Mark Haron

Speaking to Fintech Business sister publication The Adviser, the executive director of aggregation group Connective, Mark Haron, noted that while COVID-19 has forced lenders to adopt remote verification of identity (VOI) processes (which the industry has long called for) more needs to be done to maintain and standardise them post-lockdown to help bring about a true digital mortgage process.

Noting that some lenders have accelerated their adoption of digital VOI tools, there have been a range of tools and processes used by lenders – meaning that brokers may have to ID a borrower on multiple occasions and in different formats to meet different lender requirements.

During the COVID-19 crisis, for example, some lenders signed new partnership agreements to enable brokers to remotely verify their clients’ ID and store digital versions of documentation via apps and digital platforms, while others brought in more temporary video conferencing measures and some chose to keep face-to-face VOI but use “come to you” providers, such as ZipID.

Several lenders have also said that these remote VOI requirements would only be brought in temporarily and most likely revert following lockdown. This is largely believed to be due to differing interpretations of the ID laws and the “reasonable steps” test.

Mr Haron explained: “We’ve been pushing for ages to move towards a more digital home loan.

“With some of these new digital VOI processes, they’re great, but we’ve got to do everything we can to work with the lenders to keep them in place. We also need to try and continue to use these digital mediums not just for ID, but also to see more e-signatures on documentation, as well,” he said.

According to the Connective executive director, a common frustration put forward by broker members regarding verification of borrower identification is “that there’s all these different requirements in terms of an IDing process”.

Mr Haron told The Adviser: “Ideally, as an industry, what we would love to have is just a few proponents and a few systems that brokers can use so that when they engage with the customer and do the ID process, it could then be applied to every single lender.

“That way, brokers aren’t having to do the ID piece in five different ways because each lender does it slightly differently. And it means that if a bank declines a loan or doesn’t proceed with an application for whatever reason, the client doesn’t have to go down the road to another bank and do the ID process all over again, but through another medium.”

Mr Haron continued: “There’s a lot of duplication here that we need to try and start removing and avoiding.

“From an industry perspective, we should look to tackle how we can digitise some of these things in a more standardised way.”

While Mr Haron noted that industry would need to ensure that any chosen system isn’t monopolised by one facilitator (for competition reasons), he added that having a flat process would help improve the customer experience and reduce the administration time of writing a loan.

Several players in the industry have already begun looking at standardising the remote VOI process, including technology solutions provider NextGen.Net, which last month officially launched its ApplyOnline digital document verification service (DVS).

While the tool was expected to be released by the end of the first quarter 2020, the launch was brought forward in order to assist lenders and brokers in meeting their obligations in customer identification amid social distancing measures.

The DVS, which is integrated within ApplyOnline, integrates with 22 federal and state-based government databases to validate a borrower’s identity against official documents like passports, Medicare, citizenship certificates and driver’s licences.

It aims to validate the borrower’s identity documents quickly and accurately while forgoing the need to have an original document or copy of that document.

Speaking to The Adviser for the March edition of the magazine, NextGen.Net chief customer officer Tony Carn commented that the DVS could help reduce the percentage of missing information requests that are issued in relation to ID, therefore cutting down on the time to assess those loans while also giving brokers “confidence that the documentation is valid” (therefore protecting them from fraudulent applications).

He added that these would also be combined to provide a better customer experience by “reducing the need to ask the customer for further information or original documentation”.