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April 6, 2017

To begin talking about the Internet of Mortgage Things, one must first take a look at how the Internet of Things has been evolving. In his book, Enchanted Objects: Design, Human Desire, and the Internet of Things, David Rose says that all the stories that have mesmerized people aim to satisfy peoples basic needs, whether its omniscience, telepathy, safekeeping, or personal expressions. Indeed. The fantasy genre of movies like Harry Potter, Middle-earth, and James Bond have given us a lot of food for thought. Closer to reality, we already have things like the Smart Plug that allows us to connect wirelessly, and the Nest Thermostat that learns your home routine to heat or cool your house suited to your preferences.

Not only daily lives, the Internet of Things (IoT) has shown great promise in improving the way we do business. Although the banking and financial services industry has already started exploring IoT systems to simplify operations and improve efficiencies, the mortgage sector is relatively new in this space. Let us see how the mortgage sector stands to gain with IoT based systems.

Clear and timely communication is vital to strengthening the delicate relationship between borrowers and banks. Traditional communication channels like telephonic conversations and emails have lately become ineffective because information sent through these channels is prone to getting lost in the clutter of spam calls and junk mails. Wont you agree? How many times have you actually read a mailer from your bank or listened in carefully to a call from them?

The IoT holds the answer to all our woes in this regard. It can help make communication frictionless, non-intrusive, subtle, and effective. Ambient devices can be used to communicate important messages like missed or overdue payments, upcoming insurance and tax payment, and loan resets, without the nuisance of spamming. For example, such communications can be relayed to everyday devices like televisions, microwave ovens, gaming consoles, doorbells, and security consoles.

Managing properties remotely

One pressing challenge that banks face in the mortgage space is the management of the properties they end up owning as a result of unsuccessful sales at foreclosure auctions. According to Atom Data Solutions,there were 46,604 vacant bank-owned (REO) residential properties as on Q3 2016, an increase of 7 percent from the previous quarter and 67 percent from Q3 2015. Managing and monitoring numerous properties across multiple locations is an effort-intensive and costly proposition for banks. The Internet of Mortgage Things is an anticipated phenomenon. With IoT sensors installed at properties, banks can monitor their condition in real-time, and conduct remote maintenance. With these sensors, banks can obtain timely information on when there is excessive moisture in the walls, if there is significant internal damage to the walls or the roof, or in case of compromised insulation, and so on. Armed with these insights, banks can take prompt actions to restore damages, and eliminate the need for physical monitoring in due course of time.

Smart power usage

Another instance of using IoT and data analytics in the mortgage industry is banks providing customized recommendations to home-owners based on their geo-locations. The heating bills, for example, can rise immensely during winter, especially in homes that have poor insulation. Banks can use IoT devices to understand heating and cooling patterns in a particular neighborhood, and generate recommendations for homes that fall outside the pattern of usage. These recommendations could be around effective use of heating and cooling devices, home improvement initiatives as well as financial products to assist the homeowner.

But, some concerns need to be addressed

Using the Internet of Mortgage Things (or IoT in any industry for that matter), comes with its own set of challenges. The privacy and safety of customers are prime areas of concerns. As more and more companies start using IoT, larger amounts of data are collected; if this information about users finds its way into the wrong hands, you and I can guess how disastrous that would be. For example, if your home security system is hacked into, unscrupulous entities could manipulate the operations and data to use it against you. So, what is the best way forward?

To make these digitized technologies safe and enjoyable for everyone, companies need to create strict privacy policies about how these IoT devices interact with each other, and where and how the data is collected and saved. Moreover, consumers need to be allowed to access and control their data. This way, they will become more cautious and aware of the privacy implications, and would be better equipped to benefit from the connected environment.

Neha Ahuja is a Consultant with the Lending practice of TCS Banking and Financial Services (BFS) unit. Her experience and her expertise lies in retail lending, especially in mortgage banking. Ahuja holds a Post Graduate Diploma in Management (Finance) from the Xavier Institute of Management and Entrepreneurship, Bengaluru, India, and has several certifications in retail lending. Her areas of interest include digital trends and how they impact the lending space.


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