Mortgage brokers are being urged by financial regulators to use technology such as artificial intelligence (AI) to better serve their customers.
As part of its plans to build the 'mortgage market of the future', the Financial Conduct Authority (FCA) has outlined four focus areas.
One of these will focus on innovation and disclosure, increasing the use of AI among brokers while reducing the burden on humans in the process, the FCA said. “We are encouraging the use of data and technology such as AI to help brokers provide better and faster advice while retaining a human touch.”
Another area of focus includes more flexible mortgages to support first-time buyers and underserved populations.
David Zeal, executive director of payments and digital finance at the FCA, said: “We have worked at increased pace this year to improve outcomes for mortgage seekers. We will use insights from consumers and industry to drive further reform, drive risk rebalancing and help expand access to affordable mortgages that meet the needs of today's consumers.”
AI is being used across the financial industry, especially in banks, but the balance between humans and AI is important.
According to a study by Santander, 52% of mortgage borrowers prefer a broker over AI when purchasing a home, and 65% said they would not be able to proceed through the homebuying process without the support of a broker. They found that around two-thirds (63%) of people rely on recommendations and referrals from real people, and only 5% use AI to find a broker. The survey also found that 90% of customers turn to their brokers for emotional support, and 82% said their brokers made them feel less stressed when things got complicated.
“It's clear that borrowers still value the guidance, experience and human judgment that only a broker can provide,” said Graham Seller, head of brokerage channels at Santander UK.
He added that the technology plays an important role in improving the overall process. “AI can provide support in the early stages of trading research and exploration, but when it comes to making concrete life decisions, nothing can match the trust built through a broker.”
This development could be a further example of streamlining the complex and often frustrating process of buying a home.
Last month, the government announced that various departments are working as part of a coalition aimed at transforming the outdated home buying and selling process, which costs the economy around £1 billion a year.
The coalition, which includes the Center for Finance, Innovation and Technology (CFIT), will consider how digital platforms can improve the situation. “Chain breakdowns, soaring fees and fraud could all become a thing of the past,” CFIT said.
With support from the Ministry of Industry and Trade's Smart Data Team, the coalition is tasked with developing a roadmap for delivering smart data services to the home buying sector and, in some cases, prototyping smart data systems.
