could increase. We found 65% of people might consider giving a lender temporary access to their transaction history if it could lead to a more personalised rate. Open Banking can also open the door to other advantages such as automatically populating transaction details and dates, saving time for customers; or providing data insights that help identify customers who may be struggling financially.
For mortgage lending, the evolution to Open Finance could make a huge difference, helping towards better lending decisions and the potential to lend to riskier potential customers; those underserved people who can't get access to loans because their credit card might be quite thin.
Open Finance is one more route by which building societies can enhance their offering, break free from outdated systems, and achieve digital transformation.
Finding the right tech partner
So, why are some building societies slow to adopt technologies? Cost constraints, regulatory compliance and risk aversion will all come into play. But there is also the challenge faced by smaller lenders of deciding who is the right tech provider to partner with.
Vendor management can also be a challenge in itself; unlike larger lenders, smaller building societies and specialist lenders may not benefit from large procurement and vendor management teams.
“Managing all those relationships is critical, and that’s where the partnership model that Lenvi follows becomes invaluable. They’ve already invested the time and effort to understand and establish key partnerships, making it easier for organisations to leverage these relationships and focus on delivering value to their customers.”
Lydia Coyle - Woodhurst
That's exactly what we try to do at Lenvi. While large banks will have teams of people who can manage procurement and vendors, when we work with smaller lenders, being able to offer a more holistic view of an application ecosystem can be really valuable to them. In addition, a lot of building societies and smaller organisations haven't been set up to be API-enabled and integrations across the board. A lot of these systems don't talk to each other and, as a result, there needs to be a lot of manual rekeying. Recognising this, at Lenvi we are experts in integration that needs to take place between the core operating system and supporting technologies to aid a smooth adoption of these additional technologies.
Concluding thoughts
By embracing the right technologies and forming strategic partnerships, building societies can overcome the technological and market challenges facing them, ensuring they remain competitive while continuing to deliver the personalised service their members value.
If your considering how technology solutions can drive your building society business forward, book a demo with us today or speak to one our team.
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