The paperless pleasure of financing a home

This week Singapore hosted a global forum on FinTech — shorthand for financial technology — that makes it easier and cheaper for consumers to bank, invest, and borrow.

At the same time, the Monetary Authority of Singapore (MAS) announced that it is partnering with a consortium of financial institutions to explore digital currency technology.

FinTech is about many things, including the collection of Big Data to improve our understanding of trends and pricing of financial assets. But, at its core, FinTech is as much about paperwork reduction as it is about fancy analytics.

Paperwork reduction is hardly the glamorous side of FinTech. It is much more interesting to talk about bitcoins and blockchain technology and learning machines than digitising application forms.

However, I would suggest that while it is not sexy, digitising paper will bring more value for money when it comes to consumer happiness and financial stability.

Take a mortgage loan, for example. We all know that getting a loan is painful. There are so many documents to collect and submit. There are so many people involved in the process. Government agencies and banks have entire departments full of administrators dedicated to processing reams of paper to support the issuance of a loan.

Not only are there application forms, title deeds, income statements, valuations and CPF statements, but there is an entire industry of reports that is derived from your loan. There are mortgage credit reports, credit scores, sales reports, regulator reports, underwriting circulars, management reports, regulatory notices, and so much more.

All forms can be digitised. All information from forms can be stored in databases.

All information from databases can be transmitted securely to and from your handphones to Government agencies and financial institutions, and between loan providers and regulators.

The benefits of digitising paperwork are huge and include:

• Faster processing;

• Reduction in processing errors;

• Improved accuracy in processing;

• Fast retrieval of documentation and information for reporting purposes;

• Real-time measurement of processing that improves turnaround time and customer service.

Here’s just one scenario. Say you want to buy a new home. Wouldn’t it be great to know how much you can borrow before you start looking?

Today, banks do not want to give you pre-approved loans. It requires the bank to expend the same time, resources, cost and effort that it takes to issue a regular loan. But there is no guarantee that you will take the loan in the end, so they do not want to go through all that trouble only to lose you to another bank.

It does not have to be this way. The technology exists to allow you to enter your Singpass, select a few options from a dropdown menu, and digitally collect the documents you need from various institutions in a matter of minutes.

Also, the technology exists today to underwrite a pre-approval in real-time, or within 24 hours if the bank requires a human sign-off. A pre-approved loan then allows you to search for a home with confidence and certainty. At the same time, sellers are more likely to accept offers with pre-approved loans.

Then, when you are ready to convert your pre-approved loan into a final loan from the bank, it is just a matter of securing a full valuation, property Option-to-Purchase (OTP) and the final underwriting.

Technology also makes full valuations inexpensive, fast and more transparent.

A loan is just one of many examples of how the simple act of digitising paper can bring the financial industry efficiency and cost savings while improving customer satisfaction.

Paperwork can be pleasurable — if it is paperless.

ABOUT THE AUTHOR: Sam Baker is Co-Founder and Chief Executive Officer of SRX Property.