At the end of March, more than a thousand experts in artificial intelligence signed a letter airing their concerns about the future of AI.
Tools like ChatGPT and AI image generators have all driven headlines and conversations in recent months, and the mortgage industry hasn’t been immune to the hype.
While Terminator’s ‘Skynet’ might not be here just yet, this does seem like a good time for us to reflect on the role that people currently play in the mortgage industry and the responsibility we have to build a better future.
We all know the housing market plays a critical role in the UK economy and our society. Not only does it provide thousands of jobs across the country (including mine!), but research from Savills suggests that UK housing stock is now valued at £8.7tn. The UK itself is often referred to as a ‘property-owning democracy’. We all have a stake in this future.
I’ve often called for more tech in the mortgage industry, particularly innovative new solutions which can save advisers time and energy and will continue to do so, but this latest news has caused me to think hard about what role we can all play as human beings in the future of our industry.
A chance to lead
During the pandemic, we saw just how powerful industry collaboration can be. Covid-19 and the surge in buyer demand following the Stamp Duty holiday created huge challenges for our market. But when the industry came together we saw how we could create real change and make the most of the opportunities presented to us. We still have that power and it’s important that we use it.
Where can we humans still make a difference? We must first decide what is important for our market and what work we need to do to make our ambitions a reality. Here are three key areas we can focus on.
Supporting first-time buyers
The end of Help to Buy has left many potential borrowers unsure about their options for the future. To help these customers, advisers are craving clarity on what comes next. With no clear successor to the scheme, product innovation will be key.
We will need more accessible high LTV products, as well as alternatives, such as shared ownership options, to help first-time buyers onto the ladder. And I am encouraged by a number of ongoing conversation in this respect.
Additionally, we need to support the new build market, working in partnership with housebuilders to ensure there are enough homes to meet demand, and that we are building green, sustainable homes for buyers.
Boosting diversity
Embracing diverse leadership is an ongoing project for the mortgage industry, and an area where we still need to make big improvements. I have previously discussed the issues and will unashamedly continue to champion the work led by Ami and Imla under the banner of Working in Mortgages – this is no tick box exercise.
Improving diversity should be a focus for our sector and will be a huge antidote to empathy-lacking, single-track robots and artificial intelligence.
Protect the ‘Golden Hour’
I have heard recently some predictions that the intermediary share of business could continue its surge and reach 90% of purchase and remortgage activity, and 60% of product transfers. So much for robo-advice and the disintermediation scare stories of the past few years!
However, complacency must not be our downfall. In many other areas, purchasing and financing have been crashed together. Think about going to buy a car and driving it off the forecourt shortly afterwards, or the rise of buy now pay later options on pretty much everything, including your Friday night takeaway (which concerns me).
I remain strongly of the opinion that consumers want and value advice when they are purchasing most likely their biggest asset. However, advice is perhaps only a small part of the current role of an adviser, potentially as low as 10% of the activity. Much of the role is steering through processes, forms and other admin, and this is an area in which we will see technology make advances. Why would the mortgage process remain immune to technological encroachment?
It is therefore important to reflect on our current roles and maximise attention where the likes of ChatGPT will be unable to tread – on providing empathy, confidence, relationships, and most importantly advice. That is all the more important as the Consumer Duty approaches. For many of us, this will be the biggest regulatory change for our market and there is much work we must all do to ensure we meet the Duty’s expectations, but it is also opportunity to ensure we are working to a standard that truly demonstrates the powerful role of advice in achieving the best outcomes for our customers.
For some, the prospect of an AI-dominated future is a clear cause for concern, but I believe this latest news is an opportunity for us to focus on what we humans have always done best: working together. Technology has a role to play of course, but at least for now we need to devote our attention to collaboration, working as an industry to build something new and prepare for the future.
Kevin Roberts is director of Legal & General Mortgage Services
