Hear from Alexis Rog, CEO and founder at Sikoia which has recently joined the Council. Alex shares his thoughts around AI adoption in the mortgage and later life lending market whilst maintaining human interaction and consumer protection.
Why greater AI adoption will deliver a more efficient mortgage market
There is no question that the mortgage market is more open to technology today than it was even just a few years ago. You don’t need to have been in the industry decades to remember a time when processes were largely carried out offline by lenders, brokers, distributors, and the like, but thankfully practices have improved steadily since then.
For example, we have seen the introduction of specialised CRM tools, the growth of sourcing systems, and more recently the increasing integration with credit bureaus, public databases, anti-money laundering providers, and other third-party solutions. Additionally, the Equity Release Council has recently updated its Standards to include mandatory income and expenditure assessments by advisers. These enhancements reflect a strong commitment to ensuring customers can release equity from their homes with complete confidence, supported by rigorous consumer protection measures.
Yet, in my view, there remain great areas of untapped potential. Certain technological developments that have become central in other areas of financial services, and even other areas of lending, have not quite had their moment within the mortgage industry yet.
Open Banking is a good example of this—an innovation that has led to fantastic improvements in the customer experience in other forms of credit, and yet has gained little traction within mortgages.
There is definitely real room for improvement in how technology is incorporated. Particularly in a market with high broker intermediation, opportunities exist to put technology to use in ways that will take some of the burden away from staff and deliver a smoother experience for customers.
Room for improvement
I think there are three key elements which would represent the ideal future for the mortgage market based on its use of technology:
First and foremost, greater connectivity between brokers and lenders. There’s too much double keying of information, too much task repetition, which only leads to delays and inefficiencies. Sharing data between different systems is something that can largely be automated today.
Secondly, improving the format of the data we share. Establishing a more standardised way of presenting information can greatly reduce inefficiencies. Consider all the variety of inputs and methods lenders use today to assess income and affordability, along with the differing documents they may require from customers. This lack of consistency adds complexity and increases costs.
Finally, the greater use of AI (artificial intelligence), given its incredible potential for both delivering a better experience for customers and drastically reducing the time staff spends on admin tasks.
The role of AI
There is a real opportunity to utilise AI in ways that can result in enormous time savings for the various parties involved in the mortgage process.
At Sikoia, for example, we have developed an AI-powered tool that can automatically process a diverse range of customer application documents, such as payslips, bank statements, and tax returns.
Imagine giving customers instant updates as soon as they submit their application documents, without the need for manual review. Picture customers saving 20 minutes on filling out budget planners and fact-finds, while automated checks quickly verify income, employer details, and affordability behind the scenes.
Just a few years ago, having a technological solution that could do this would have involved prohibitively high costs and often a lack of reliability. Yet AI is now filling that gap and at far more palatable costs.
Our proprietary system is built to ingest data from these documents swiftly and automatically generate checks covering proof of income, employer verification, single affordability, and application completeness.
That’s hours of work—always carrying the risk of human error—being cut down to moments, with an impeccable rate of accuracy. Time saved can now be used to better support more customers.
The benefits to all parties involved are substantial, providing near-instant certainty compared to current, more lengthy, and costly methods. The best part is that AI can be implemented in a way that requires minimal changes to current processes and behaviors.
The human touch
A common criticism of the use of technology in mortgages previously has centered on the importance of the human touch. A mortgage is a massive undertaking, and most borrowers feel more comfortable dealing with a real person, someone they can talk to about their various issues or concerns.
I’d argue there is a misconception that technology will replace that interaction; at its best, sensible technology will supplement human advice, not take its place. Effectively, AI can be used to support providers in working more consistently and efficiently, taking on some of the heavy lifting, rather than providing a rival service.
Delivering a faster, smoother experience
I believe we are on the cusp of a period of great digital transformation, where across the mortgage industry, technology is integrated more fully into the way we work.
There are substantial benefits available from doing so, not just in terms of the timesaving but also in the better understanding lenders will be able to build of their customers.
Today’s borrowers are already seeing AI playing a more central role in various aspects of their lives and will come to expect it from mortgages too. The only real question is how quickly mortgage businesses recognize the potential improvements it delivers and incorporate it into their plans.
- The views of contributors are not necessarily shared by the Council
