AI is no magic bullet, but it is inevitable – mortgage lenders on the tech challenges ahead
AI is not a magic bullet, and collaboration between mortgage lenders will be essential if they do not want to risk being left behind. These were some of the arguments made at a Business Reporter event for lenders, held in Manchester on 20 May.
The event, sponsored by technology provider nCino and held at 20 Stories restaurant, gathered 10 decision-makers from banks, building societies and specialist lenders to discuss technology and its role in the broker experience. The roundtable explored pain points in broker-lender interactions, and how technology and especially AI is being used to try to smooth the friction.
Pressure to adopt new tech at pace
The attendees agreed that they felt rushed and under pressure to bring in new technological solutions at pace in their organisations. “We’re trying not to get carried away with AI in the sense of ‘have we missed the boat?’, when really everyone’s probably in the same boat, no one’s missed it yet, but you feel rushed,” said one speaker.
Compliance and pushback from the chief risk officer can get in the way of innovation, one speaker said, which is why a solid governance framework and guardrails are needed.
With a lot of resources required to try new solutions and technology changing fast, the stakes are high and lenders are worried about getting it right first time. One executive argued against doing things in stages. “Iteration is a huge risk,” they said. “We have to be thinking about the next stage ahead, otherwise we will waste a lot of money as a business on interim solutions.”
Another pressing problem is the difficulty of successfully integrating new tech solutions into an existing tech stack. “We are focusing on our ability to integrate technology rather than the tools themselves,” they added.
Firms are focusing too on improving processes and data quality before trying to automate, because poor inputs will simply lead to poor outputs. “There are solid foundations needed,” one speaker said, suggesting firms think carefully about what they are trying to automate, and why.
Quality of communication
Those around the table reviewed some of the common complaints from their broker clients, such as speed and ease of mortgage applications, slow response times and opaque lender processes which can leave them feeling out of the loop.
Brokers report that they waste a lot of time re-keying customer data into lenders’ systems, something where automation could vastly improve processes.
Quality of communication is vital too. One building society executive said they are working hard to communicate their offering clearly to brokers, especially around certainty of execution. “Brokers want to make sure that they’re placing an application with an organisation that’s going to go through the application process to offer. For organisations like ourselves and others around the table that aren’t the cheapest in the market, it’s really important that brokers understand our offer and have as much certainty as possible that, when they place an application, there won’t be a change in decision,” one leader said.
Who owns the customer?
Attendees also discussed the question of who “owns” the customer, and the tension sometimes felt when lenders contact customers themselves – for instance, telling a customer directly that their mortgage has been approved rather than letting the broker deliver the good news.
As technology moves on quickly, there was some debate about the importance of relationships and human contact in the mortgages space. Lenders still value real conversations with their broker clients, but end customers, especially younger people, tend to want to do everything online or via an app, and don’t want to speak to a human at all. Brokers want to avoid AI speaking directly to their clients, partly for fear they will ultimately be liable for any bad advice it gives. But, if AI chatbots are the future of mortgage advice, where does that leave the more traditional brokers used to doing business on the phone?
Digital transformation as a priority
Financial services firms today are operating against a challenging backdrop of interest rate uncertainty, market volatility and geopolitical risk, as well as higher operating costs. But in spite of these headwinds, digital transformation is not taking a backseat in their organisations, and attendees agreed about the need to “be brave”. There are winners and losers in every period of change, and several executives said more consolidation in the industry is “inevitable” as successful firms absorb smaller rivals on the road to a more technologically advanced future.
To learn more, please visit: www.ncino.com