"Automating routine tasks like data analysis and document verification helps brokers excel at what they do best: building client relationships, providing expert advice, and helping prospective/current homeowners achieve their goals. "
From the initial meeting to the mortgage offer, the mortgage application process can be a time-consuming and frustrating experience for all involved. However, a new era is dawning, and we’re only at the tip of the iceberg in terms of what AI can achieve.
With the UK AI market currently worth more than £16.8 billion (and expected to grow to £801.6 billion by 2035), AI has the potential to drive significant change within the mortgage industry. From streamlining processes to optimising the customer experience and proposition, let’s take a look at some of the ways this is happening, and how we can continue to capitalise on this type of innovation.
Streamlining broker operations
While AI is still in its early days, there’s a huge opportunity for it to flourish in the mortgage space. In fact, many organisations have already begun to implement AI-driven solutions to improve efficiency. According to a study by McKinsey, AI can reduce the time spent on document verification by up to 50%. Automating routine tasks like data analysis and document verification helps brokers excel at what they do best: building client relationships, providing expert advice, and helping prospective/current homeowners achieve their goals.
It will come as no surprise that MAB is investing in AI. We’ve created a dedicated team in addition to our considerable existing IT resources, and we’re putting process efficiency at the heart of this transformation.
We’ve piloted the use of OCR to convert scanned documents, PDFs, and images into editable and searchable data, with the AI models being trained by real people to ensure we process this data accurately. While OCR technology has been around for a while, when combined with AI, we can understand the structure of a bank statement and check for fraud or extract data. This automates the completion of income and expenditure within the budget planner, which reduces the need for manual data entry.
We see huge value in utilising an AI-driven virtual assistant, using natural language processing to answer general mortgage-related queries from customers, as well as enabling them to query documents such as the offer letter. This will aid brokers by complementing the advice process and ensuring compliance with Consumer Duty obligations.
Optimising the customer journey
Another way in which AI has considerably transformed the mortgage industry is by redefining the way customers proceed through the application process. AI-powered chatbots and virtual assistants are becoming more sophisticated conversational agents, capable of understanding complex questions and providing a customer with easy-to-understand responses and education.
They also have capacity to provide real-time feedback/support, helping to ensure that every customer interaction is increasingly valuable and relevant to their needs. By automating operations such as data collection, verification, and underwriting, AI can significantly reduce application processing and wait times.
In fact, one lender has recently reported that its AI-powered chatbot now solves 60% of broker enquiries. Since its launch, this software has allowed its team of brokers to handle more enquiries, freeing up valuable time for them to provide a more personalised, tailored service.
Lender benefits
AI is also becoming increasingly integral to lending processes. For instance, sophisticated fraud detection systems employ AI to cross-reference data from multiple sources, safeguarding both lenders and borrowers from financial loss. What’s more, technologies such as automated valuation models and electronic identity verification often rely on AI to streamline the mortgage journey, providing a more seamless experience for brokers and customers alike.
For example, one lender recently launched an AI tool which automatically analyses and categorises documents required for mortgage applications. The new tool allows brokers to provide and review all of their client’s documents in one go, all without any back and forth from the underwriter.
Areas to consider
While AI offers our sector numerous benefits, it's also essential to acknowledge its limitations, and what we potentially need to be aware of when implementing it into our processes. One major concern is ‘hallucinations’, where AI systems generate incorrect or nonsensical information. This could lead to errors in mortgage applications and even the advice we deliver, so we need to ensure the ways we adopt AI within our processes are thoroughly researched and checked on a regular basis.
Another challenge is the potential for AI to source inaccurate information. AI relies on the data it’s trained on, so if this is biased, incomplete, or outdated, it can potentially lead to flawed conclusions. For instance, an AI model trained on historical data might not accurately predict future market trends, potentially leading to incorrect recommendations and advice. While AI can automate many tasks, the importance of human oversight and advice cannot be understated. Rather, the two should operate in tandem to make informed decisions and create the best possible customer experience.
These considerations are particularly poignant following the recent news that the EU, Norway, UK and US have signed The Council of Europe’s international AI Treaty. This sets out a legal framework which covers the entire lifecycle of AI systems and addresses the risks they may pose, all while promoting responsible innovation.
AI and Consumer Duty
Under Consumer Duty regulations, advisers must have explored all available options and provided customers with relevant information so they can make the most suitable decision relating to their circumstances.
By leveraging AI, mortgage firms can gain deeper insights into customer needs and vulnerabilities, enabling them to recommend more tailored products and services. However, while this undoubtedly brings efficiency and precision to the mortgage process, the importance of human interaction remains irreplaceable.
While AI can streamline processes, it cannot replicate the human capacity for building trust and rapport. The complexity of individual financial circumstances, coupled with the emotional significance of buying a home, necessitates a personal touch. We as brokers are the ones responsible for building long-lasting, meaningful connections with our customers, providing ongoing support and guidance beyond the initial transaction. With this in mind, we need to continue to value the importance of the personal touch that AI cannot replace or master.
Best of both worlds
By embracing and harnessing the power of AI, brokers can create a more efficient, personalised, and customer-centric experience. This is down to the technology’s ability to handle admin-heavy, time-consuming tasks, allowing brokers to focus on building and maintaining relationships with customers.
Above all, it’s the combination of AI's efficiency and a broker's empathy, knowledge, and problem-solving skills that truly creates a powerful synergy. As our sector continues to evolve, brokers who can effectively leverage this technology (all while maintaining a strong human connection with customers) will be well-positioned to succeed moving forward.
