A robo-advice "revolution" will not happen any time soon and a completely automated mortgage market may never meet customers' needs, a trade body has claimed.
The Intermediary Mortgage Lenders Association (IMLA) published its latest report today (December 13), exploring the digitisation of the mortgage market and the potential of the internet to drive broker success.
The 14-page report, titled ‘The technological new frontier: digitisation in the mortgage market’, found google searches for mortgage brokers in 2018 had hit a 14-year high, increasing by 180 per cent in the past five years.
But whilst IMLA recognised mortgage lenders and Financial Conduct Authority actively supported a digitisation of the market, it suggested a robo-broker revolution was still a "long way off" with a number of barriers faced by firms seeking to implement a full robo-advice model.
Kate Davies, executive director at IMLA, said consumers "clearly appreciate" the softer skills offered by brokers.
She said: "We have already seen a number of digital advancements as the industry seeks out solutions to improve the mortgage and property transaction process.
"But we’re still some way from seeing a completely automated mortgage market as the technology cannot yet – and may never - fully address all customer needs."
The report also noted customers' lives frequently did not fit into "neat algorithms", suggesting brokers often successfully challenged cases initially turned down by lenders for falling outside of their criteria.
The IMLA highlighted the restricted performance of comparison websites as a means to consumer engagement in the mortgage process, claiming they had made "limited inroads" in the market compared with other financial products such as car and home insurance.
The trade body noted comparison websites only provided customers with a list of mortgage products from different lenders based on a very limited range of criteria, with no certainty customers will qualify for the loans they have selected.
Ms Davies said IMLA had been working with the FCA to explore possible improvements to the way consumers assess their eligibility for specific mortgage products.
But Ms Davies warned while she appreciated the FCA’s wish to "enhance the consumer experience", there was a risk if the regulator sought to "influence the direction of travel too strongly" it might inhibit the momentum naturally created in a competitive market.
Earlier this month concerns were voiced in the wider financial market that robo-advice businesses had to evolve or they could face extinction, with claims robo-advisers were spending too much on acquiring new customers to have a viable business model.
However, Ms Davies said while the digital revolution had not yet disrupted the traditional mortgage journey it had certainly begun to make it more effective.
She said: "Online tools have made it easier for mortgage brokers to advertise their services and to be sought out by local property buyers seeking information and advice.
"I’m sure we’ll see new and exciting developments in technology and delivery – and our members are very aware of the need to keep up to speed with what the market can provide and what consumers increasingly expect, so that they can stay ahead of the curve."