Article originally published in The Intermediary April 2023 – page 75
Whenever the mortgage industry talks about technology and innovation, there is an immediate and almost inevitable objection to any claim that the home purchase process could be dramatically streamlined. It’s just not doable, they say. There are too many separate touch points to co-ordinate from customer to broker, to lender to surveyor, conveyancer and back to the customer.
Of course, digitising processes has been underway for some time, but I am talking about rewiring entire processes. From product selection to application, valuation and conveyancing.
Machine learning may be about to change this. We are at the beginning of an era of change that will change how we think about and conduct our businesses.
Though machine learning remains thin on the ground, the use of technology to make the application and advice processes slicker has come on leaps and bounds. The availability of better data to support more efficient automated decision-making has meant substantial change has already been achieved.
Lenders’ front-end tech has been transformed as have other parts of the value chain – especially where easy wins have meant a better outcome and cheaper operational cost. Property risk has adopted Automated Valuation Models, Desktop or Remote Valuations and better interoperable on-site technology has revolutionised how the house valuing process has evolved. Qualified surveyors and valuers still sign off on given judgments, as they should, but the journey to these judgments is more appropriate than it was.
But there is room for much more. Ultimately data will underpin a new generation of machine-thinking and put even more speed into the process as will new thinking about how and when these judgments are required. If brokers could get an AVM pass at the Decision in Principle stage, then why not. It’s about using the appropriate technology and machine learning to assist in the delivery of the best customer journey. Experts can then focus on where they can really add some value.
In February, the international law firm Allen & Overy announced a partnership to integrate with an artificial intelligence platform built specifically for legal work. The platform, called Harvey, operates in multiple languages and gives users the ability to generate and access legal content with unmatched efficiency, quality and intelligence. It can work in multiple languages and across diverse practice areas using natural language processing, machine learning and data analytics to automate and enhance various aspects of legal work, such as contract analysis, due diligence, litigation and regulatory compliance. There remains a need for a qualified solicitor to review the platform’s output, but during Allen & Overy’s trial of the software, the firm reported that the insights, recommendations, and predictions based on large volumes of data meant lawyers could deliver faster, smarter and more cost-effective solutions to their clients.
Housing, and in particular understanding and assessing all types of property risk, will be transformed if this type of technology is integrated across the market. Particularly, it has the potential to drastically reduce the amount of time it takes to carry out tasks such as validating vast swathes of property data, searches, product selection and crucially at alternative points in the decision-making process.
There is now the means to reduce or remove that administrative burden from specialists’ workload. There has long been a fear that the onset of artificial intelligence would result in the loss of jobs for people. In some industries that may become true, but for most it will allow experts to deliver and charge where they really add value.
Now that a global, leading law firm has announced its use of AI and extolled its virtues to boot, I suspect the momentum for change will mean we are going to see more of this in future.
The prospect of AI will get many outside as well as inside the industry thinking hard. Which parts of the process could be disintermediated? How much cost could be saved? How much more standardised could the process become? How much more consistent and with less risk of human error in those parts of the process which are effectively mechanical? Where do people really create and add value? How do we leverage that?
It bears thinking about certainly, because if the technology exists and it works you can bet that someone will move to disrupt our market. It’s vast, worth trillions of pounds, millions of people interact with it multiple times in their lives.
We are edging toward more seismic change in our management of risk across the board. The game’s afoot.