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AI recommendations could negatively impact a client’s future options – Marketwatch

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  • 18/09/2019
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AI recommendations could negatively impact a client’s future options – Marketwatch
The last few years have seen conversations about the impact of technology on the mortgage sector increase, as society increasingly relies on its use.

Artificial intelligence (AI) has been lauded for its ability to speed up and simplify processes by “learning” to take on some of the decision making processes humans carry out, and where it is used in the initial stages of an application process play a role in identifying what it considers to be the best products for a client.

As with any technological process, however, it doesn’t come without its negative points. So this week Mortgage Solutions is asking: Should more brokers embrace AI technology that narrows down a client’s choices in the first steps of the application process?

 

Michelle Niziol, CEO of IMS Property Group 

Whether you’re asking Siri on your iPhone for directions, or Alexa on your kitchen counter for movie listings, there is no doubt that AI systems have become a significant aid to many people’s daily lives. The question is, do AI systems make sense to use in the mortgage industry?  

In my opinion, they do not. While there are certain advantages to using AI systems for mortgages, such as ease of application submissions and speed of turnaround for decisions, there will inevitably be situations with buyers that simply cannot be understood or appreciated by an AI system. 

For example, a recent client of mine wanted to purchase a home for her young family. In their mortgage calculation, their childcare costs drove down their approved borrowing amount significantly. However, she had plans to have her mother move in with them after four months to help with childcare, eliminating these costs. While an AI system would find it difficult to incorporate this, our ‘human approach’ allowed us to explain our client’s childcare situation with the lender, who understood and was able to make an exception. 

Today, she has the home of her dreams, and her mother has moved in to help with childcare, allowing her to easily meet her monthly payments. Had she gone through an AI system, she would not have been able to purchase her home. The purchase of one’s home is usually the largest single investment that people make, and having the human element involved makes sure that people are looked after, and not just treated like a number.  

 

Anna Peplermanaging director, Key Solutions Mortgages 

We believe that there are many pros for brokers who embrace AI technology that reduces a potential purchasers’ choices as a first step on any application. The initial stages of a fact find are mainly concerned with ‘hard facts’. Because AI can speed up this basic task of information gathering, it will be advantageous to both the broker and the client. 

The downside on AI technology is that any system is only as good as the quality of the information that is input, and a client’s understanding of things such as overtime/shift allowances and the level to which this is guaranteed may be ambiguous without robust questioning which would affect the filtering process and won’t provide as much of an advantageous outcome for the clients. 

No recommendation is complete without gathering soft facts and there is a danger with AI that clients will believe that a mortgage recommendation is purely based on hard facts. Therefore, they will select the headline product without due consideration of other factors which could negatively impact their future options. 

We believe that AI technology will inevitably become the norm in the mortgage process and we welcome any progressive change but care and consideration needs to be given to its implementation and clients should have the choice of whether to participate rather than it becoming the default option. Our belief is that AI technology will never fully replace the adviser as people tend to want expert human interaction at some point along the process. 

 

Payam Azadi, director of Niche Advice 

I was part of the team some 20 years ago that designed a system called ‘MortgageLink’ which was an end-to-end fully online mortgage sourcing system. We were not even the only ones with competitors such as the Charcol Online, TMOS system and Mortgage 2000 – which later became Money Supermarket – so AI and intelligent systems have been around in the industry for a long time. 

So why now are we seeing so much in the press and media about AI? Well, it’s because AI has the power to change industries to a whole new level, but its logic is only as good as the people who code it. The current Mortgage Sourcing Systems are living proof. I’m now a mortgage broker and regularly use two of the most widely recognised systems and almost on a daily basis I discover inaccuracies with product criteria, which effects its sourcing accuracy output. Don’t get me wrong, they narrow down the options – and are a vast improvement on published formats such as Moneyfacts magazine that age before they leave the press – but they do not pick the perfect mortgage either. 

My point is that we should embrace technology as it has distinct time saving qualities and out of office coverage. However, you cannot replace experience and advice, and this is often determined by gathering ‘soft’ rather than ‘hard’ facts from customers, and hand holding when the chain has challenges. 

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