AI wins ‘Best supporting role’

The proliferation in the use of artificial intelligence (AI) across the majority of professional occupations continues, but what of our wonderfully complex world of mortgages?

Will we watch from the sidelines as AI fundamentally alters other industries, or will our world be thrown into flux by this most modern, complex and impactful new technology?

Perhaps more importantly, will AI impact us incrementally, or will we see material change that upends our market in a way that perhaps few have considered up to this point?

We all need to collaborate to apply this new tech.

In my view, the challenges that face all businesses associated with the financial advice market in the UK are mounting, and the advent and application of AI is exacerbating those.

Indeed, the very principle upon which the foundations of many of our businesses are built — that only humans can deliver truly exceptional financial advice — is once again in question.

But we’ve heard that all before, right? So what’s different this time?

Material shift

Well, this time it’s not coming from new players within our industry. It is coming from something external and existential, which can move a market in a way that its participants have not yet conceived.

Incremental changes to small pieces of the process are unlikely to deliver material change.

The advances that we are now seeing in data analytics, AI and machine learning — and, dare I say it, with an increased push from central government and the FCA — feel different from what has come before. It feels as if we are on the precipice of something material finally shifting.

There are too many interests aligned in making these new technologies dominant players in the delivery of financial advice — not least the regulator, and indeed some of the lenders themselves. Change is most certainly coming.

But those of us who know and understand this market know that financial advice dominated by rules engines and algorithms is rarely in the best interests of customers.

Our ambitions should extend to a full re-imagining of everything to do with the delivery of mortgage advice

To combat this and to ensure that, as a group, we collectively continue to deliver exceptional outcomes to customers, we as an industry must focus on what makes the retention of the human element in advice so important.

And we must then leverage the human element, in partnership with the technology that will transform our market, for the ultimate benefit of the end customer.

At least for the foreseeable future, machines do not exhibit human levels of either emotional intelligence or empathy. Generally, as humans, we do. We understand that life is not defined by a set of rules.

The best financial decisions are made by taking into account the vagaries of our lives, and invariably it is only another human, who has lived and breathed the same or similar challenges, who can ask the right questions, elicit the right information and therefore make the right recommendation.

It feels as if we are on the precipice of something material finally shifting

And they will use technology such as data analytics, AI and machine learning to support, not replace, themselves.

Improving efficiency

For now, therefore, we as technology providers in this market should focus on the application of AI in areas where it supports the provision of advice.

This application is likely, for the moment at least, to be incremental and focused on specific areas where the obvious use of AI technology can materially impact the efficiency of the advice process.

We have already seen this in some key areas, with third-party providers taking pieces of the process (document scanning and translation being good examples) and applying AI to deliver efficiency in data collection and output.

Other providers will no doubt emerge, but incremental changes to small pieces of the process are unlikely to deliver material change to the benefit of end customers in the longer term.

Will AI impact us incrementally, or will we see a material change that upends our market?

Our ambitions, therefore, should extend beyond the incremental to a full re-imagining of everything to do with the delivery of mortgage advice. In order to achieve that, key market participants should consider the extent to which we all need to come together, finally, to look at how we truly collaborate to apply this new technology to all of our businesses.

Year after year we have proved that incremental change, made in a silo, adds little to the experience of the end customer. Nor does it materially impact any of our businesses. Something bigger needs to change.