The Data Solution

Knowledge is power – that’s how the old adage goes. The more knowledge we have, the more we can do. It’s this philosophy that had NextGen.Net – the company that owns loan processing platform ApplyOnline and open banking company Frollo – look at harnessing the information it receives through its system to provide more knowledge for lenders and broking groups on the turnaround issue. 

Back in November 2020, there was a record $23.96 billion of new home loan commitments set – and turnarounds at many of the largest lenders, which were already under stress due to record levels of refinancing and construction loan demand (fueled by HomeBuilder and First Home Loan Guarantee) expanded out further. 

In order to help identify a solution, the mortgage lending technology provider announced in December 2020 that it had launched an Industry Benchmark Reporting offering for lenders to help them “prioritise and facilitate change, and assess if additional or more advanced digital solutions are required”. 

NextGen.Net started providing benchmark reports for their lender customers to help them understand their positioning in the market.

Covering both lender-service and product-related benchmarks, the initiative aimed to provide lenders with valuable insights into their loan approval process, showcase what a marketleading experience looks like and highlight the opportunities for efficiency and customer service enhancements.

Speaking to The Adviser, NextGen.Net’s chief customer officer, Tony Carn, explains: “Benchmark reporting enables both lenders and broker groups to identify and prioritise the change required to positively affect their turnaround time and determine what changes they can implement to deliver better efficiencies”.

He reveals that the benchmark reporting shows, in the most recent months, the average time to unconditional approval has been around 20 days – but the best in market were much lower.

According to Mr Carn, generally, the lenders who were utilising the benchmark reporting have been able to deliver really positive improvements in their turnaround times.

Identifying the stumbling blocks in STP

As well as benchmark reporting, NextGen.Net is also now providing straight-through process (STP) reporting so that lenders can analyse “where they can implement further changes to improve their STP rates”.

He explains: “For example, they might see that average turnarounds for owner occupiers are eight days, but for loans where there is straight-through processing, that might be only two or three business days.

“So, if they are able to identify that, they can work to drive quality from point of sale and – in combination with automation of processes and credit policy – it’s not a huge bridge to cross to get those numbers right down for the loans that fit those categories.

“Some lenders have been very focused on understanding the numbers and investing in empowering brokers to have quality at the point of sale. That’s because they’re understanding where the breakdowns in straight through processing are occurring, what the rework types are, and then – importantly – actually taking action on it,” he says.

As an example, NextGen.Net’s chief customer officer said that a large proportion of the delays in turnarounds were due to requests for more information, with approximately 10 per cent of those relating to unsigned documents.

As such, lenders were able to identify that this was an issue that could be easily fixed, by enabling the broker and the customer to e-sign documents.

“Other delays come in waiting for valuations, so there are some lenders who have identified that and embedded the ordering of valuations into the loan application process,” he continues.

“So, those who are verifying identity documents digitally, that are allowing the e-signatures, that are ordering valuations in the loan process…. If you put those factors on top of one another, it is quite achievable to see those times coming well and truly down. Two to three days is quite achievable,” he tells The Adviser.

“But there’s still a lot of opportunity out there to drive better automation in the application processing,” he continues.

Indeed, according to Mr Carn, a large proportion of the delays caused in processing relate to the transmission and receipt of supporting documents, revealing that while brokers using ApplyOnline may be uploading all the documents, these are sometimes being delivered to “30-year-old green screen platforms” that cannot digest or leverage that information.

“We have an increasing number of lenders who are actually utilizing ApplyOnline to actually receive, view, verify documents, and ask for more information quickly and seamlessly. Because they’re finding that it is an issue with their technology that is causing the delay,” he explains.

We have also been able to highlight that many lenders have an inability to triage loan applications for assessment. As a result, complex and simple loans are travelling along the same approval conveyor belt. Anyone can process a simple vanilla home loan in next to no time, as long as your credit policy is geared to empower your process.”

More power to the aggregators

To further enable the industry to reduce turnaround delays and identify where any roadblocks may be, NextGen.Net is now moving to offer aggregators similar reporting data, so they can identify best practice and identify if there are any issues that can be improved on their end.

Mr Carn says: “This data will let them see how individual brokers are against the market, and breaking that down into different geographic areas, different loan types etc.”

“It’s a really powerful tool for broking groups to be able to identify what the best practice is and identify the secret herbs and spices for those brokers who get it right all the time.”

“It’s all about the data, and it’s all about understanding what good and bad looks like and actually investing in the automation of platforms to help get that quality upfront and enabling better process automation into their loan origination platforms.”

Mr Carn concludes: “The data that we can see shows that when everyone works together, turnaround times can be improved. Being able to identify pain points is the key to start that prioritisation of change management required, and that comes from the lender position and from an aggregator position.”

“If you can see where best practice is, and emulate that, that’s how you reduce your turnaround time.”

NextGen have been setting the standard for loan processing, from application to settlement, for over a decade. We've...

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Written by Tony Carn - Chief Customer Officer - NextGen.Net

Last Updated: 16 March 2022

Published: 18 June 2021