Using AI to take the direct approach in mortgage lending

Maintaining a human touch with consumers while automating to aid expansion has been a constant challenge for businesses. But artificial intelligence is starting to bridge the gap between these twin goals.
This article explores how Bath Building Society has partnered with fintech Festina Finance to use AI to transform its direct mortgage lending proposition.

For centuries building societies have helped generations on to the housing ladder, providing the financial means to make their property-owning dreams a reality.

A key hallmark of the approach societies take to their mortgage customers is to treat them as individuals, not just figures on a spreadsheet. We all have specific needs, requirements and quirks which cannot be easily catered to with a blanket approach. Maintaining this essential human touch can be a challenge when it comes to automation.

The history of automation in all industries as firms have looked to scale up their systems and processes has been to do the exact opposite.
The holy grail for businesses has long been systems that can automate to allow firms to expand but use data to maintain that human touch to focus on the individual needs of customers.

 

AI applied to mortgage lending
Artificial intelligence and data science are starting to transform how firms engage with customers and achieve these two goals.
In the UK, Festina has been working with both Bath Building Society and Hinckley & Rugby Building Society to use artificial intelligence to help both firms transform their mortgage lending.

Hinckley & Rugby has been working with Festina since 2018 and its chief customer officer Dean Waddingham says the firm has consistently addressed complex problems other firms have struggled with to promised timelines.

“We anticipate that our use of the significant capabilities of Festina’s Advisor solution will, over time, provide even greater benefits to our mortgage process and our borrowing members, with its development being accelerated and enhanced by the added contribution of Bath Building Society and ideally others from within the Building Society sector,” Waddingham adds.

Kevin Gray, CEO at Bath Building Society, says a lack of a good front end sales system for direct mortgages sales had been a barrier to growth for the society in the past.

“This was all proving to be both inefficient and frustrating and we therefore had a clear need to do something to improve this position," Gray says

 

At the BSA’s 2019 Annual Conference, Festina demonstrated how its system could be applied to help improve Bath’s direct mortgage lending process, a visit to Hinckley & Rugby further proved that the solution was the right decision, and a contract was signed December 2019.

Dean Waddingham, chief customer officer at Hinckley & Rugby Building Society, says

“One of the key elements for success has been that the team at Festina have been excellent to work with over more than two years, consistently addressing complex problems that others have struggled with very effectively, and to the timelines promised.”

 

The Festina Finance approach
The key behind Festina’s approach to AI has been to see it as a complementary tool when designing a business process and customer journey. The software collects information about the customer's financial situation and asks relevant questions on their views and understanding of mortgages and the overall economic outlook. Mikael Braagaard, CEO at Festina Finance, says:

“We see that the close dialogue between the industry and our software developers leads to state-of-the-art solutions in benefit for the advisors and the end-customers”.

For Bath Building Society, the system has helped them become more flexible when it comes to dealing with customers, compliance and boosting productivity, the solution was put into production summer 2020.

"The time taken to process an application has also been significantly reduced which will greatly enhance the productivity of our direct sales team and improve the customer experience at the same time” says Gray