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Automation in UK Mortgage Market: Reducing Costs and Human Dependency


The mortgage market is calling for a change. But, why?

The system is not broken, but it is calling for upgrades. Just look at the numbers!

With £4,000 in cost, it typically takes 45+ days to originate a loan for any bank.

Economic uncertainties, regulatory changes, and evolving consumer preferences have combined to create a complex landscape that requires innovative solutions.

The Mortgage Market Challenges

One of the primary challenges plaguing the UK mortgage market is the high cost of loan origination.

In recent years, the mortgage market has been buffeted by the aftershocks of Brexit, the volatility of interest rates, and the shifting demands of homebuyers. These factors have placed significant strain on lenders, brokers, and borrowers alike, defining the urgent need for transformation.

Compounding this issue is the industry's heavy reliance on manual processes and the lack of digitization. Approximately 40% of the mortgage lending process requires human intervention, leading to inefficiencies, errors, and extended timelines. This cumbersome approach frustrates all parties involved and results in:

    • High Loan Origination Costs: The cost per mortgage has risen to an average of £4,000, putting a strain on the industry.
    • Lengthy Approval Processes: It now takes more than 45+ days to obtain an initial or refinance mortgage.
    • Low Productivity Levels: Mortgage processors and underwriters are only able to close 10-15 mortgages per full-time employee per month.
    • Excessive Back-and-Forth: There are typically 3-5 back-and-forth communications between lenders and brokers, with 2-5 underwriter touches per file.
    • Declining Customer Satisfaction: Net Promoter Scores (NPS) for mortgage customers at banks and fintech range from 20 to 40 points, well below the 20 to 70 points seen in best-in-class industries.

Delays in underwriting decisions and loan reschedules are only serving to compound the customer satisfaction woes. Adding to this, is the persistent challenge of meeting turn times on rush orders. A task that has become increasingly difficult due to the fragmented and manual nature of the mortgage process.

Underlying all these challenges is the issue of inconsistent and incomplete information from applicants. This lack of reliable data makes it exceedingly difficult for lenders to make well-informed decisions, further slowing down the mortgage approval process and increasing the risk of errors.

Digitization and Automation with Coforge

In response to these pressing challenges, Coforge have developed a solution that aims to tackle the issue at large in the UK mortgage market. At the heart of this innovation is the digitization of the document intake process, which allows for electronic submission and processing of documents, reducing manual work and errors.

The solution leverages advanced AI and ML technologies to classify and extract data from mortgage documents, ensuring accuracy and completeness. This data is then validated against external sources, maintaining the integrity of the mortgage approval process.

To address the exceptions and anomalies that inevitably arise, the solution employs a Human-in-the-Loop (HITL) approach. This ensures that any issues are promptly addressed by human experts, maintaining a high level of accuracy and reliability.

Furthermore, the solution automates pre-underwriting tasks, significantly reducing the time required to prepare a complete and validated file for the underwriter. This automation streamlines the overall mortgage approval process, delivering tangible benefits to all stakeholders.

Streamlining the Mortgage Process

The primary objective of the solution addresses two critical pain points in the mortgage industry:

    • Reduce Time Taken and Back-and-Forth
    • Ensure Complete and Validated Files

By focusing on these key areas, the solution aims to enhance the efficiency and effectiveness of the mortgage approval process, benefiting both lenders and borrowers.

This offers a range of tangible benefits that have the potential to transform the operations of UK mortgage market:

  1. Cost Reduction: 30% reduction in the cost of origination has eased the financial burden on both lenders and borrowers.
  2. Time Efficiency: 40% decrease in time to fund has significantly improved the speed and responsiveness of the mortgage approval process.
  3. Increased Productivity: The enhanced productivity of mortgage processors and underwriters due to automation has enabled lenders to handle a larger volume with minimal additional costs.
  4. Improved Customer Satisfaction: The streamlined process and reduced delays have led to a notable improvement in customer satisfaction, as reflected in the higher NPS scores.
  5. Scalability: Automation has made it a scalable and adaptable solution for the evolving mortgage market while not worrying about staffing issues.
  6. Enhanced Compliance Accuracy: Improved compliance accuracy and reduced operating costs are achieved through timely submission of reports and implementation of audit controls, ensuring lenders remain compliant with regulatory requirements.

A New Era for the UK Mortgage Market

The solution addresses critical challenges in the UK mortgage market by leveraging advanced AI and ML technologies to digitize and streamline the mortgage process. The result is a transformative shift towards a more efficient, reliable, and customer-centric mortgage experience.

As the industry continues to evolve, these innovations will play a crucial role in shaping the future of the UK mortgage market. By adapting to these changes, lenders and borrowers alike can navigate the complexities of the mortgage landscape with confidence and ease, inviting the age of automation in our domain.

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