A ‘computer says yes’ approach to automation in the seconds market

By James Rainbird

January 14, 2022

When it comes to the use of technology and automation, it’s fair to say that the second-charge market hasn’t exactly led the way historically.

Indeed, advisers who might be used to the super-slick systems they have access to in their first-charge environment, might think they have stepped back in time when it comes to some of what is available tech-wise in our space. Or rather, not available.

That, in itself, can be an issue because we want to be encouraging advisers into being active in the seconds market, and quicker turn-around times, a ‘computer says yes’ approach, use of automated valuations/e-signatures, etc, is undoubtedly going to help in that regard.

Some might argue that the seconds market doesn’t require the type of automation or greater use of technology that advisers seem to get as a matter of course in the first-charge market. I disagree wholeheartedly. In fact, if you were looking for a growing theme within seconds it is the different approach some lenders are taking to technology, and I will go on the record right now, and say those who take it seriously are undoubtedly winning the race.

The ability for us as a packager to be able to turn cases round in days rather than weeks is a real determining factor when it comes to placing business with a lender. Take Selina Finance, for example, as one lender that has an incredibly slick, automated system, who look and use AVMs, who don’t require wet signatures, who offer automatic paperwork, etc.

Is it any wonder that we as a packager are going to be drawn to such lenders? Increasingly we are being asked by some lender representatives why they aren’t securing the business in the same levels as previously? We tend to point out that they have no system to speak of, we still have to fill out paperwork manually, and that all takes time/energy/resource, and results in a waiting time that clients are not willing to accept.

We’ve just begun working with another lender, Scroll, who – judging by their platform and system – are working on the same lines as Selina. There is a comparable slickness and speed built in, a clear willingness to let the tech take away a lot of the heavy-lifting for all concerned, and an acknowledgment that packaging partners want this and it makes a clear difference to our proposition.
It’s always been the case that we want to work with lenders who feel the same way about tech as we do. For a start, with the systems we have it makes it far easier to plug into the platforms and systems that the likes of Selina and Scroll have, and to start looking at where its products and criteria fit for the clients we have. It means we can drop our processing and completion times down to, in some cases, days instead of weeks, and it means we can provide certainty and confidence to advisers/clients because they are not having to wait on tenterhooks to see if they can get the finance they need and when it might be in their hands.

The tech tide is undoubtedly turning here and those lenders who are effectively operating as second-charge luddites are going to find themselves losing more and more business to those who recognise the benefits they can provide to all their stakeholders. In that sense, existing lenders are going to have to improve their tech/system offering, otherwise they will be joining the number who keep asking us why they’re not getting the business.

In some cases, it will take a fundamental shift, and a significant amount of investment and resource to get up to speed; for others, it will mean a greater commitment to what they half-offer already. The point is that they are still some way behind the tech market leaders, and as we know, this is an area of the market which doesn’t stand still and requires constant attention.

As a packager, of course we’ll always offer best advice right across the piece and we’ll work with the systems and processes of all lenders to the benefit of clients who qualify for those products. However, a quality system and better use of technology can only help us deliver in that area and deliver better client outcomes. That has to be a result worth pursuing and we would therefore encourage all lenders to do just that.