Revolutionizing the UK Digital Mortgage Market

uk digital mortgage marketplace

There are multiple fintech lenders and marketplaces in the UK dealing in mortgages and other financial products. What sets Nuvo apart is it’s claim to be the first artificial intelligence (AI)-powered digital broker. Launched by Nick Sherratt (heads oversees operations and finance) and Richard Hayes (CEO) 18 months ago, Nuvo fills the gap between traditional […]

uk digital mortgage marketplace

There are multiple fintech lenders and marketplaces in the UK dealing in mortgages and other financial products. What sets Nuvo apart is it’s claim to be the first artificial intelligence (AI)-powered digital broker.

Launched by Nick Sherratt (heads oversees operations and finance) and Richard Hayes (CEO) 18 months ago, Nuvo fills the gap between traditional brokers and established price comparison websites. They had been running their own mortgage brokerage in Macclesfield, Cheshire for a decade, also selling life insurance and income protection. Their experience as a traditional broker helped them understand what was missing in the market. As a result, they’ve made it easier for customers to access the best mortgage offers in less than a minute, once they’ve gained some basic information from the user.

Now Nuvo Works

The focus was on user accessibility and speed of providing quotes. But the platform’s USP is its AI-powered chatbot technology, which helps users chat in real time and suggests the best mortgage products suited to their finances. The platform was established with 1 million GBP in a seed round, and it recently raised 1 million GBP in a second round of funding.

Historically, if a customer wanted advice on mortgages, he would rush toward a broker or any other independent financial advisor and, in turn, the advisor charged a fees for their advice. However, recent research conducted by Nuvo revealed that nearly 40% of Britons rely on their own research once they get a list of prices from comparison websites. But the problem is most comparison sites don’t give the full picture and can’t answer queries accurately. This passive information overload did not really solve the user problem. Thus, Nuvo was born of the need to marry the traditional mortgage broker experience with the convenient of free comparison websites.

Nuvo has digitalized large parts of the mortgage application process through incorporating real-time sourcing. With an emphasis on transparency, customers can put their queries online with the help of a laptop or other mobile device and get an instant response. Instead of collecting data from the customer through a lengthy form, Nuvo provides a platform that allows the customer to provide details to a chatbot. Customers can also opt to chat with a qualified human financial advisor via the website or by booking a telephonic interview. It means the process is a two-way process, so the customer can ask specific questions at any point if there is something they do not understand.

What Artificial Intelligence Brings to the Table

Artificial intelligence and machine learning add substantial value by bridging the data, information, and context gap so that the virtual assistant and its human counterparts can deliver a seamless customer experience. If the platform lacks data, or the customer provides insufficient data, then it implements sentiment analysis to ascertain intent. Sentiment analysis identifies the customer attitude, emotions, and opinions. If the platform feels like customers are unhappy and/or confused, they can quickly add it to their processing and allow the virtual assistant to interact without sacrificing user experience. There is no need on the part of the customer to wait for a response if the virtual assistant is unable to answer a complex question. Nuvo removes the uncertainty and interjects with a human being.

The first version of the product launched was a Facebook chatbot with some basic functionality that helped people find the best deals on mortgages. Soon, Nuvo will launch the new version integrated on their site with a state-of-the-art user interface, better communication technology, and a next-gen interaction process. Nuvo utilizes its access to endpoints for a better user experience. It also ensures that APIs match the products the platform is offering to users.

The platform launched after the review by UK’s regulator, The Competition and Market Authority (CMA), which recommended that customers use a variety of sites for comparing the best deals. But there are no other companies giving real insight into the market and products.

The UK Mortgage Market Has Not Caught Up With Technology

Most digital brokers are startups and not evolved from traditional brokers. Products and prices are changing constantly. Nuvo allows customer to find the most suitable offer by updating information on a daily basis. Customers can see and compare all the options to make sure they are getting the best deal, eliminating the need for a traditional broker. Also, the founders’ traditional brokers’ practice became a competitive advantage for Nuvo as it enables the company to combine domain expertise and knowledge in their aim to better serve customers.

The UK is one of the largest marketplaces for mortgage deals. Habito and Trussle are other startups aiming for a slice of UK’s lucrative mortgage market. But Nuvo is in for the long haul and believes it can achieve a market share of 5%-10% of the online mortgage market in the next five years.

According to Nuvo founders, they have 10,000 more deals on their platform than Habito at this moment. There is an in-house team of financial experts that assist the customer in solving complicated financial decisions at zero cost. Nuvo does not charge fees to customers like traditional brokers. Instead, they get a commission from the insurer or the mortgage provider.

Founder Richard Hayes said, “Millennials are now willing to transact digitally, so we have an opportunity to resonate with anyone who is willing to engage digitally.”

So far, the mortgage sector has not been able to innovate to meet the demands of customers, but Nuvo, with its AI-powered chatbot, is attempting to simplify the on-boarding process. They are also focused on first-time buyers to build trust and confidence in the mortgage ecosystem.

A major tailwind for digital brokers is the slow but steady death of brick-and-mortar mortgage advisors. In 1985, there were over 120k independent financial advisors in the mortgage space, but now it’s under 20k. Correspondingly, there has been a massive increase in people seeking mortgages. This suggests that the market is consolidating and scale will be an important element in winning the sweepstakes.

How Nuvo is Capturing the Future Digital Mortgage Market

“2018 will see a full mortgage journey on our platform,” Hayes said. Nuvo is incorporating new features to speed up the application process and using APIs to enhance the customer experience at large. “We all know that buying a house is a costly and long process.” Thus, the platform assimilates all the information about property such as value, construction details, and more, from different sources to help the customer get the best mortgage deal and insights about the property itself.

The platform is focused on its journey to help borrowers find the best mortgage and other financial products. It is looking to raise further funding to grow aggressively in this massive market space with its proprietary AI technology.

Author:

Written by Heena Dhir.

Mortgage Data Asset Verification

mortgage data asset verification

Modernizing banking infrastructure is no easy task, but one company has found an easy way to make it happen using the latest development techniques and tools. Borrowers expect easy-to-use solutions in this era of digitalization, but to deliver inclusive lending solutions for a broader set of borrowers, it’s very important to use data that is […]

mortgage data asset verification

Modernizing banking infrastructure is no easy task, but one company has found an easy way to make it happen using the latest development techniques and tools. Borrowers expect easy-to-use solutions in this era of digitalization, but to deliver inclusive lending solutions for a broader set of borrowers, it’s very important to use data that is reliable and timely. That’s where a technologically-based solution optimized for user experience comes in. Plaid gives traditional top-notch institutions a competitive advantage by giving them access to the latest technological advancements.

About Plaid

Plaid was co-founded by Zachary Perret and William Hockey, ambitious innovators who felt that something had to be done to make financial transactions simpler and quicker, in 2012. They developed Plaid into a platform whose suite of APIs can absorb huge volumes of unstructured data and transform it into something usable.

Based in San Francisco, Plaid acts as a bridge between users’ bank accounts, banks, and third-party applications. Initially, Plaid aimed at helping borrowers access necessary information that would help them determine the right lending institution based on their qualifications and the lending institution’s requirements. The platform made borrowing easy and fast since all information was processed in real time. However, with time, Plaid started getting attention from other financial industry players, including mortgage providers, that needed real-time data verification.

To date, Plaid has raised $60 million. The latest funding round, a Series B, pulled in $44 million led by Goldman Sachs. That was in the spring 2016.

Partnership with Fannie Mae

Recently, Plaid partnered with Fannie Mae to help automate asset verification, which has been a time-consuming and tedious step in the mortgage lending process. In collaboration with Fannie Mae’s validation service, Plaid will offer a quick, simple, and more reliable way for mortgage providers to vouch and verify borrowers’ assets.

This partnership will allow Fannie Mae’s lenders access to borrowers’ financial information directly and in real time through the Plaid platform. The integration will eliminate the manual document collection and review steps from the mortgage lending process. The collaboration will also alleviate risk through Fannie Mae’s Day1 Certainty program.

According to Kate Adamson, the head of the mortgage department at Plaid, the introduction of automated asset verification in the mortgage process is a huge step from what was traditionally handled through enormous paperwork. She said Plaid are excited to have finally simplified and streamlined the mortgage application process. “Working with Fannie Mae to smooth the mortgage application process is a great example of Plaid’s mission in innovating and simplifying how consumers experience financial services,’’ she said.

Mortgage processing is one of the major components of fintech but has not yet been fully exploited. The founders of Plaid have a broader mission whereby they want to change how consumers experience financial services by using new technology to shift focus from compliance optimization to consumer operations and user experience optimization.

The Plaid platform differs from other platforms in that it focuses on helping lenders from relying on banks solely to gather and verify information. Foundations such as Freddie Mac and Fannie Mae always have to verify assets in the process of buying mortgages. Normally, the verification process involves the submission of bank statements for every account a borrower has, and in cases where there are more than one party involved, all parties must submit bank statements. The process takes from hours to a couple of days, but Plaid has reduced it to mere seconds.

To eliminate the process of uploading and downloading statements, Plaid has synced all necessary information by building relationships with over 10,000 financial institutions thus helping borrowers verify their information within seconds.

Advantages of using APIs for data verification

  • Standardized data: The relationship with over 10,000 institutions helps lenders to get standardized data that is complete and accurate. Data retrieved through APIs is also authentic and reduced the rate of fraud.
  • Automation: Since all data is synched with the platform, the process of retrieving and verifying data is automated reducing processing time. Automation also helps to reduce paperwork, which is costly in both effort and time.
  • High document integrity: Data retrieved through APIs is acquired from the source and can thereforebe trusted. Every institution wants to make decisions using updated and accurate data, which has been made possible through APIs in real-time.
  • Conversion: Initially, mortgage processing took days and was also a tiring factor that made many potential customers abandon the process in the middle. Now, the application process requires minimal effort, which leads to an increase in conversion rate.

Plaid’s key differentiators

  • An all-purpose enterprise: Most companies are dedicated to mortgage asset verification only, but Plaid is different since it offers cross-industry asset verification to ensure optimal consumer experience and satisfaction.
  • The unique drop-in module: The Plaid Link feature has boosted customer experience in many ways including ease of use, a factor that has led to the attraction of a huge number of consumers to the platform and increased conversion rate.
  • Ease of integration: Plaid is designed for developers, which makes it user-friendly. Developers can easily get started and integrate their applications without any trouble.
  • Quality integration: Having built relationships with over 10,000 banks, the quality of data processed through the platform can be deemed high quality regarding completeness and accuracy as it is updated real time.

The Future of Plaid

The company has started seeing overwhelming results with an increase in conversion rate for mortgage applications, more banks integrating with the platform, and other financial institutions planning to launch with them soon. The enterprise is also improving the technology front end and back end to facilitate efficiency from an operational point of view. Plaid is streamlining and tokenizing data as well as increasing resources, to include human resources, to sustain growth, improve efficiency, and meet market demand. The main aim of the platform is to improve customer experience by making all operations as simple and fast as possible.

Authors:

Written with Ibrahim Kihugu.

Allen Taylor