The managing director of online mortgage broker uno. has suggested that artificial intelligence in mortgages could disrupt the industry and change the way broking works.
Speaking to The Adviser, Vincent Turner outlined that currently, online mortgage platform uno. allows users to look at different loans suited for their needs, which are then supported by a team of advisers.
Mr Turner said: “There is the presumption that if it’s digital, it means you’re doing it yourself. But, today, our advisers look at deals in the same way a broker would. We work out things the platform doesn’t, yet, work out.”
However, the managing director suggested that as technology catches up, the role of brokers and advisers will change.
He said: “Every month, we improve the insights available in the platform, or the rules that are in the platform, so that more and more of the stuff that we get a broker to do today – looking at it, and having credit knowledge — will be in the platform. Anything that a human can learn about credit policy, you can teach a computer.
“Now at that point, the intelligence in the platform starts to surpass that of an individual broker because it’s across every lender we deal with, and the service person’s role becomes less around who will approve it (because that logic will be inside the platform), and more about how do we structure this deal.”
Mr Turner estimated that uno., could, “within a year from now”, have the algorithm rules to know who will lend the money, how much they’ll lend, how much will cost, and whether they’ll approve it.
However, he said that if the lenders “work out how to do lending decisions in real time, without involving people at their end”, there could be a point where the intelligence “gets beyond our own”.
Mr Turner explained: “If you move forward 10 years, the lenders, I believe, are going to make lending decisions quite differently. With the advent of ubiquitous machine learnings and AI, the credit policies could be evolving on a minute-to-minute basis. That’s where I think it’ll end up on the next five to 10 years… And, if that’s all changing real time and the algorithms work out how to get smarter and smarter, then, the concept of a broker doesn’t really exist. It’s basically platforms that are plugged into what the lenders are using to make decisions.”
When asked whether AI could spell the end of brokers, he said: “Well no, not now. Not two years from now, five years from now. Even seven to 10 years from now, I doubt it. But, I don’t know.
“Each year, we get closer to where technology can make the entire lending decision. As long as you give it all the data and the documents, and you can assume that any documents you give it, it’ll be smart enough to pull the data off those documents, populate it into a data file, then the lenders who can make decisions just based on uploading all of the documents you need for a particular person, they will win.
“And, if there’s still the concept for broker, it’ll be a platform that has access to all of those lending algorithms.”
He concluded: “Inevitably, a mortgage will be: have you enabled me to do the thing I want to do, as fast as possible, with the least amount of effort, at the lowest possible cost?… It’s competition, you know.
“It’s annoying, but it’s good for the customer.”
“Absolute rubbish” that brokers are being replaced by technology
Many in the broking industry have been quick to reassure that AI and fintech would not threaten the mortgage industry, with former RESI CEO Lisa Montgomery telling The Adviser earlier this week that the proliferation of technology companies coming to the fore is actually of “detriment” to the borrower.
She explained that this was because you “cannot run your personal financial platform without the guidance and support of someone who knows how to articulate it correctly to pay the least amount of interest and to pay things off quickly”.
Likewise, the former chief executive of the Stargate Group and a leading fintech consultant has said that despite technology becoming more prevalent in the mortgage space, “brokers aren’t going anywhere” and could actually be on their way to writing 80 per cent of home loans.
Speaking to The Adviser, Brett Spencer, the former CEO of the Stargate Group and executive director of TICH Consulting Group, said that he thinks anyone who believes the broking industry is being replaced by technology is talking “absolute rubbish”.
Mr Spencer said that the fact an abundance of “fintech” solutions are coming to the market is exactly the main driver behind brokers remaining relevant and increasingly relied upon by consumers.
He explained: “The reason brokers are here and will continue to be here, and market share will grow… is that the sheer proliferation of the number of mortgage products in the market today is in the thousands.
“You talk to any one lender and they might say they have three products, but there are probably 30 variations on those products. Joe Consumer just doesn’t understand it.
“No matter how good an online platform you have, no matter how good a technology solution you have — Joe Consumer still wants to talk to a broker who is the expertise. And so, brokers will be here to stay. There is no question about it.”