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By James Dearsley

Co-Founder, Unissu


PropTech Today: Mortgage brokers vs robo advisers - who will win?

Give me 100 leads and I will make five-times more good appointments than any AI you put me up against,” stated the comment left beneath last week’s rather contentious column about the future of the negotiator.

The commentator may have been correct that he would personally excel in that particular scenario. However, sadly he missed the point.

The future of the negotiator isn’t going to be about banging out any number of phone calls in the hope that something sticks. This is about operational effectiveness.


How effective are we currently and how effective will we be in the future? What jobs, or tasks, do we need to do in the future to make us more efficient?

Do we need to have so many manual elements to our role, or can we automate some of them? Take, for example, the paperwork side of our role. How much of that can we automate in order to have more time to concentrate on servicing clients in a better way?

Take the commenter’s example - calling 100 people. Is that really an effective use of our time? Is it an effective use of their time, more importantly?

If you just ‘bash out’ 100 calls to people, how many will of those calls will be placed at the wrong time? How many answerphone messages will you leave? How many will be pi**ed off as they are not wanting to move or they are no longer able to proceed? I could keep going on and on about this.

I remember so clearly this being my position back at Foxtons, to some friction, if I am honest. We were always drilled on the mantra of ‘more phone calls means more viewings, which means more sales’. I disagreed with this when thinking about efficiency.

So, I did some research. I looked at the calls-to-viewings ratio, and the viewing-to-offer ratio. Who were my most effective negotiators? I wasn’t trying to find people who were slacking or not wanting to put in the hard graft, it was all about finding out who had the best understanding of the client. The best negotiators are always those who truly listen to their clients.

They knew exactly what that client wanted and when. The customer knew that when a call came in it was worthy of answering. They knew they would never be wasting their time.

Today, we have much smarter ways of filtering these customers to ensure our outbound communications are more relevant, better timed and more contextual. Bashing out a load of calls isn’t always the answer. Today, there is already a better way. So, just imagine what sort of ‘better ways’ there will be in the next 5-10 years.

Let’s wake up and realise there are better means of communication that don’t waste everyone’s time.

With that in mind, let’s have a look at one particular example of this in action; the mortgage market, another section of the industry that is likely to be upgraded in coming years with existing brokers struggling to compete with each other, let alone technological intervention.

There has been a lot of talk in the past few years about digital mortgage brokers and how most of them seem to be enjoying a little more success than the ‘iBuyers’. Why is this?

I see two key areas of explanation. First, there is a discussion to be had on automation and why this is straightforward in the mortgage market. Second, there is the tricky navigation path of regulation and legislation.

Getting a new mortgage or switching mortgages is key to any mortgage adviser's role, all part of researching appropriate products for their clients. Digital brokerages do this automatically and constantly, not just when your current mortgage period is about to expire.

Take Hubble as an example. Very much in the news this week as a funding round is announced between them, Goldman Sachs, and Rabobank to the tune of £7.5 million.

They automate this advisory process and alert people when a better product has come to market. It is a completely hands-off process and has the customer in mind at all times. It is seamless and it will even complete the switch for you.

My question is, why would you need a person to do this when a computer algorithm does it all for you?

It’s a deliberately contentious question and depends on your attitude and experience. I’ll give a quick real life example, and then move smoothly into my second point about legislation and regulation.

A few years ago, I did some work for HSBC about the home of the future. They were looking at their own mortgage services and debating how they needed to change. First, they recognised that their client demographics were changing the demand on their service, and then noticed that mortgages were their only access to the property market. They knew they wanted to become more deeply ingrained in the sector.

A survey we all carried out at the time showed that customers today had little or no brand loyalty when it came to mortgages; a huge issue for a bank as you can imagine. This was particularly the case around millennial mortgages - exactly the demographic Hubble is targeting.

They also found that the millennials, the bank’s future customers when taking a longer term view, didn’t even trust the bank’s mortgage advice anymore. Instead, they trusted family and friends far more than anyone - a complete reversal to the Baby Boomers who seemed far more wanting of professional help and guidance.

The bank realised that it needed to adapt its offer to a digital product in order to bring in the future generation. They recognised the need for on-demand advice, often out of hours, and reviewed the idea of online video appointments. This all meant one huge, overriding change was possible: everything could now become centralised because the role wasn’t best based in-branch anymore.

That was one thing, the other was around the fast growth of the online systems being used. Chatbots were the fastest growing area for mortgage advice at the time.

The financial sector refers to this as the growth of the ‘robo adviser’ and, interestingly, bots are growing in popularity among both customers and regulators.

Customers want both instant access and instant answers in this on-demand era we are entering. However, regulators, too, are beginning to understand the benefits of AI that can be centrally updated in an instant.

When a new piece of legislation passes, or rules are implemented, the algorithm is updated centrally and then rolled out. No training required, no risk of human staff misinterpreting the update and advising poorly.

This means the FCA and other regulators should be more comfortable with robo advisers than IFAs or banks. They are controllable and editable.

They give constant advice and aren’t suckered into a sob story or emotional plea. ‘Computer says no’ is indeed the story here which can and will be frustrating. However, risk issues are arguably lowering as everything comes back to ensuring consistency of advice. Humans don’t do consistency particularly well.

What does that mean for the brokers? Well, this is my entire point, really, and speaking to one PropTech entrepreneur this week confirmed it:

“More regulation? More rules? Bring it on”, he said. “We technologists love boundaries. We build tech to the rules. That way we have the parameters to build things and actually help to solve real problems.”

So, to bring it back around, mortgage brokers are in the same boat as negotiators, though perhaps in a worse spot given the home is, and always will be, an emotional purchase whereas a mortgage certainly is not.

Given 100 leads and, yes, you will most probably beat the AI. But it would also be a great waste of your time. Working with those 100 leads, I bet the AI would beat the mortgage broker in terms of time taken, efficiency, and the continued ability to get the customer a better deal.

Perhaps between 8am and 7pm (I have been generous here) brokers might stand a chance. But at 11pm on a Wednesday night, no chance. You have been warned.

*James Dearsley is a leading PropTech influencer and commentator, and is co-founder of PropTech platform Unissu. You can follow James on Twitter here.

  • icon

    "you have been warned" lol.

    James Dearsley

    Felt like it was a suitable end Simon!

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    • 22 January 2020 16:10 PM

    Algorithms will govern much consumer interaction.
    As a mortgage holder I want any mortgage broker I deal with to have access to the WHOLE mortgage market.
    I am not interested in tied brokers.
    What I require is to be able to access all deals.
    I would have no problem with a whole of market mortgage broker having my details such that they could on a regular basis say once per month to review ALL whole of market offers and to then contact me if the broker considers the various offers might be of use to me.
    Such algorithms could be used in conjunction with credit files such that offers change based on changes in credit files.
    A holistic approach needs to be followed.
    I would have no issue with receiving monthly mortgage updates as to mortgage products that might be worthwhile for me.
    Such information would be based on the last information a broker would have on me.
    Essentially there only needs to be one broker for all of the UK.
    One algorithm would cover all potential applicants.
    A computer could fire out monthly updates for any who register their details.
    No need for more than one broker.
    One computer is more than capable of firing off all monthly updates etc.

  • Andrew Stanton PROPTECH-PR A Consultancy for Proptech Founders

    At a recent seminar hosted by Taylor Wessing who are international solicitors, who took the step to digitally automate their business, and also represent amongst others proptech companies, one of the delegates asked the question will an algorithm replace the solicitor industry. Joe Pepper the MD thought not, and I concur. But, financial services is a different sector, absolutely ripe for the devastation or helping hand of the tech revolution. People who need financial advice relating to property, should be able to just click into the intel. AI is perfectly positioned to meet this requirement, and soon will do the ‘brain work’ in the sector. In a 24/7 click click world a 24/7 solution is required, being a human and having deep knowledge set or skill set in say mortgage provision is great, but as James Dearsley says, at 2am when I want to know what that 600k mortgage is going to cost, it will not be some human giving me the good news.


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