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Koodoo can do a CeMAP but AI can’t replace brokers…or can it? ‒ analysis

  • 25/08/2023
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Koodoo can do a CeMAP but AI can’t replace brokers…or can it? ‒ analysis
Artificial intelligence has the potential to revolutionise mortgage advice, brokers have suggested, but that will come through supporting advisers rather than replacing them.

AI looks set to make a big impact on the way that we work in future, with Goldman Sachs reporting earlier this year that it could replace the equivalent of 300 million full time jobs. Understandably, there is already concern among workers that such developments in technology could render their roles obsolete ‒ a third of respondents to last year’s global workforce survey from PwC said they were worried about their role being replaced by technology in the next three years.

We have already seen AI begin to make its presence felt within the mortgage market. Mortgage technology firm Koodoo revealed earlier this month that it has created AI which was able to pass the UK Certificate in Mortgage Advice Practice (CeMAP) exam.

Koodoo suggested the technology could transform the UK mortgage market, with its AI achieving grades of above 70 per cent in all three modules.

However mortgage brokers expressed cynicism about the degree to which AI poses a threat to traditional advisers, arguing that borrowers continue to value personal interactions.

AI could never replace personal touch

Jodi Spreadbury, senior mortgage and protection adviser at The Mortgage Broker, said that she had many clients worried about payments, rates and the risk of losing their homes, and the conversations she has with them could never be replicated by AI.

This was echoed by Sabrina Hall, mortgage adviser at Kind Financial Services, who said that she commonly hears from clients about how great it was to have someone to talk to through the process. “Communication and experience are a huge part of my role as an adviser and I think we are a long way away from AI being able to deal with that side of things,” she continued.

Developing technology which can pass a multiple choice questionnaire is impressive, accepted Steven Morris, advising director at Advantage Financial Solutions, but he agreed that proper mortgage advice involves “a level of emotional intelligence” which can’t be provided by technology.

Would you trust AI to sort out your home?

The role of brokers is misunderstood by many outside the industry, suggested Lewis Shaw, owner of Shaw Financial Services, who noted that AI will “never be able to read between the lines or deal with the messy business of real life” as brokers do.

He continued: “When AI can ‘look’ at someone and see the confusion on their face, or distinguish between what’s being asked by a client and what they are actually trying to ask, then we might be in trouble.”

Craig Fish, director of Lodestone Mortgages & Protection, noted that AI can prove useful with marketing, admin-based tasks and as a research tool for generic information, but queried whether it could replace a good broker.

He added: “It’s a brave person who lets a computer secure a mortgage on their most important and prized asset, their home.”

A similar point was made by Emma Hollingworth, managing director at MPowered Mortgages, who noted that the CeMAP focuses on hard facts, which AI can do well, “but a broker’s job is so much more”.

Use AI to support brokers

Spreadbury did accept that AI could supplement and support the work of brokers. 

She explained: “At the moment, I have the criteria of approximately 90 lenders, five protection providers, as well as legal processes, compliance, consumer duty fee charging all rolling around in my head. I’d welcome any sort of intelligence that will support me, so I can focus my energy on the bit that is important – making sure my clients are comfortable and well informed.”


What about Consumer Duty?

AI does not present an immediate threat to brokers, “but we are at a crossroads” admitted David White, chief operations officer at Simply Lending.

He added: “Client acceptance is earned over time and is often generational. Walk into your local bank or building society today and you will witness how technology has already changed the industry. Gone are the days of walking into a busy banking hall with members of staff filling up all cashier positions as this style of service has largely been replaced by online banking and zero human interaction. 

“How this all falls within Consumer Duty is the million dollar question as if AI gets it wrong who is responsible?” he concluded.

Working with AI not against it

However, not all brokers were so negative about the prospects for AI.

Ranald Mitchell, director of Charwin Private Clients, was more positive about the potential for AI, suggesting it had the potential  ‒ if it is developed well ‒ to revolutionise the industry.

He continued: “Coherent front-end conversations can help brokers with marketing to improve the quality of applicants, weeding out the people who cannot be helped and linking them to alternative suitable options. In a world that is fast moving towards the benefits of AI, and consumers increasingly engaged with their devices, AI certainly has a place.” 

However, Mitchell was another broker who pointed to AI failing “on the emotional side” which is why it will not replace humans.

“Working with AI is an exciting opportunity for the industry to evolve, delivering faster, more accurate and better outcomes for consumers. Let’s work with it, not against it,” he concluded.

Hollingworth was clear that AI can be a “game changer” for brokers and borrowers alike, noting that MPowered Mortgages had been using AI to deliver fast mortgage offers by “automating onerous parts of origination, like expenditure verification from bank statements or credit commitments matching”.

She added: “From start to finish, we’ve worked with brokers to understand how we can serve them best and worked to develop the tools to do so.”

Brokers would be naive to think AI won’t have an impact on the way advice is provided, argued Joe Stallard, director of House and Holiday Home Mortgages.

He continued: “I do believe however that it will work alongside how advice is delivered, with technology predominantly aiding the client journey, rather than replacing the adviser.”

Stallard noted that mortgages are the biggest financial decision most people make, and the help of an expert “won’t be undervalued anytime soon”.

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