Our Associate Partner, Tim Hague of Sagis shares his views on how the lending industry has changed over the past 12 months.
As we continue to negotiate Q1 in a continuing lockdown it is a period of multiple challenges – the need to keep the wheels turning, reflecting on the changes implemented in the height of the storm, working through what we need to finesse with the benefit of hindsight (and actual operational performance), and, trickiest of all, planning for the new challenges that continue to emerge.
The response from lenders during Lockdown 1 was huge. Staff were issued laptops, networks were strengthened to cope with the increased demand. New digital processes and more operational colleagues were introduced almost overnight to cope with the complex – and largely manual – demands of payment deferrals and furloughed income, etc. And the playing field changed as some lenders retreated from the market while others stepped forward to fill the void.
And 2021 is unlikely to get any easier.
As more and more employers feel the lasting effects of Lockdown 3.0, redundancies are hitting hard and lenders are already starting to see rising pre-arrears and arrears cases. Added to that, the Bank of England’s Monetary Policy Committee have told lenders to be ready to cope with negative interest rates in six months’ time. And that is a real headache they could well do without… six months is no time at all to effect changes to core mortgage systems.
So now, more than ever, lenders need to be prepared.
The usual annual planning process in Q4 of last year will have suffered – resources will have been challenged, most will have been working remotely, and how do you plan for the unknown anyway?! So many will be in catch up mode. And the list of things to do will be lengthy.
Now is the time to conduct risk assurance activities to ensure that change delivered in 2020 is still fit for purpose. What can be strengthened given more breathing space? Are arrears strategies and operational processes appropriate for these unprecedented times? What systems solutions are available to increase capacity and support/streamline underwriting of more complex cases? Can systems support negative interest rates? Which parts of the system are impacted? How many different systems are involved and will they all work after any changes have been implemented?
And what technical IT and Change resource is needed to effect the change? For some it will be a case of prioritising current workloads. For others the need to bring in expert support will be critical. Thankfully help is at hand.