Jerry Mulle, UK Managing Director at Ohpen
The aftermath of the pandemic has seen lenders and building societies more capable than ever of taking advantage of modern cloud technology. The rapidly increased rate of digitisation paired with Covid rescue measures have granted these institutions more financial wiggle room to be able to access more modern technology, something that was once a privilege only available to those organisations that could afford it.
Despite this digital shift forward, it’s no time for organisations to take their foot off the gas. Industry players have to keep moving forwards on the journey of digitisation if they want to adapt and remain competitive in the market. The institutions that do so will see huge benefits, from ensuring speed and agility, to catering to the ever more pressing environmental issues facing the industry.
When speed becomes crucial
When it comes to intensifying competition for customers, speed is fast becoming one of the most important elements in ensuring that institutions are able to keep hold of their market share. From a broker’s perspective, it’s at the heart of what they demand from lenders. Around this time last year, the post-pandemic ‘race-for-space’ led to imminent stress in the mortgage and lending market, intensified by the increasing instances of collapsing chains and compounded further by historically low rates and stamp duty holidays. For this reason, enabling fast exchange time frames was paramount.
However, what we’re now witnessing is that, in order to secure the best pricing from borrowers, speed to offer is becoming absolutely essential. With rates rising, the importance of locking down a price at pace cannot be understated, likely a result of the recent uplift in the re-mortgaging business too. With rising rates and inflation, it’s difficult to discern when this could change.
As such, fast efficient processing is here to stay and any institution still operating with cumbersome legacy technology will start to realise that they are sinking. Agile operating systems that grant an affordable entry to a more level playing field will become a gamechanger for those who are willing to make the change. In this era, operational excellence is key to success in the market.
Looking ahead to net zero
There is increasing need for the financial services industry to continue to articulate how they will reach net zero. But there is also a need to consider how these institutions can aid their customers to cut their emissions too. The industry must now take action to collectively encourage landlords and households to make use of clean energy and greater efficiency in order to break down the number of mortgage holders who are “trapped” in homes that are energy inefficient and decreasing in value.
While some maintain that lenders and building societies should simply restrict lending to properties that have high EPC ratings, others say it’s their responsibility to help households lower their carbon footprint. Although both of these approaches to the problem should be considered, there is another key element that can help institutions on their path to net zero: cloud technology.
For instance, migrating from server-based legacy systems to cloud operating systems can reduce lenders’ carbon emissions by as much as 88 per cent. This transition can also give lenders the ability to develop green products more quickly and securely given cloud-based SaaS’ ability to make the smart use of data not just possible, but easy.
The cybersecurity risks
Malicious security threats, many coming through scammers, have vastly increased the dangers for financial institutions, particularly those running on legacy systems. In addition to this, increased security threats throughout the pandemic have also exposed the weaknesses of companies’ security infrastructure away from the office. Accessing systems that contain highly sensitive data through personal home broadband connections puts companies at even more risk to cybersecurity attacks and opens up more weaknesses in the system.
Both in the office and remotely, this outdated kind of legacy technology cannot be patched. Any mutual will be familiar with the many issues caused by the merging of multiple decades-old systems, all simultaneously storing data in their own unique ways. And while many still fear the immense logistical challenges that come with migrating these systems to newer platforms, this is something institutions will have to overcome.
It is ultimately essential for financial institutions to undergo a true digitisation of their banking processes as a means of ensuring the security of their customers’ savings and mortgages. Luckily, there are now solutions that exist to offer transitions to more affordable and secure systems at pace; something that eventually institutions will have no choice but to undertake if they want to remain competitive.
All in all, now is the perfect time for lenders to continue to take advantage of cloud-native operating systems. In addition to addressing speed, security and ESG, cloud-native platforms will ensure that they are prepared for the future across all stages of the cycle, from origination to servicing. For lenders and building societies, the future is here, and whether they want to join it is becoming less of a choice and more of an obligation.
