In an effort to cut costs, banks have actually reduced efficiencies and created more headaches for brokers and their customers.
As a former Mortgage Choice franchise employee, Ruth Hatherley witnessed first-hand how frustrating it can be to deal with banks that have outsourced their mortgage processes through a service-level agreement (SLA).
Speaking to The Adviser, Ms Hatherley said that she can understand the logic of banks wanting to outsource parts of the mortgage value chain overseas. However, the fintech founder questioned whether any benefits were flowing through to customers and brokers.
“It creates SLAs on top of SLAs,” she said. “When I was working with Mortgage Choice, we had one SLA from an institution based on their time frames because they controlled every part of the process.
“Every single time that they outsourced a segment of that process, they negotiated an SLA with that third party. So, we’ve got an SLA with a lender that is then dependent upon an SLA that they have with a third party. And of course, if they blow out, that has a knock-on effect for the rest of the value chain.”
Through her new blockchain-based platform, Homechain, Ms Hatherley is now looking to disintermediate this process.
“I want as much of the process as possible to stay inside the workflow in one platform. That way, the end user — the consumer — is not impacted by several different parts of the process being governed by different SLAs.”
The new technology aims to provide an “ecosystem solution” to a problem that is costing lenders thousands of dollars for each mortgage transaction.
“To be quite honest, when I ask a lot of institutions what is the cost of getting an application from submission to settlement, they don’t know the answer to that,” Ms Hatherley said.
“We have done some independent research ourselves and most institutions spend around $2,200 to $2,500 per application, taking it from submission right through to settlement. Overseas, I have seen quotes of up to $3,200 per application.”
Lenders including HSBC Australia are already trialling the Homechain system, which can retrieve and verify data via API calls to data providers (such as land agencies or government bodies) and effectively move on to the next stage of the application within minutes.