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Lenders and brokers split on advantages of robo-advice – Iress

  • 19/04/2018
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Lenders and brokers split on advantages of robo-advice – Iress
The majority of lenders believe robo-advice will prove to be a positive development for the mortgage market but brokers are far more hesitant about the evolving technology.


Almost six out of ten of lenders see robo-advice as an opportunity, compared to just one in seven intermediaries, according to Iress’ annual intermediary mortgage survey.

One in five brokers were dubious about the technology behind robo-advice systems and saw risks in algorithms and automation not taking full account of an applicant’s circumstances and needs.

However, despite these fears one in five intermediaries said they would or possibly would implement a robo-advice offering in the next 12 months.

Some lenders did raise concerns about these advice risks, but none said it would be a threat to the market.

Automation of the application process, increasing efficiency and improving the customer experience were the key positives cited, but one lender went further than that.

It thought robo-advice technology could be developed for lenders to offer an automated execution only service, though not, in effect, providing advice in the traditional sense.

IRESS principal mortgage consultant Henry Woodcock told Mortgage Solutions that some of the smarter technology could be useful but there was still some time for it to evolve.

“Brokers generally told us that face-to-face advice was still important for consumers and for building trust,” he said.

“I think Facebook and other data breaches have made people more hesitant about using new technology and more desirable to speak to people.

“But I think another year there we will see where the technology really this in this space,” he added.


Product transfer concerns

Interestingly, one in three lenders said they were concerned how the product transfer market will evolve this year, with 38% planning to improve the online journey including retention and product transfers.

Woodcock noted that in this instance concerns were often because lenders did not have the processes in place yet to allow brokers to complete product transfers on their behalf.

“Quite a few would have done this as a back-office process so they don’t have an outward process to give access to brokers,” he said.

He added that they want to get the journey right for offering online retention product transfer capability so the broker can do that online.


Little progress on usability

For the fourth edition of its research Iress again asked brokers what one change by lenders could most improve their technology offering, and similarly to last year, the most requested (35%) was for lenders to make their portals more intuitive and easier to use.

As with last year’s survey, often used phrases included; “more user friendly”, “easier to navigate”, “simplify”, “remove unnecessary questions” and “ability to move around sections,” Iress said.

This was reflected in brokers usability rating, with 45% judging portals to be below average, suggesting lenders need to continue to focus efforts on their main portals, as well as their mobile offerings.


Other key findings included:

  • Nine out of ten lenders provide scan and attach at point of sale, but 42% do not allow proof documents to be uploaded as an image via a smartphone or tablet;
  • Eight out of ten lenders provide real-time case tracking, however, more than half of intermediaries still have to make between four and ten calls on average per application, most frequently for case updates;
  • Nearly half of lenders think application programming interfaces (APIs) will open-up opportunities in the mortgage market.


It was also notable that 60% of the 417 brokers surveyed predicted their share of the market would continue to increase over the next year.

With around 75% of new mortgage business already generated through brokers, it is possible that many see inroads in the product transfer market as being the key area for growth.

Woodcock said: “How much more can be broker introduced?

“It is a positive that they are thinking along those lines but the majority of lenders think it will be a flat market. But it has been very robust since the crash really,” he added.

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