Robo-advice, the phrase coined by the industry, is already alive and well in the wealth and IFA space, but took a little longer to make it to mortgages. Trussle.com which launched in December last year, is bringing the robo-advice model to the mortgage world.
The website, founded by entrepreneur CEO Ishaan Malhi was the first of its kind to hit the UK market in December 2015 and another, Habito, joined it last week with others reportedly not far behind.
In a similar vein to the wealth advice models, Trussle.com asks potential clients to fill in an online form detailing circumstances and needs and an algorithm recommends the optimal product.
A few weeks ago, the Financial Advice Market Review (FAMR) recommended the regulator build on the success of its project to promote digital development for good consumer outcomes in Project Innovate to establish an ‘Advice Unit’ to help firms develop their automated advice models. The Trussle.com software neatly falls into the regulator’s sweet spot as a fintech firm ahead of the curve looking to bridge the advice gap, so Malhi has been invited to see the Financial Conduct Authority (FCA) three times in just over a year.
The regulator is keen to help financial services firms find more efficient, cost-effective ways to provide not just suitable advice but the best possible advice which current systems and processes arguably don’t always achieve.
What is Trussle.com?
Trussle is a Mortgage Advice Bureau (MAB) Appointed Representative (AR) with its own team of mortgage advisers and proprietary software powering its website. In recent months it has been hailed as the UK’s first online mortgage adviser.
At the back-end, the software is also a sourcing, Client Relationship Management and lead generation system with live chat functionality.
Trussle, which has raised £1.1m of seed capital, announced an exclusive strategic partnership with the Zoopla Property Group in February. It is set to provide an integrated advice service on the Zoopla property search engine and uSwitch comparison site, which are both due to go live later this year.
Robo advice in action
“We wanted to take the repeatable and predictable grunt work out of advisory, leaving our advisers to focus on value added advice to customers, if and when they need it,” says Malhi.
“By automating the lion’s share of an adviser’s work, the capacity our advisers have to help customers is unrecognisable to that of traditional brokers.”
Trussle is gearing up to serve hundreds of mortgages per month with Zoopla. For a traditional mortgage broker, that could require dozens of advisers; for Malhi’s Trussle.com, automation means he aims for just a handful.
However, far from rendering the mortgage advice service redundant, the model splices an experienced mortgage adviser with technical support at every stage from application to completion and beyond to remortgage.
As with a mortgage calculator, a digital customer enters high-level details for either a purchase or remortgage on a laptop, mobile phone or tablet and gets an affordability snapshot in return. An intelligent decision algorithm delves deeper during the fact find to more complex details like whether the borrower is self-employed or had credit problems in the past, for example. Throughout the process, customers know where they are in the timeline while Trussle’s advisers have a dashboard view of the customer’s circumstances, status and suggested product recommendation.
Malhi says: “So the adviser considers affordability, eligibility and suitability. That’s what advice is, a function of those three components. We know which lenders will lend to you, we know how much lenders will lend to you and the suitability is our algorithm mixed with what the adviser’s doing.”
Malhi explains that specialist, complex deals still rely heavily on adviser knowledge on top of the technology to add acumen and a sanity check. At present the system handles vanilla cases well and Malhi says that further development will perfect the company’s ability to push into niches like lending into retirement and the self-employed.
The human touch
So what can’t it do and why is the adviser still key?
“At the moment its two simple things: Judgment and a human voice. We’re talking about large sums of money, the biggest financial and emotional commitment. You can build software that’s as simple as anything and apply the best design, but you may still want to hear that from a voice over the phone.”
A physical adviser is more necessary in cases of ‘escalation and exception, clarifies Malhi.
He adds that 70% of people are logging in outside 9 to 6pm office hours, with some exploring the site at midnight on a Saturday. This is where the automated voice comes in for updates or questions on process.
In a similar vein to the property search, not everyone is looking to buy next month. People are exploring the early stages of a thought process so don’t want to talk to a mortgage adviser yet because they don’t want to waste their time, he adds.
Peter Brodnicki, CEO at MAB says that this is the time-saving element for advisers.
“There is a huge amount of information and documentation gathering before an adviser is in a position to provide advice, which technology can facilitate and simplify, as well as going a long way in narrowing the options available for customer’s individual circumstances.
“Also it is often not possible for advisers to keep in contact with customers considering buying, for what can be many months or even years until they are in a position to proceed and yet you still want to engage with them at the earliest possible opportunity. Technology can again play a major part, by informing clients and keeping them engaged until they are ready to make a decision.”
Brodnicki says he sees technology streamlining and simplifying the process, providing customers with more information and flexibility, and by doing so making the whole intermediary proposition even more compelling than it is today.
“The customer experience and consumer outcomes should be at the centre of all innovation, and if advances in technology can achieve that, then as an industry we should be embracing the changes we will be seeing and ensuring that our businesses keep up with our customer,” he adds.
In part two tomorrow, we find out what the mortgage adviser role looks like in a technology-driven world and how technology could shape the industry in future years