With the growth in technology and other digital solutions continuing to make substantial in-roads across the mortgage sector, there is a growing consensus of opinion to suggest that brokers who fail to accept the changing nature of their industry or to engage with these developments may be left behind. In a major report published earlier this year, for example, the FCA outlined its own view that further technological advances may cause lenders to become less dependent on traditional brokers in the future and that the advent of PSD2 and Open Banking could ‘accelerate the digital transformation of retail lending models’ as well as to entrench increasing levels of competition between ‘technology driven firms’ (particularly in relation to ‘mortgage intermediation and credit broking’).
This outlook has already been confirmed by the growing use of (so-called) ‘robo-advice’, ‘chatbots’ and other Robotic Automation Systems within the financial arena to dispense with a wide range of administrative or compliance work and to speed up previously time-consuming processes which have traditionally deflected brokers from pursuing more productive work (such as affordability checks or borrower applications). In October 2017, moreover, clicktopurchase.com completed the first ever entirely digital property transaction in the UK, utilising blockware software to market and exchange the Wiltshire-based property in just one week – a remarkable achievement and a likely indication of future industry practices.
There is however a growing and understandable sense of apprehension amongst brokers as to their own role within the mortgage process, with almost 40% of them (according to research conducted in 2017 by the Legal and General Mortgage Club) identifying the rise of ‘robo-advice’ as the single greatest threat to their businesses at the present time. But, are they right to be fearful?
Well, yes and no is the answer. Many experts have dismissed the possibility of a purely digital, or ‘robo’-based business model on the basis that a huge number of consumers value relationships. They want conversations and face-to-face advice. For a broker, being in the same room as a client enables them to observe relevant factors that may affect a client’s situation. This is something that a robot will not be able to do (or least not for a very long time!).
However, there is an opposing view to suggest that brokers will also need to adopt an increasingly ‘pro-active’ role and to demonstrate a greater sense of worth to their custom bases if they wish to compliment technological advances and offer a truly ‘hybrid’ competitive service. This means that brokers who target ‘low hanging fruit’ or straight-forward ‘vanilla cases’ that require little in the way of involvement and even less time to close, may find that their volumes of business begin to fade away, while an increased onus on periphery needs and a ‘one-step further’ attitude towards clients will be essential to meet the new ‘gold standard’ of service. Indeed, a greater reliance upon technology may arguably initiate a wider process of elimination amongst brokers with less transferable or inadequate skill sets and to encourage a ‘survival of the fittest’-type scenario, but this is a natural and necessary part of any cost-effective or labour efficient business model (especially one undergoing such fundamental changes).
Accordingly, brokers who wish to stand out from the crowd and to thrive in an era increasingly defined by technology will need to look to the opportunities that digital platforms can offer them and aspire to new levels of interactivity with their clients. It’s called evolution. Embrace it!