How brokers can utilise AI to assist them in accessing finance for their clients

Artificial intelligence (AI) has become an integral part of our daily lives, influencing everything from online experiences to virtual assistants. Pepper Money’s CIO explores how brokers can be leveraging it

In the financial sector, AI is transforming the way we approach lending and brokering, automating tasks, enhancing decision making, and improving customer experiences.

The rise of ‘smart’ finance

AI has ushered in a new era of smart finance, where algorithms and machine learning models process vast amounts of data at incredible speeds. This intelligent automation accelerates decision-making processes, mitigates risks, identifies opportunities, and ensures regulatory compliance. AI also plays a crucial role in credit assessments, fraud detection, and real-time data analysis.

Examining the lending value chain reveals inefficiencies that AI aims to address, enhancing both value and speed. Whether streamlining loan applications, offering personalised rates, or improving creditworthiness assessments, AI innovation drives differentiation and customer loyalty.

Consumers now expect personalised online experiences in banking and AI can deliver hyper-personalised end-to-end customer journeys. However, the challenge lies in harnessing AI’s advantages responsibly while avoiding potential risks as the technology evolves.

Navigating regulation and ongoing change

Despite AI’s benefits, concerns about its misuse in cyber security and data privacy persist. Financial institutions adopting AI must tread carefully to maintain customer trust and comply with evolving regulatory frameworks, including emerging viewpoints from the Australian federal government on high-risk use cases and greater regulation.

In the evolving financial landscape, AI isn’t poised to replace human expertise, like what brokers offer but to elevate and augment it. The synergy between human insight and AI capabilities propels the broker and finance industry forward, creating a harmonious balance across the finance ecosystem.

There’s a reason why brokers continue to be the preferred channel for over 70 per cent of mortgage borrowers. Humans value interactions, especially when making significant financial decisions, like buying a home. Brokers’ emotional intelligence, empathy, and experience combined with AI tools play a significant role in successful credit assessments and loan management.

Non-bank lenders, often at the forefront of technology adoption, innovate with AI to enhance customer experiences, automate processes, and make data-driven decisions. In contrast, traditional banks face challenges in modernising legacy systems and meeting stakeholder expectations.

Almost one in four (23 per cent) of commercial banking executives say product innovation is the number one factor in changing the competitive banking landscape* and non-banks excel in this area, introducing novel lending products, flexible terms, and customer-centric features.

The convergence of innovation from non-banks and traditional lenders benefits the entire finance and mortgage industry, fostering better services and improved financial inclusion. Collaboration, adaptability, and customer-centricity define success in this dynamic landscape.

What’s on the horizon?

As AI evolves, its optimal performance relies on access to extensive, high-quality information. AI-ready security and ethical data governance are critical for unlocking AI’s full potential in non-bank lending. Striking the right balance between AI and human qualities is essential for the industry’s continued success.

AI is the next technological revolution for business, promising to integrate complex loan scenarios with advancements like the Consumer Data Right and Digital Identity. This convergence offers brokers and customers unprecedented speed and certainty.

AI presents a transformative opportunity for brokers to enhance customer experiences and operational efficiencies. Embracing AI responsibly, leveraging its advantages, and adapting to regulatory changes will define the future success of brokers in the finance industry.

*MFAA’s quarterly survey of lending mortgage brokers and aggregators, July to September 2023