Comment on Old fashioned paper processes hamper mortgage applications by Mark Dryden

Individuals applying for a mortgage must provide proof of ID and address in the form of bank statements and utility bills. To satisfy money laundering

Individuals applying for a mortgage must provide proof of ID and address in the form of bank statements and utility bills. To satisfy money laundering requirements, these documents must be originals and not printed online copies.

But the majority of UK consumers (69%) today receive paperless bank statements while 46% receive paperless credit card statements, according to the GBG research. The younger generation are most likely to opt in for paperless bank statements, with 75% of 18-24 year olds saying they receive digital versions of their bank statements, compared to 59% of those aged over 55.

The research also found that 42% of UK consumers do not hold paper copies of their utilities bills for their current address, with a third (33%) signing up to paperless utility bill statements which they receive via email or access online.

If an individual does not have suitable documentation to prove their identity, an application can be significantly delayed as they wait for paper copies from their bank or utility company. And if an individual cannot obtain the original documents, a lender may well turn the application down.

Nick Brown, group managing director at GBG said, “As incidents of fraud continue to rise, the pressure for banks and lenders to prove someone’s identity has never been more critical.

“These paper-first procedures had to be put in place to sort the ‘good’ from the ‘bad’. However, it’s clear these old-fashioned measures haven’t caught up with what’s actually happening in the real world.

“And as more customers opt to receive paperless statements and access their documents online, these traditional processes could hinder a legitimate individual’s chance of getting on the property ladder.”

Previous addresses

In addition, lenders will often ask applicants for proof of address for previous properties if they have moved frequently. But GBG’s research found that 45% of UK consumers have moved address one to two times in the last three years and over a third (34%) do not hold proof of address documents – such as utility bills or council tax statements – for each of their previous addresses.

When GBG asked UK homeowners about their mortgage application experience, over a third (36%) said they found it stressful, 33% said it was a complicated process and 27% found it ‘long and drawn-out’.

The research revealed that it took the average UK homeowner just over three hours to source all the paper documentation (utility bills, council tax statements, verified copies of ID documents) required for their application. Add this to the time spent in various interviews with lenders and it paints a picture of a slow, time-consuming process.

Bad experience

Commenting on her recent experience of purchasing her home in South East London, Juliette Keyte said: “I was shocked at how archaic the mortgage application process was. I have paperless billing with my bank and utility providers, so getting paper copies of bills to prove my identity and address was a massive hassle and took a lot of time.

“Buying a house was a hugely stressful experience, and having to prove who I was – umpteen times to various different parties – exacerbated that. I’m surprised the process hasn’t changed to meet the needs of the modern home buyer.”

Process needs improving

GBG’s Nick Brown concluded, “In this digital age, processes should be becoming simpler rather than more complex. Today, we can verify the identity of over four billion people in the world in a matter of seconds, so why should people have to face weeks or months of form frustrations to try and get the service they require?

“As the world continues to digitise, banks and lenders need to bring processes into the 21st century and keep up with consumers’ expectations. The digital age creates the need to allow legitimate customers to on-board with ease and speed, whilst stopping fraudsters. Using identity data intelligently allows businesses to make better decisions quicker, and ultimately make processes slicker and more accurate.”

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