Specialist lender to the property market, Hampshire Trust Bank, is building a unique proposition based on best-in-breed technology, open banking and human experience. Charles McDowell and Russ Fitzgerald explain how it’s knocking on the future’s door
Decade retrospectives are usually playful affairs, hopping energetically across the biggest stories of the previous 10 years: royal weddings, sporting upsets, Kardashian bottoms, that kind of thing. So it’s telling that, in raking over the 2010s, what struck most commentators was the breathtaking technological progress we’ve made since the Blackberry-booming days of 2010.
In a significant way, the past decade saw digital technology become the story. In the finance sector alone, we’ve covered a quantum leap – literally, for IBM and Google – in computing power ,which, combined with innovations in financial services, precipitated the fintech revolution. Along the way, we’ve learned that the future is contradictory: that 100 per cent banking automation is possible, but not preferable; that staffed bank branches are redundant, but remain important. The hopes of the techno-optimists were realised, only to be tempered by a simultaneous consumer craving for a ‘human touch’.
If one firm embodies this duality – of tech innovations and human advisors aimed at delivering top-drawer customer service – it’s the diminutive yet dynamic Hampshire Trust Bank (HTB): UK specialists in the property investment market. HTB, lending across asset finance, property development finance, and specialist mortgages, won Savings Champion’s Customer Service Award in 2017 after refocussing on providing a best-in-field customer experience for brokers and their clients.
The firm’s managing director of specialist mortgages, Charles McDowell, outlines the specificities of the market HTB operates within. “In the mortgage market, there are three ways to differentiate,” he explains. “Through price, through service or going up the risk curve.”
Concluding that accepting riskier propositions and offering lower prices were both unsustainable strategies, HTB decided to pursue high-quality customer service as its unique attribute. As McDowell puts it: “All of our clients and our brokers deal with us because of who we are: we are completely passionate about giving a fantastic broker experience, and a fantastic client experience.”
But, as fintechs and financial institutions (FIs) learned over the course of the last decade, ringing every bell and blowing every whistle in the fintech innovation space does not necessarily lead to happier clients and customers. McDowell is refreshingly realistic about how his firm treats innovations and envisages change in the property investment lending market.
“We’re not going to completely revolutionise the whole process,” he asserts. That’s largely because, in the specialist lending market, the human touch isn’t just reassuring, it’s vital for underwriting unique and bespoke loans. “We are dealing with complex borrowers, with complex needs and often complex properties,” McDowell explains, “so we need expert manual human underwriters to continually assess on a case-by-case basis.”
But there’s an element, too, of HTB quickly finding answers to the questions that fintechs and financial institutions were busy grappling with in the 2010s. Founded in 1977, HTB was acquired in 2014 by private equity firm Alchemy Partners LLP. Over the next five years, it welcomed in a number of new, highly-qualified staff – McDowell among them – to help boot up an ambitious growth strategy.
That strategy appears, in the cool light of 2020, to have been fortified by insights from the early fintech revolution: namely, that cherry-picking and bolting-on software-as-a-service (SaaS) innovationsor low-code platforms is wiser than attempting those end-to-end innovations in-house. Russ Fitzgerald, HTB’s CIO and another experienced hand brought in to help realise the lender’s new strategy, is concise about HTB’s approach to new tech.
“We operate a best-in-breed strategy, so we’re really clear: if we can commoditise it, we’ll buy it; if it’s part of our specialism, we’ll build it,” he explains. “We automate the processes we need to automate, but we don’t take away the face-to-face relationship that HTB has with its brokers and customers. Automation, for us, goes to a point then stops.”
Among those service providers that HTB deems best-in-breed are Netcall, the low-code customer experience specialist whose partners include Network Rail, Nationwide, and a number of NHS trusts and universities. Netcall’s Create service enables HTB to automate the testing of its low-code software, reducing costs, manual testing requirements and software blips. Last year, HTB also forged a partnership with SnapLogic, which again provides a low-code, intelligent integration platform; in November, HTB bought into Alfa Systems’ end-to-end asset finance software, which both parties anticipate will deliver a 300 per cent increase in functionality across HTB’s workflows. Fitzgerald believes it’s these smart, strategic partnerships that make the bank uniquely dynamic in the lending space.
“There are many lenders that have come to market as what I would call bank-out-of-a-bag,” he explains. “They would’ve gone and bought a core banking platform, and will be largely operating off the back end of that. Where we’ve differentiated ourselves is we’ve brought in industry tools – low-code tools, such as what we get from Netcall. We use those to develop our own front-end systems, so what’s different for us is that we’ve built a lot of it ourselves, we’re not reliant on vendors to deliver it.”
Converging in an extensive application programming interface (API) infrastructure, with scale and diversification enabled by the Cloud, HTB’s engagement with industry tools is aimed at removing the friction from the customer experience or, as McDowell puts it, ‘finding those little bits of grit in the process, and taking them out, so that it’s easier for us, for our brokers, and our clients’.
“Our digital transformation allows us to identify those areas that are frustrating, and remove them,” he adds.A specialist lender with the power of a bank and the flexibility of a disruptor, HTB currently serves more than 27,000 customers in the UK, helping to boost a buoyant UK property development market while supporting SMEs with specialist mortgages – like student accommodation and buy-to-let housing. By automating simple processes – enabling e-signatures, for example – it’s asking less of those customers with each interaction.
But there’s another aspect to superstar customer service, and that’s getting the job done effectively and efficiently. HTB’s website is peppered with press releases detailing the speed at which some lending deals are finalised: a matter of days from initial agreement to the final signed contract. And herein lies another industry innovation, enabling super-fast and accurate underwriting, which HTB has been able to tap into, thanks to open banking.
“A bank like HTB actually doesn’t have an awful lot of data, especially given we’re only five years old,” says Fitzgerald. “We leverage open banking through our relationship with AccountScore, and that gives us access to bank account data and categorised statement data, which improves our underwriting processes.
“‘Through our partnership with fintech Realyse, it also gives us connectivity into publicly available APIs and data services,” he continues, “many of which we consume to enrich the process and improve the capability of our underwriters to get to a decision very, very quickly. We have a better understanding of the average price to sell, how long it takes to rent, what rental value it will go for, what the demographics are in the area, the average age of the individual, what their average income’s going to be – far more than any developer will ever know.”
By using open banking to facilitate snappier decisions, HTB is delivering on speed to complement the resolutely human and responsive customer experience it has curated. While, elsewhere in the property investment market, all-digital startups like UOWN emerge to challenge the status quo, it’s clear that HTB has forged a comfortable niche for itself in the specialised property investment space.
Looking to the future, Fitzgerald gives a taste of what to expect from HTB: more partnerships with best-in-field services
and more low-code solutions. “Our next step, this year, is to offer a broker portal,” he says. “It’ll be fully integrated, through API services, into our back end; there’ll be end-to-end integration, the bit in the middle will be the underwriter, and that will be where we add that unique decision element.”