Article originally published in Mortgage Introducer January 2022 – page 22
Everything about the way we live and work today is changing and while the accelerators of that change may vary, at the heart of how we experience change in our daily lives are technology and data. In all walks of life, the application of technology and data are changing the way we work, live and play.
While banking and mortgage lending may not be at the cutting edge of technology, they are engaged in a process of changing how and where technology and data can add value to the customer experience. Apps and processes that fulfil twenty-four hour, 365 days per year self-service have fourished over the last decade. The way in which people want and need to interact with financial service companies has changed completely. The way in which financial service companies need to interact with them will evolve further.
It begs an important question because as some tasks and jobs are replaced by automated processes, we need to understand the value of the technology, data and people in determining the way we live.
The pandemic heralded a renewed interest in digital technology. In a world of working from home and pandemic restrictions, the remote valuation model and to a lesser degree the Automated Valuation Model (AVM) found a renewed lease of life in which these models could enable transactions to proceed where otherwise they might have ground to a halt. It has a valuable role to play in facilitating certain types of lending and, over the coming year, and will support lenders who, fighting thinning margins with continuing low interest rates, are keen to drive more operational efficiency on lower risk lending.
But as we know, a valuation model like the AVM do not take into account elements such as property condition and new build property is particularly difficult to value due to the lack of comparable properties and historic data. Yet, the remote valuation can pull on a larger pool of comparables and data sources which can enhance our understanding.
We live in a digital age and big data offers us big opportunities. Climate change has heralded a renaissance in the desire to understand a property’s energy performance. It is early days but how we assess and what we assess will change as we begin to understand what ‘good’ property really looks like. Data and technology will play a huge part in establishing that.
But putting the right information in the right hands is only part of the equation. While machines can make decisions from data, they do not always make perfect sense of it. They can be ruthlessly consistent in the actions or conclusions they draw from it but human experience, wisdom and expertise are all important ingredients we dismiss at our peril.
It’s not difficult to see why valuations should be so much more than a binary choice. Our own feeling is that there are many steps open to lenders that go beyond binary decisions – in particular as the industry begins to evolve its understanding and calculation of value.
CoreLogic has been for some time at the forefront of enabling lenders, panel managers and surveyors to enjoy the benefits of real time data and mobile working to better understand property risk as it occurs at the point of valuation. But these elements are also shaping thinking about the future.
Realising the value of big data has been a strategy for property risk managers for some time. What we are seeing now is an evolution in the demands made from the available data. How do we understand the value of a property that goes beyond a snapshot of the market at a certain point in time to an understanding of its performance over the coming years? As computational power becomes smarter, and more innovative, senior executives are now exploring how significant parts of their businesses can run on data-driven decisions that provide immediate guidance on the best actions to take. CoreLogic’s data and technology is a key part of de-risking those decisions.
Working with our panel management and valuation partners, we are beginning to see the technology and data that underpin AVMs, digital and remote valuations evolve from producing outcomes that provide defensible decisions about property to thinking that might allow a different interpretation of value. Climate change and energy efficiency are just two areas prompting new questions about the nature of property value.
The confidence in the data driven model to support human thinking is proven. Using technology and data appropriately allows those in property risk to understand and focus upon what risks are really being taken and how appropriate they are for the organisation. Technology and data are not only supporting that decisions they are helping to shape them.