We’re sold on a utopia of invisible commerce, blink-and-you-miss-it convenience and unbeatable protection. Imagine DeFi, imagine smart contracts, imagine a world in which you can purchase a house as easily as you purchase a pizza. While the tech world races ahead, one crucial piece of the puzzle is stuck in the dial-up era: the Lenders' Handbook. It’s not only outdated—it’s purposefully undermining the new digital revolution taking place in property.
Imagine this: A young couple, eager to buy their first home, have jumped through all the hoops. They have identified the ideal property, obtained a mortgage in principle, and are prepared to proceed with purchase. Enter the conveyancer, armed with tech-savvy digital ID verification tools. Yet, when the lender is challenged, they immediately say “Not acceptable.” We still require physical copies, wet signatures, and a journey to the post office. The dream starts to seem a whole lot less dreamy pretty quickly, huh? This isn’t just an inconvenience; it's a systemic problem stemming from lenders' stubborn refusal to embrace the future.
How can banks say they are innovative, fintech banks when they’re still doing batch processing?
Stifling Digital Identity Innovation
The Land Registry gets it. In addition, they’ve made over 15 city forms and processes aware of, and accept, digital ID verification. The Conveyancing Association has been shouting this from the rooftops for years. Even UK Finance are now on about digitising the Lenders’ Handbook (due to go live in October, allegedly). Talk is cheap. Action is what matters.
Yet as the bible for mortgage lenders — the FHA’s Lenders’ Handbook — clings mightily to outdated processes. It’s the same as expecting a Tesla to get charged by a coal plant. By refusing to explicitly accept digital identity verification and requirements, lenders have for life-saving innovation in this space are effectively stifling it. Why would a tech company invest in developing cutting-edge digital ID solutions if the very institutions that should be using them are still clinging to paper and pens? The result is a classic example of institutional inertia delaying much needed progress.
Increasing Impersonation Fraud Risk
You’d assume security would be the most important thing to lenders. These are all important questions, for after all, they are dealing with billions of taxpayer dollars and people’s sensitive personal information. By continuing to reject the use of digital ID verification, they truly are making it easier for fraud to take place.
Think about it: Physical ID documents can be easily forged. Signatures can be faked. Impersonation is rampant. Norway reportedly experienced a 1000% decrease in fraud after implementing digital ID. 1000%! That’s not a typo. Our question is, why aren’t we learning from their success?
By sticking with outdated methods, lenders are essentially saying, "We're okay with a certain level of fraud, as long as it doesn't require us to change anything." This is not just irresponsible, it is truly dangerous.
Slowing Down the Conveyancing Process
Time is money. And in the realm of real estate, time is equal to a whole heap of cash. Each additional day in the conveyancing process is an expense for buyers, sellers, and lenders alike. To my mind, this speaks volumes about the banks—it’s as if they feel they have an eternity to comply.
The Lenders’ Handbook’s Digital ID ban makes the process take weeks if not months longer. All those physical documents to print, sign, mail and process manually? All those duplicate ID checks? Eliminated.
This isn’t just about the convenience of adding transit trips. They’re actually far more efficient. It’s not just about freeing up resources though. It’s about truly rethinking and streamlining the entire process. Lenders' production processes are strangling the pipeline with their still 2015 production practices.
Creating Unnecessary Costs
Who ultimately pays for all this inefficiency? You do. The consumer. The homebuyer. The aspiring first-time home buyer.
Every one of those delays, every moment of manual processing, everytime fraud risk is increased – it’s all cumulative. Ultimately, lenders are forced to pass these costs directly to their borrowers. They achieve these goals by raising fees, hiking interest rates and boosting insurance premiums.
It’s a secret surcharge on innovation, imposed by organizations who refuse to adapt and move forward.
Preventing Qualified Electronic Signatures (QES)
Digital ID is just the first step. The real game-changer is Qualified Electronic Signatures (QES). These are indeed cryptographically secure, legally admissible signatures that could be used for all types of digital transactions, including conveyancing.
QES represents a complete paradigm shift. No more wet signatures. No more PDFs. No more archaic processes. It is about security and compliance. It’s a digital, legally binding solution to execute documents. In order for QES to work, it’s dependent on a strong digital ID infrastructure. As long as the Lenders’ Handbook doesn’t embrace this new era, QES will only be a pipe dream. Now picture a future where property transactions are as unhackable and legally invulnerable as they’re on paper. Now imagine those same innovations happening at a faster pace, at reduced cost, and with increased efficiency!
The digital revolution is here. The reality is that it’s high time for lenders to adapt or be disrupted. Our digital future is inextricably linked to our digital property, and we can no longer afford to undermine it.
- Demand change. Contact your lender and ask them when they plan to update their policies to accept digital ID verification.
- Spread the word. Share this article with your friends, family, and colleagues. Let them know how the Lenders' Handbook is holding back progress.
- Support the Conveyancing Association. They're fighting the good fight on behalf of consumers and the industry.
- Hold lenders accountable. If they refuse to embrace digital ID, take your business elsewhere.
The digital revolution is here. It's time for lenders to get on board or get left behind. The future of property is digital, and it's time to stop sabotaging it.
