Artificial Intelligence (AI) is rapidly transforming the mortgage landscape. From streamlining case management and improving underwriting accuracy to enhancing client engagement and compliance, AI is driving a seismic shift in how lenders and brokers operate. But while its impact is unquestionable, many questions remain about its implementation.

The Financial Conduct Authority’s (FCA) latest initiative highlights the urgency and potential of adopting AI in a safe, transparent, and customer-focused way. In a bold step, the regulator has announced a live testing service designed to help firms safely and responsibly deploy consumer and market-facing AI models.

Set to launch in September 2025 and run for 12–18 months, this service is part of the FCA’s AI Lab, an innovation hub aimed at supporting responsible technological development. As Jessica Rusu, the FCA’s Chief Data, Intelligence and Information Officer, stated at the Innovate Finance Global Summit:

“We want financial firms and their customers to benefit from AI, so we’re providing a safe space to test how they plan to use it. This will help develop shared understanding and explore evaluation methods that facilitate the responsible deployment of AI.”

Consumer benefits

With 75% of firms already using some form of AI, mostly for internal operations, the FCA aims to encourage broader adoption in areas that can directly benefit consumers, including mortgage origination, client communication, and personalised financial planning.

As AI moves beyond back-end analytics into customer-facing applications, it is reshaping consumer expectations. According to recent data from ValidPath, 28% of IFA client meetings are now remote, and fewer than a third (29%) of advisers see face-to-face meetings as essential.

The growing importance of a hybrid approach is underlined by nearly half (49%) of IFAs sampled viewing technology as vital to their business success, making it the most important factor behind ‘identifying, attracting and retaining clients’. This shift, however, doesn’t signal the end of in-person advice; rather it reflects a growing awareness that technology can enhance and augment, not replace, human connection.

AI enables brokers to deliver personalised advice at scale, whether through virtual assistants that triage queries, automated follow-up tools, or predictive analytics that flag mortgage expiry dates or potential product switches.

AI can also cater to generational preferences: Gen Z expects digital-first, instant interactions, while older borrowers still value personal touchpoints. AI doesn’t replace brokers; it empowers them to tailor services to evolving customer behaviours.

Modern CRM platforms integrated with AI are now central to business practices across the mortgage market. Such platforms automate laborious tasks, like rekeying data, scheduling reminders, or sourcing quotes, freeing brokers to focus on the actual advice process.

Additionally, AI-enhanced CRMs track engagement, support client segmentation, and anticipate needs, making proactive retention campaigns easier. With customer acquisition costs rising, retention is a smarter play.

Compliance 

AI is also revolutionising risk and compliance. Tools that automatically assess affordability or flag irregularities reduce the risk of mis-selling and align with Consumer Duty. AI’s ability to record, track, and interpret customer interactions ensures better outcomes, especially for vulnerable clients.

Despite the opportunities, challenges remain. A joint FCA/Bank of England survey found that 46% of firms only partially understand their AI tools, especially third-party models.

The FCA’s live testing framework aims to bridge this gap by providing regulatory support and promoting best practices to arm firms with the confidence to invest in AI in a way that drives growth and delivers positive outcomes for consumers and markets.

By leveraging AI to automate, personalise, and safeguard the mortgage journey, firms can future-proof their businesses and deliver better value to clients. But responsible deployment is key.

Dale Jannels is chief executive of One Mortgage System