Lenders should prepare for Smart Data by addressing the 86% of friction points in the mortgage journey that they could solve without it, Novus Strategy has stated.

Experts from the transformation consultancy for the mortgage and home buying industry outlined to banks and building societies the quick wins they could deliver on ahead of the full rollout of Smart Data.

As well as stating that lenders do not need to wait for Government reforms and Smart Data to improve their own mortgage journey, Novus Strategy outlined key findings from its time with lenders.

It revealed that redesigning the mortgage journey could now address up to 86% of friction points that made it inefficient, resulting in underwriting speeds that were up to 20% faster, from decision in principle to full mortgage offer.

Novus Strategy said part of the problem was that friction was often hidden or could not be measured correctly. In one case, a lender was completing underwriting on each case in 10 minutes, but was not counting the time that cases spent sitting in people’s inboxes. This meant they were underestimating the amount of time underwriting was really taking by over 99%.

The firm stated that this is the problem of "handoffs", where a case, task or piece of data moves from one person to another, either internally or between firms.

At another lender, mortgage offers were turned around in 25 days, but half that time was soaked up by handoffs, not the actual underwriting process.

This also applied to misrouted cases, where different income types were misidentified, meaning these cases had to be redirected to specialist internal teams late in the journey, leading to delays of three to four days, despite the underwriting itself taking just 43 minutes.

Novus Strategy said tackling these efficiencies will be important for all lenders expecting to participate in and benefit from the home buying reforms proposed by the Government.

Transformation and strategy partner at Novus Strategy, Chris Williams, said: "Lenders aren't necessarily responsible for all of that delay currently. But what will happen is that lenders could ultimately become responsible for delay if the rest of the industry begins to improve their parts of the journey and lenders, inside their own four walls, keep doing the same things that they've always done.

"It's not just about the time then. This is also about the products that people sell. They’re not necessarily going to stay the same. The opportunity for all lenders is to push out different types of products."

Novus Strategy’s pathfinder product director, Kevin Duncan, added: "Preparation for Smart Data is a combination of three things — technology, processes and configuration. If we don't have all three in place, then we won't optimise fully for the Smart Data that's coming down the line. If we layer smart data on legacy processes, we will not unlock the value that can be realised.

"[It’s in] the redesigning of the mortgage journey in a way that's ready for Smart Data, that's where everybody wins. Not only are the original gains there, the indirect gains that will come through are absolutely massive."

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