Nivo launches Second Charge Lenders Technology Steering Committee

17 June 2020

New industry group aims to grow Second Charge market through lender and broker fintech collaboration

Nivo has formed a Technology Steering Committee bringing together most of the biggest lenders in the Second Charge market, to regularly research and discuss ways in which technology can help make things easier for consumer and brokers, and to drive up conversion in the Second Charge sector.

The inaugural meeting, hosted by Nivo's Chief Development Officer Mat Elliott, took place via Zoom with industry leaders from lenders including United Trust Bank, Together, Optimum Credit, Paragon, Norton Finance, Shawbrook Bank, Central Trust, Equifinance, Step One Finance, 1st Stop Home Loans and Selina Finance joining to launch the group and discuss the findings of Nivo's initial market research.

The group has been established to prioritise key areas for further improvement, with Nivo driving more in-depth research, and investing in technology enhancements as steered by Steering Committee participants.

The key themes discussed

The consensus of the research was that the market would take 12-18 months to recover to Pre-Covid-19 activity level, while one positive raised was the acceleration of digital adoption across the industry.

The need to improve deal speed and simplify the customer experience was raised by all attendees as the main benefit that technology can deliver. It was also seen as the greatest driver of market growth in an industry where slower deal times increase the risk of drop-outs. Given the high drop-out rate and effort involved through the course of a loan, conversion rates are highly sensitive to incremental reductions in customer effort and deal time, so digitisation can make a big difference even when only applied at certain points of the customer journey.

Although reducing costs and improving efficiency was an important goal, the majority of lenders were most focused on increasing awareness and driving growth in the market.

Based on pre-C19 volumes, Nivo’s research estimates that driving 10% growth in the sector would be worth an additional £40M of income to lenders and brokers, so the Steering Committee homed in on how technology can be used to achieve this.

Staying up to date with the latest technology as new solutions and technology evolves was also seen as a significant challenge to the industry and there was discussion around the benefits, and considerations of consuming Software as a Service (SaaS) to reduce the risk of in house technology development.

Next meeting and next steps

The key takeaway from the meeting was the need for collaboration to improve customer experience and broker productivity, with the outcome of increasing deal speed. The following three areas were identified as priority focus areas, and Nivo will be examining them with an immediate focus on improving broker <> lender engagement. The group agreed to form a sub-working group of lenders to focus on more detailed research into the problems, opportunities, and solutions.

• Improving broker <> lender engagement - especially around reducing the effort of the back and forth communication and increasing clarity of what lenders need from brokers
• Land-registry E-signing – was acknowledged as a good initiative to pursue for both purposes of cost reduction and reducing deal time
• Income verification – Some believe that raw open banking data may not be immediately helpful and there was constructive debate around the extent to which income verification could be helpful - Nivo plan to shape some concept thinking for further discussion.

Mat Elliott, Chief Development Officer at Nivo, commented: “There’s a real opportunity for technology to help drive the recovery in the Second Charge market. We are proud of the results that we’ve proven so far by focusing on making things easier for customers and brokers, and we see so much potential to make things better. We have Board support to invest further in solving a next set of problems specifically for this industry and are focused on working closely with lenders to ensure that the technology we deliver is shaped from the ground up with their input.

I’m delighted that most of the biggest players in Second Charge lending have agreed to work together with their peers and competitors to discuss and help develop FinTech solutions to benefit the industry. The future of the Second Charge market will be shaped by forward thinking companies and individuals who understand that being better connected is the route to a bigger, more successful industry.”

Buster Tolfree, Commercial Director – Mortgages, United Trust Bank commented: “I’m very happy to be a part of this group as, like Nivo and many of my contemporaries, I believe technology will play a vital role in developing the Second Charge market. Bringing lenders together to discuss common challenges and explore fintech solutions is an excellent initiative and Nivo’s expertise in this field put them in a perfect position to facilitate discussion, gather research and accelerate innovation. I’m confident that working collaboratively on FinTech will keep the industry moving forward and ultimately will benefit all participants.”

Claire Rankin, Commercial Director, Shawbrook Bank commented: “If the recent challenges have taught us anything, it’s that the need for an open dialogue between lenders and brokers is paramount. The Steering Committee provided the ideal forum to discuss common challenges faced in the market and across the industry, with a view to shaping solutions that make life easier for brokers and customers.

This was particularly timely for Shawbrook as we are making a significant investment into digital transformation to ensure we build a seamless broker journey. Along with facilitating a simple and transparent way for a broker to collect supporting information from clients, this should serve as your prime directive, and we see Nivo as a key enabler on that front.”