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My Opinion: Robo advice needs human engineering


Instead of trying to replace brokers with robots, why not build tech to support the integral, human part of the process?

What do technology and consumer demand have in common? Both tend to change very rapidly. Just as Netflix made the once popular Blockbuster disappear from our high streets, and Airbnb allows homeowners to invade the territory of hotels, the mortgage industry is seeing a similar disturbance through robo advice.

Although technology is welcomed for making certain systems and processes easier to use, recent research from Legal & General revealed 35 per cent of brokers felt the biggest threat to their business was robo advice.

In this day and age, technology is an essential way of life for businesses, and brokers need to keep up with such change. However, could their fears be reasonable?

Sourcing systems

Everyone wants a carefree life but the quickest and simplest route towards achieving this goal is not always best in the long term. Sourcing systems often produce pages of results but the most relevant products can sometimes be hidden behind hundreds of other deals. This is especially true when dealing with niche or specialist products that require more in-depth underwriting.

But how can brokers justify an affordable, bespoke product on page 150 when other deals appear much higher on the list? With the vast number of products available on the market, some element of technology is obviously needed to compile and filter them.

However, it takes the human touch to recognise what is appropriate for a borrower’s specific circumstances. If there are nuances in an application, or reasons behind a potential borrower’s rudimentary credit score, robo systems will be able to do little to help source the appropriate deal.

The most attractive headline rates offered by lenders are not always available to the average borrower, instead reserved for those with a near-perfect credit history. Computers cannot identify genuine reasons why customers may have incurred adverse credit. But brokers can add real value. They will go that extra mile to ensure legitimate customers trying to get back on track through effective management of their income and expenditure are not subjected to an automated ‘Computer says no’ response.

Examples of the types of complicated application that need an element of additional support are those from clients who are self-employed or who work as contractors. The UK workforce is changing: 15 per cent of workers are self-employed and contractors have increased by 35 per cent in three years. As such, we often find income patterns are irregular and job histories shorter. A computer cannot analyse a set of accounts with legitimate tax-efficient plays within it, nor identify what should be added back in to represent the borrower’s true income.

Only a human can understand an individual’s personal history, get to grips with their business plans and understand that this growing pool of borrowers is just as worthy of credit as those who fit traditional high-street criteria.

Robos can only be as accurate as the data they have been fed. These automated systems assume the borrower will understand what is being asked of them and type in the correct information. However, if completing an application in haste, or even carefully but misinformed, a borrower could click on something that takes them down the wrong route to an unaffordable option or, worse, causes them to be declined outright.

The mortgage market needs human brokers to engineer the mechanics of the innovative technology it will eventually employ. Even the pure robo-only companies that have launched to challenge the status quo often use people to double-check their applications for any errors.

Instead of trying to replace brokers with robots, why not build technology to support the integral, human part of the process?

Full digitisation?

So, will the mortgage market ever become fully digitised? Judging by the number of clients who prefer meeting in person when looking for a mortgage, the value of the broker cannot be underestimated.

Machines will have a role to play in carrying out the basic processes – but human advice and intuition are second to none.

Matt Andrews is managing director at Bluestone Mortgages


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  • Chris Hulme 1st December 2016 at 5:20 pm

    Robo advice has a long long way to go. When this industry gets its head around the fact that advice doesn’t just stop at choosing a product it will truly understand just how far off robo advice really is.
    Advice starts with gaining the relationship, understanding the client and choosing the product. The structure of that product, the application, chasing lenders, valuers, estate agents and solicitors wont be done by robo solutions in any effective manner at all. Even less so when it comes to sorting out problems of renegotiations, down valuations, getting reports to lenders – the human list is endless.
    Mortgage sourcing systems remain woeful at best. They’ve been trying to get this basic element right for the last 20 years and are no nearer now than when I started in the industry in the mid to late 90’s.
    Advisers will still be advisers in the future – and we’ll have that great human interaction that is so rare in most things we do now. The best bit is that I hope technology is there to support the human adviser going forward rather than trying to hopelessly replace them.