Lucy Waters - Managing Director, Aria Finance
Imagine the scene. The year is 2030 and a borrower is going through the advice process in the hope of securing the property of their dreams.
Except, this borrower is not sitting down face-to-face with a human. Instead, they are interacting with a piece of artificial intelligence-powered software, which is doing the job of the now-extinct mortgage advisor.
For a lot of people, the scenario above may sound like an outlandish work of science fiction. But if you believe the AI evangelists, it could be a reality in the not-to-distant future.
In the past 12 months, the hype around AI has reached a fever pitch, with experts suggesting this technology could upend the global economy.
Earlier this year, Goldman Sachs predicted up to 300 million jobs could be lost to automation. Other studies sought to predict which jobs may be most at risk from automation. Interestingly. mortgage brokers and financial advisers are two roles experts believe could be replaced at least partially by AI.
Only the other day did I read about a brokerage that had created an AI tool that was knowledgeable enough to pass the CeMAP exam.
But as much as the world has been gripped by AI fever, I remain highly sceptical about the idea that a piece of software could replace experienced advisers even in the distant future, particularly in the specialist end of the market.
For a start, I'm not sure people will ever be truly comfortable with trusting an AI-powered solution when it comes to the biggest purchase of their lives.
Yes, robo-advisers have had some success in the world of personal investing. However, buying a house is a very different proposition to picking a low-cost passive investment fund using a decision tree matrix.
Property transactions are incredibly complicated and, even now, after years in the industry, I regularly come across scenarios that I have never encountered before and which test my knowledge and experience.
ChatGPT caused a storm earlier this year after it demonstrated it could relatively convincingly produce prose that sounded and read like it was written by a human, But it could only do that by scanning millions of pieces of text to learn how to speak and write.
Any software company looking to create a solution would need access to thousands of case files. Where would they get data from? I cannot see brokers being willing - or even allowed - to give up such data. And without that, any effort would be doomed before it started.
A large-scale national mortgage broker with deep pockets may take up the challenge in the future, of course. But it's a risky investment with no guaranteed pay-off and, from what I can see, nobody is falling over themselves to replace their brokers at present.
But assuming for one second it were possible to create an AI model that could outperform brokers, there would surely be a myriad of regulatory hurdles to clear. For starters, would the FCA allow property transactions to go through that were fully advised by AI?
And what if an AI-powered advice solution were to give bad advice? Which would almost certainly happen at some point, given AI has already proven it can and will go rogue, offering incorrect answers that bear no resemblance to its training.
Should this happen, who is on the hook for that bad advice? Is it the software company that created the solution in the first place or the advice firm using its white-labelled software package?
For me, there are simply too many unanswered questions to consider AI a threat to face-to-face advice. Too many questions not just about AI's ability to ever deliver better advice than an experienced broker, but also whether clients or the wider industry would be willing to allow software to manage the entire consumer journey.
That is not to say that I don't see any role for AI in the mortgage market-and I'm sure there are plenty of firms figuring out how to work it into their business models.
For me, AI will be an assistant to the broker, boosting their productivity and automating the repetitive and mundane tasks that take up too much of their time. That bit I am excited about.
However, I wouldn't lose any sleep about the prospect of a robot taking your job just yet.