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The prevailing winds point to a strong year for the UK’s credit finance brokers in 2016. For example, in the secured loans market ‘completions’ rose by a whopping nine per cent in quarter three of 2015. However, despite this buoyant outlook most know that it isn’t going to be plain sailing all the way.
In part, this soaring growth is down to a sustained rise in consumer confidence, which looks set to continue this year with secured lending now a third higher than it was just two years ago. The recent threat of regulation change has also injected new urgency into the market. The Financial Conduct Authority recently suggested that from March this year brokers that don’t offer both first and second charge mortgages will lose the ability to call themselves ‘independent’. This news has quickened the step of many, who rightly fear a resultant dip would send their business into the doldrums by the end of quarter one.
The operational impact of these conditions is twofold:
Firstly - many brokers are working hard and fast to expand their product portfolios in order to accommodate both first and second charge products. If they succeed before the March deadline they can continue to do business ‘as is’ with no problems.
Secondly - those that don’t intend on doing this (or are unable to do so in the time available), however, will be focused on streamlining their processes and raising the efficiency of their operations in a bid to offset the impact.
In both scenarios new technology platforms have been purpose-built to help.
Brokers that are rapidly expanding their product portfolios are throwing up a huge challenge to advisors, upon whose portfolio knowledge rests the long-term success of the firm. What use is a comprehensive product portfolio if your advisors can’t judge what they should be recommending to whom?
Fortunately, automated cloud-based software platforms can now enable brokers to compare an applicant’s lending profile to their firm’s entire portfolio of available products - something that, until now, has been practically impossible for brokers to achieve.
This enables brokers to validate the credit-worthiness of their clients and match them with the best available products almost instantaneously, regardless of how large the portfolio is or how quickly it has expanded. The same systems are enabling those brokers focusing on driving efficiency gains ahead of March to also make huge strides operationally.
By automating a huge proportion of conventionally manual, often paper-based work that brokers need to do during the applications process, they are instead able to focus their attention on higher-value work. ‘Black and white’ applications flow automatically through the system, meaning that brokers need only spend their time negotiating those that require specialist intervention and case-by-case communication with the lender.
For too long the performance of large brokers has been bogged down by paperwork and limited by the knowledge of their individual advisors.
In 2016 the smart brokers in the market will start to see the prevailing wind of new technologies filling their sails in a rising market and tack their operations to the changing regulatory environment. It will be fascinating to watch this market develop as the year rolls on.