For many of us, the last 12 months has seen a significant spike in technological innovation. Events of the last year have shifted those of us who consider ourselves to be technologically ‘challenged’ to perhaps a state of feeling rather tech ‘savvy’ (Zoom calls, Enter QR Codes, Pay Wallets).
In so many ways technology has supported so many of us through the need to safely social distance, whether that be through touchless or remote communication platforms and systems. Artificial Intelligence specifically (AI) has been finding its way into the financial and banking sector for quite some time now, and there’s no denying that the technology offers immeasurable benefits.
We’ve all however also witnessed in some way the cost of that technology in the human touch. As a mortgage broker, I wonder if we are losing the human connection in our day-to-day finance needs also? Are we risking having our financial future determined by a machine? Here we take a look at how those changes could work for you (and against you) in the world of finance and specifically, your search to buy a home.
So what is artificial intelligence and how does it work in banking and finance?
Artificial intelligence enables machines to learn from their experiences, adjusting where possible to imitate human tasks. Essentially, they rely on learning natural human-like behaviours and processes in order to learn patterns and process large amounts of data. AI can increase efficiencies, optimise processes, reduce costs and enrich the customer experience. Possible applications range from customer service and marketing to asset management, portfolio management, treasury, and securities trading. Many of the banks’ lending systems are being significantly changed to capitalise on efficiencies that Artificial intelligence (AI) brings. However, perhaps this is simply due to the need for them to create more value from scale.
Even with the value proposition challenge, it is believed that AI is the future of banking. To help combat fraud and improve compliance, a system of advanced data analytics seems to be the solution. For what takes an average employee a day to accomplish, with the help of AI-based technology, these issues can be alleviated within seconds. In addition; the amount of data that can be processed is astronomical compared to average employee data input, meaning that human error can be eliminated. Faster processes and more reliable results.
Who doesn't love the sound of that?
AI and banking work cohesively together to essentially bypass middle office functions. By doing so the following benefits could be achieved:
Automated systems programmed to mimic human behaviour are responsible for making strategic decisions. Bankers look to these cognitive systems for advice when needing to make on the spot decisions. The systems store data and information known as a database which provides optimal decisions based in real-time on data.
Through Robotic Process Automation (RPA), AI automates repetitive processes which allow workers to spend their valuable time on tasks that require more human interaction.
Through automating tasks via constant machine learning, information-intensive, costly and error-prone services can be automated. In turn, reducing costs and making processes faster and more efficient.
Chatbots are used to respond to requests by identifying the context of the conversation and responding in the most appropriate way. This creates a human connection making the client feel valued all whilst saving time and money and being more efficient.
With the new technology age, consumers are becoming more expectant of quick and efficient processes and services. Gone are the days of waiting for a response from the bank. As consumers, we look to have information and problems solved instantly and expect the banks to deliver a seamless experience. Hence the need for automated and efficient processes are extremely important and highly sought after.
AI and mortgage brokers
Although more streamlined in banks, AI can assist mortgage brokers in their day-to-day operations. By eliminating the need to get the data off important documents and into the lender's loan origination system for processing, technology can save brokers professional time they could be spending on higher priorities and more clients. In addition, reducing this human error can result in protecting values, business relationships and increased buyer satisfaction. Furthermore, working so closely with banks in their line of business, the fact that banks are becoming more AI integrated helps mortgage brokers in the turnaround of happy clients. Artificial intelligence will never replace a broker however it does help to streamline efficiencies to help the client at hand.
Does it all come at a cost?
Although there are benefits of using machine learning algorithms, there are also several challenges associated with it. AI continues to machine learn from data which expand its capabilities, hence causing problems to arise.
The traditional mortgage broker uses industry knowledge, communications skills, and lived experience in loan processing outcomes to help the borrower.
We understand a financial situation is not always black and white and your ability to repay a mortgage for instance, should be read in a number of different ways.
Therefore, it is critical to be aware of the risks and implications that can come with integrating these AI technologies into the finance and banking sector. Issues that are prevalent in these industries include rejection impacts of loan approval due to machine bias, interaction and interpersonal aspects through becoming automated, privacy risks and inability to explain decisions. Although this may seem off-putting, there are risks associated with everything. Recognising these issues early and before they have a marginal impact leaves room for improvement.
The borrower doesn’t realise that too many small applications for cars or credit cards with one lending system can cause a decline. Yet on another, it means little to no consequence. Even simple communication issues between a borrower and a call centre may result in a decline of an application, as the call centre may have misunderstood the intent of the borrower's comment relating to their current lending limit. The call centre is unable to enter anything different to what the client tells them.
What is Astute doing with technology to ensure we are ahead of the curve?
Here at Astute, we understand the importance of technology-based systems and processes and how they can make your lives that little bit easier so we’re committed to a joint approach of progressive technology, supported by the human connection.
Day to day we operate a robust tailor-made loan portal for the real world called GEM. It allows us to organise our client leads pipeline, ongoing frameworks and projects for a cohesive overview. It also allows for team collaboration, connection with our clients through the client portal and automates tasks and workflow through notifications, reminders and updates. GEM also has a fully integrated lending compliance document called the Credit Proposal, which is a complete overview of the transaction that is signed by the client prior to submission. This process helps our team meet their compliance obligations, whilst providing them with a complete overview of the deal being completed. The system is accessible on all smart devices and technologies which allows ease of access and convenience for both our team and our clients when they are on the go.
The future of AI and mortgage broking
Artificial intelligence is the way of the future. It saves valuable time, money and improves efficiency. Although this is the case, mortgage broking offers a more personable experience as it contains several essential processes and tasks that need to be completed through human interaction. We do love it for how it improves the customer experience and time management, but we believe that we should be there beside you along each step of the process; That's our key point of difference as a mortgage broker.
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