Robo advisers and digital brokers were hailed as the new ‘big thing’ in mortgages six or seven years ago. Fintech firms predicted game-changing, artificial intelligence mortgage brokering that would take over from humans.
Robo brokers claimed they could offer customers a quicker, simpler, more reliable and convenient experience when searching for a new home loan.
These newcomers often had snappy names such as Dashly, Habito and Mojo. They announced grand 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 as little as 15 minutes.
There is no such thing as a totally humanless system that does all the work of a high-street advice firm
But many traditional brokers were, and still are, sceptical about whether the mortgage journey could ever be carried out purely online.
SPF Private Clients chief executive Mark Harris says: “Seeing the whites of the eyes of the client and obtaining hard and soft facts through human interaction are invaluable.
“When it comes to their mortgage, few borrowers, if any, can afford to get it wrong.”
What has happened in the intervening years? Have these fintech firms lived up to their promises or fallen into oblivion? Has digital brokering been embraced by traditional brokers or committed to the history books as a passing fad?
Short-lived disrupters
Trussle launched in 2015 and claimed to be the UK’s first digital-led mortgage broker. Habito and Mojo Mortgages launched the following year, with both platforms offering online searches backed up by human interaction. Hoocht and The Mortgage Gym launched in 2017; and Hooski in 2018.
These newcomers were generally funded by venture capitalists and private investment.
The collection of client information upfront, and ongoing engagement throughout the process, looks to be the best use of the technology on offer
By 2021, however, venture funding for digital brokers was starting to run out, 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 bought by LSL with the intention of using it to expand into the new-build market. Neither Hoocht nor Hooski is still in business today.
Trussle was acquired by US firm Better in 2021 (later rebranding as 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 about telephone-based broker London & Country (L&C) buying Habito, but these collapsed and the digital broker was forced to secure rescue funding.
The time saving that can be achieved by decent use of hundreds of thousands of lines of computer code does exist. We are doing it
Habito chief risk officer Garreth Griffith says the company has never described itself as a robo adviser but offers a service “powered by cutting-edge technology and delivered by the very best people in the industry”.
He adds: “Like any business, we continually evolve to meet our customers’ needs, the changing regulatory landscape and market conditions.
“Habito Plus, our homebuying service, is an example of a proprietary tech innovation and expert service that was developed in response to a growing desire from homebuyers to have their mortgage advice, survey and conveyancing all under one roof.
“It’s been one of Habito’s biggest growth areas and demonstrates the value of tech and human expertise coming together to deliver great customer outcomes.”
The role of the broker and the human touch are still paramount to running a successful and reputable mortgage brokerage
Dashly has often been tagged as a ‘robo adviser’ due to the timing of its launch in 2017 and its unique digital proposition. The Dashly platform analyses the market, borrowers’ existing mortgages (including early repayment charges) and property values, on a daily basis. Where customers can save money, leads are passed to broker firms that then offer personalised advice.
Dashly founder and CEO Ross Boyd says: “I’m not surprised about how digital brokering has gone.
“There is a need for real people behind the technology, and brokers are now using more tech.
“Robo advisers found they couldn’t get the cost of acquisition down below income from the case. Unless you can do that, you don’t have a business.
Seeing the whites of the eyes of the client and obtaining hard and soft facts through human interaction are invaluable
“What we do is automate a lot of the information gathering, such as Open Banking, credit reports and equity in a property. There’s a huge amount of data and we help both brokers and lenders. But advice is very important.”
Best of both
In the past few years, some long-standing traditional brokers have started to take a more hybrid approach.
Experian invested in L&C in 2018 with the aim of transforming the business into a digital hybrid model. L&C’s digital offering allows customers to initiate their mortgage journey at a time that suits them — not just when advisers are working.
What we do is automate a lot of the information gathering, such as Open Banking, credit reports and equity in a property
L&C associate director for communications David Hollingworth says: “The two difficulties in claiming ‘the end of the mortgage broker’ were underestimating the complexity of the mortgage journey and not reckoning on customers’ strength of preference to speak to a person about their options.
“There is no doubt that technology is constantly changing the mortgage process, but customers were quick to demonstrate that, although online tools had their place, they wanted to be able to pose questions to a person and have product features explained to them.
“We always took the view that a hybrid approach that gave customers the choice would be the right one.”
There is a need for real people behind the technology, and brokers are now using more tech
Mortgageable.co.uk is another brokerage that allow users to do an initial search online, at a time of day that suits them, but then encourages them to
talk to a human.
Mortgageable.co.uk director Kristian Derrick says: “While robo advisers have offered a lot of utility and value to the industry, mainly by allowing us to automate many tasks, the role of the broker and the human touch are still paramount to running a successful and reputable mortgage brokerage.
“There are many consumers who still seek human interaction when mortgage planning because questions unique to their circumstances naturally crop up and reassurance and advice are sought.”
MortgageShop.com financial adviser Gary Bush says: “It’s clear financial advisers hate the idea of robo mortgage advisers and, to be honest, so do we. But we kind of are one.
Habito Plus demonstrates the value of tech and human expertise coming together to deliver great customer outcomes
“Coming from roots that included us running high-street offices that allowed people to come in and kick the tyres of mortgage rates, wasting hours of our staff’s time — quite simply, we are happy to be called robo advisers.
“It’s true that there is no such thing as a totally humanless system that does all the work of a high-street advice firm.
“But the time saving that can be achieved by decent use of hundreds of thousands of lines of computer code does exist. We know. We are doing it.”
Necessary compromise
As things stand, no firm has been able to offer a large-scale, digital-only brokering process. All of the robo-adviser platforms have moved to a form of hybrid solution, using technology for some elements of the mortgage process but still relying on humans to offer personalised advice.
At the same time, we have seen traditional brokers shift towards using digital tools to improve broker efficiency and customer experience.
We always took the view that a hybrid approach that gave customers the choice would be the right one
EHF Mortgages managing director Justin Moy says: “The collection of client information upfront, and ongoing engagement throughout the process, looks to be the best use of the technology on offer, making it easy for people to apply for a mortgage outside the traditional 9 to 5, as well as keeping up with progress.”
Most advisers are, to one degree or another, using technology to deliver their service; and customers, inevitably, will decide on what works as the best blend for them.
But advisers who seek to label themselves as either ‘traditional’ or ‘robo’ are likely to find this an impossible task.
This article featured in the May 2023 edition of MS.
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