At The Specialist Lending Event (TSLE) in York, the lender panel was asked whether mortgage intermediaries have anything to fear from robo-advisers, especially with Open Banking potentially pushing clients over to digital brokers.
Yes, but not yet
Despite the potential for innovation in the UK mortgage market, the technology of digital advisers has not reached a stage advanced enough to warrant concern, said David Torpey, managing director of Bluestone Mortgages.
“I think there’s nothing there at the moment for us to be fearful of,” said Torpey, adding that his attempts at using digital advisers led him to human-based helplines.
However, Torpey also emphasised that while current robo-advisers have “minimal impact” and are “playing around the edges”, this will not always be the case.
“But it’s not to say that things won’t change dramatically,” Torpey continued. “The way we process mortgages in the UK is still antiquated.
“There is massive room for improvement, but I don’t think it’s going to happen any time soon.”
High street moves
The robo-advice offerings around at the moment lack the sophistication to accommodate for specialist needs, but a technology which can cut out the intermediary has a massive appeal to bigger lenders, argued Adrian Moloney, sales director at One Savings Bank.
“At the end of every piece of robo-advice there seems to be a human being,” said Moloney, “I think the specialist sector is immune to robo-advice.”
“I’ve yet to find an algorithm that can do a four person buy-to-let, purchasing a house of multiple occupation (HMO) and transferring from sole name into a limited company,” he added.
Yet, Moloney cautioned that even absent the necessary sophistication, there is strong motivation for high street lenders with direct to consumer offerings to pursue automation.
Make no mistake, if you’re a large bank or building society, and 75% of your business is going through the intermediary channel – you’re going to want to switch some of that business back over.”
“I think you’ll see the high street banks and building societies start to use the robo-advice process and potentially open banking to attract people direct,” commented Moloney.
The youth wave
The broker’s value in the mortgage process is essential, argued Marie Grundy, sales director at West One Loans.
“There’s a reason that over two-thirds of mortgages are now intermediated,” she said.
“The value of brokers has never been higher, and I don’t think automation and technology is going to change that.”
However, the preferences of the younger generation may force change. Meaning brokers will have to step up their engagement to keep their place.
“For the younger generation coming through, I think that’s probably the way they prefer to transact. So from that perspective, perhaps robo-advice will play a greater part,” said Grundy.
She added: “But I don’t think it’s going to be a silver bullet.
“It comes down to the way you interact with clients, making sure you’re in constant contact with your clients to ensure you maintain your value in the process.”
On the other hand David Whittaker, chief executive officer of Keystone Property Finance, came out swinging, arguing that robo-advice is a passing phase.
“If you peel back the layers on any of those robo-advisers, there’s still a human in the back of the process,” he said.
Because homeownership is one of the most important financial decisions that consumers make, they will still want the human advice, Whittaker argued.
“I think it’s a tool we can embrace,” he continued, adding that the technology has not “landed very elegantly.”
“I don’t think we should be threatened by robo-advice, I think it’s a fad and a phase, and it will pass by.”