Artificial intelligence is fundamentally reshaping the business world, and the advisory sector is not immune.
New financial services platforms are powered not just by machine learning, but a combination of other technologies, including ‘big data’ and, increasingly, open banking. Few doubt that sooner or later the way consumers invest and borrow and intermediaries advise will be turned on its head.
Some are intimidated by this change. Others are genuinely excited by it and see it as an unprecedented opportunity for advisers to embed themselves even deeper into the fabric of their clients’ lives.
What certainly will not be happening — at least for many years to come — is the replacement of man by machine. We are still a long way off full automation.
Within the mortgage sector, open banking will play a key role in the advice revolution. After all, the current way of applying for a mortgage will become obsolete.
There will no longer be a need to actively apply as, due to the real-time sharing of a consumer’s data between selected financial organisations, a person’s eligibility for securing a loan will already be known.
Most importantly, it will be known to the lender. And this is where the paradigm shifts. The real-time availability of up-to-date financial data through open banking platforms will change the rules of the game for lenders once and for all.
Through their ability to access and continuously monitor people’s ever-changing financial ecosystems, banks will be empowered to create highly personalised products, targeting the specific risk demographic they want. This will bring to an end the standardised pricing of risk.
The result? Customers, freed from the scourge of apathy, getting the products they need; banks lending profitably to the people they want; and advisers in high demand in what will be a significantly more fluid and ‘always on’ mortgage environment.
In other words, new technologies will be an opportunity for advisers within the mortgage sector rather than a threat.
The explosion of personalised product creation will require an equivalent explosion in advice. In that sense, the threat of disintermediation will not be accelerated, but reversed.
Due to their position at the centre of their clients’ financial ecosystems, advisers will be there to guide their clients through the mortgage maze as their circumstances change and advisory events are triggered.
The future, for many years at least, will not see a hostile takeover by algorithms, but a merger of ‘always on’ machine and ‘on standby’ human, namely adviser, intelligence.
Ross Boyd is founder of Dashly.com
