Modern Lender sits down with Claire Van der Zant, CEO of Novus Strategy, to find out what’s in store for lenders as homebuying enters the second phase of digital transformation.
- So Claire, it’s clear that buying a home with a mortgage isn’t quick or easy. What’s going wrong?
How long have you got!
I can answer this from two perspectives at the moment — as a consultant and a consumer — because I'm buying and selling a home right now.
The market is digitally mature but, for all the technology, nothing is joined up. Every business in my transaction has multiple platforms and tools, all overlapping, none of them talking to each other, all telling me a different story. As a result, I’m repeating tasks constantly. It's overwhelming, and nearly all consumers going through this process share this sense of acute frustration.
At the root of all this is a huge amount of complexity and it’s too easy to just blame poor technology. In most cases, they’re just not configured to solve the ultimate goals of the consumer in a joined up way. This is why time to exchange is still getting longer and currently sits at 135 days, up from 93 days in 2019.
- So why is that happening and why does it matter to lenders?
There’s so much duplication, it’s unreal.
I’m currently logged into seven platforms, engaged in several WhatsApp groups and email chains, and have to use three more apps for verification that are all doing the same thing. None of the platforms talk to one another, none of the platforms tell me the same story, and some of the platforms overlap even within the different businesses.
So externally it all feels very fragmented and that’s reflected internally too, where there’s a real need for simplification and reconfiguration. When we talk about lenders needing to redesign the customer journey, it is likewise both an internal and external effort. Efficiencies must be won in collaboration with other parties like brokers, agents and conveyancers. And it’s not like they each take their turn and disappear. They all need to feed in at different times, and it all needs to happen in a particular order. You don’t get your mortgage offer before you’ve proved your identity for example. Nor do you get your funds before you’ve exchanged contracts.
So your house and your transaction becomes this football that gets kicked around dozens of different people. They all might have good systems internally but when it comes to talking to one of these other crucial businesses, they’re not set up for that and everything slows right down. Add in identity verification, KYC and more burdensome regulations, and it’s a recipe for delay and added expense.
This stretches out transaction times and increases the chances of fall-throughs and mortgage cancellations. This is where lenders suffer. They commit a lot of capital that ends up going nowhere for months, if ever.
- So what should lenders be doing?
Innovating, experimenting and getting their data ready for everyone else.
What I mean by that is, there’s a groundswell of activity among different types of organisations across the private and public sector at the moment all trying to solve these problems. Their systems are finally becoming more interoperable and the Government’s introduction of Smart Data is going to be really powerful, but all this will have limited value to lenders if they don’t reconfigure how they operate first. Smart Data without a way to enable it to flow across the entire transaction is just a fancier form of data. It might provide small incremental improvements internally, but no silver bullet on tackling the real outcomes that lenders are striving towards in the pursuit of growth.
When leveraged correctly, suddenly data, decisions and permissions are unblocked and can travel wherever they need to, in order to make the whole transaction painless for everyone. Simplification creates value internally, and externally progress starts to yield reduced fall-throughs, faster completions, better capital velocity and more predictable pipelines.
Experimenting doesn’t have to be risky. Lenders can simulate reconfiguration of the mortgage journey so they understand the impact of different changes before setting them live. The old approach of ‘analyse, recommend, then decide’ is a bit antiquated now, as it’s less accurate and takes too long.
Lenders are also using AI to increase efficiency but they need structured data otherwise none of this will work. Structured data is part of the framework that makes it possible for trusted information and decisions to move across organisational boundaries. We call this framework Horizontal Digital Integration (HDI) and it’s what connects individual pieces of infrastructure into a coherent whole, where data and evidence flow end-to-end.
- We haven’t heard much about you yet. Tell us a little bit about yourself and how Novus Strategy helps lenders?
I’ve had a pretty varied career actually. I most recently specialised in payments and fintech but I’ve also worked in retail, travel and the creative industry. I’m glad I’ve seen the inside of businesses from all these different angles. I think it helps.
As for Novus, we essentially help lenders get ship shape by reconfiguring them internally and externally. This revolution is coming and you’ve got this collision of innovation, Smart Data, AI and HDI, and none of these things come down to simply ‘buying a platform’ off the shelf. There’s a lot of work involved behind the scenes in ensuring a lender is ready to take full advantage of HDI, and being part of it all will eventually be table stakes. No lender will be able to bridge the improvement to Net Interest Margins, underwriting efficiency and speed-to-offer or exchange by any other means. It is HDI that’s the foundation of effective AI deployment too, and we also help lenders design for their AI capability. What HDI and AI should be unlocking now is minimising the manual lift internally as a foundation for scaling operations in a highly cost-effective way. What it could be doing in the future is enabling an agentic operating system beyond your own organisation to underpin transaction interoperability.
- And lastly, what’s the one trap you’d urge lenders to avoid this year?
Start early and realise you might have to adjust your preconceptions of what digital transformation means today. Trap is an interesting way of asking the question, because we refer to the current state as the vertical trap.
In the past, it was all about going digital and optimising individual processes. Now it’s not about the tools specifically, it’s about how lenders reconfigure tools and processes to redesign the mortgage journey for interoperability. So don’t misunderstand what the next phase of transformation looks like. You’re not going to be able to sit back, let others take the lead and then just buy a piece of software.
So you need a completely new outlook and I know there will be some people out there who’ve heard promises of digital transformation before and will be tempted to wait and see what happens. I entirely get it. But for evidence that this is now really gathering pace, you just need to look at the way several Government departments, the Land Registry, the planning system, and now the FCA’s Open Finance Roadmap are all making tangible progress simultaneously towards Smart Data, standards and trust frameworks. This year, we’re expecting to see reforms from Whitehall to improve transaction speed, transparency and reduce fall-throughs. That tells you something.
