Robo-advisors and digital brokers were hailed as the new “big thing” in mortgage lending six or seven years ago. Fintech companies have predicted a game-changing AI-powered mortgage brokerage that will take over from humans.
Robo brokers claimed they could provide customers with a faster, easier, more reliable and more convenient experience when looking for a new home loan.
These newcomers often had catchy names like Dashly, Habito, and Mojo. They have announced big plans to “disrupt” the mortgage market and supplant traditional brokers. Speed was often a selling point, with some fintechs claiming borrowers could find a mortgage in just 15 minutes.
There is no totally inhumane system that does all the work of a high street consultancy
But many traditional brokers were, and still are, skeptical about whether the mortgage journey could ever be done solely online.
Mark Harris, Managing Director of SPF Private Clients, says, “Seeing the whites of the client’s eyes and getting hard, indirect facts through human interaction is invaluable.
“When it comes to their mortgage, few, if any, borrowers can afford to be wrong.”
What happened in the years that followed? Have these fintech companies kept their promises or have they fallen into oblivion? Has digital brokerage been embraced by traditional brokers or written into the history books as a passing fad?
Trussle was launched in 2015 and claimed to be the UK’s first digital mortgage broker. Habito and Mojo Mortgages launched the following year, with both platforms offering online searches supported by human interaction. Hoocht and The Mortgage Gym launched in 2017; and Hooski in 2018.
These newcomers were usually financed by venture capitalists and private investments.
Gathering customer insights up front and ongoing engagement throughout the process seems to be the best use of the proposed technology.
In 2021, however, venture funding for digital brokers was starting to dry up, while the market as a whole was still dealing with the impact of the pandemic and an unpredictable housing market.
The Mortgage Gym went into administration in February 2021 and was subsequently purchased by LSL with the intention of using it to expand into the new construction market. Neither Hoocht nor Hooski are still in business today.
Trussle was acquired by US company Better in 2021 (later renamed Better.co.uk), while Mojo was acquired by another US giant, RVU (owner of Uswitch.com, Confused.com and Money.co. uk).
There were talks of phone broker London & Country (L&C) buying Habito, but those fell apart and the digital broker was forced to secure bailout funding.
The time savings that can be achieved by decent use of hundreds of thousands of lines of computer code do exist. We are doing it
Garreth Griffith, chief risk officer at Habito, said the company has never described itself as a robo-advisor, but offers a service “powered by cutting-edge technology and delivered by the best people in the business”.
He adds, “Like any business, we are continually evolving to meet the needs of our customers, the changing regulatory landscape and market conditions.
“Habito Plus, our home buying service, is an example of proprietary technological innovation and expert service that has been developed in response to a growing desire from homebuyers to have their mortgage advice, investigation and transfer property under one roof.
“This has been one of Habito’s biggest areas of growth and demonstrates the value of technology and people expertise coming together to deliver great results for customers.”
The role of the broker and the human touch are always paramount to running a successful and reputable mortgage brokerage.
Dashly has often been referred to as a “robotic advisor” due to its 2017 launch timing and unique digital proposition. The Dashly platform analyzes the market, borrowers’ existing mortgages (including prepayment charges), and real estate values daily. Where clients can save money, leads are passed on to brokerage firms who then offer personalized advice.
Dashly Founder and CEO Ross Boyd says, “I’m not surprised at the evolution of digital brokerage.
“There is a need for real people behind the technology, and brokers are now using more technology.
“The robo-advisors found that they could not lower the cost of acquisition below the revenue of the case. Unless you can do that, you don’t have a business.
Seeing the whites of the customer’s eyes and getting tangible, subtle facts through human interaction is invaluable
“What we’re doing is automating a lot of the information gathering, such as Open Banking, credit reports, and property equity. There is a huge amount of data and we help both brokers and lenders. But advice is very important.
The best of both
Over the past few years, some long-standing traditional brokers have begun to adopt a more hybrid approach.
Experian invested in L&C in 2018 with the aim of transforming the company into a hybrid digital model. L&C’s digital offering allows clients to initiate their mortgage journey when it’s convenient for them, not just when advisors are working.
What we do is automate a lot of the information gathering, such as Open Banking, credit reports, and property equity.
L&C’s associate director for communications, David Hollingworth, said: “The two difficulties in claiming ‘the end of the mortgage broker’ were underestimating the complexity of the mortgage journey and not relying on the strength of customers’ preference to talk to someone about their options.
“There is no doubt that technology is constantly changing the mortgage process, but customers quickly demonstrated that while online tools had their place, they wanted to be able to ask a person questions and have product features explained to them. .
“We always thought a hybrid approach that gave customers a choice would be the right one.”
There is a need for real people behind the technology, and brokers are now using more technology
Mortgageable.co.uk is another brokerage that allows users to do an initial search online, at a time of day that suits them, but then encourages them to
talk to a human.
Director of Mortgageable.co.uk, Kristian Derrick, says: “While robo-advisors have offered a lot of utility and value to the industry, primarily by allowing us to automate many tasks, the role of the broker and the human touch are always paramount to running a successful and reputable mortgage brokerage.
“Many consumers still seek human interaction when planning a mortgage, as questions unique to their circumstances naturally arise and they seek reassurance and guidance.”
Gary Bush, MortgageShop.com Financial Advisor, says, “It’s clear that financial advisors hate the idea of robo mortgage advisors and, to be honest, we do too. But we are somehow one.
Habito Plus demonstrates the value of technical and human expertise coming together to deliver great results to customers
“Coming to roots that included us running high street offices that let people in and off mortgage rates, wasting hours of our staff time – quite simply, we are happy to be called robo-advisors.
“It’s true that there is no totally humane system that does all the work of a high street consultancy.
“But the time savings that can be achieved by decent use of hundreds of thousands of lines of computer code do exist. We know. We are doing it.
As things stand, no company has been able to offer a full-scale, digital-only brokerage process. All robo-advisor platforms have moved to some form of hybrid solution, using technology for some elements of the mortgage process but still relying on humans to offer personalized advice.
At the same time, we have seen traditional brokers turn to using digital tools to improve broker efficiency and customer experience.
We always considered that a hybrid approach that gave customers a choice would be the right one.
Managing Director of EHF Mortgages, Justin Moy, said: “Collecting customer information in advance and continuing engagement throughout the process seems to be the best use of the technology on offer, allowing people to easily apply for a mortgage outside of the traditional 9 to 5, as well as track progress.
Most advisors use technology to one degree or another to deliver their services; and customers, inevitably, will decide what works best for them.
But advisers looking to label themselves as “traditional” or “robot” will likely find this task impossible.
This article originally appeared in the May 2023 edition of MS.
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