In the mortgage industry, technological revolutions appear with the same regularity as new housing ministers: loudly trumpeted, often overhyped, and occasionally delivering a smidgeon of what was promised.
Nearly a decade ago, robo-advice swaggered onto the scene, poised to replace brokers entirely and usher in a new age of algorithmic supremacy. The reality? Robo-advisers were decent at crunching numbers and spotting anomalies in documents but utterly hopeless at handling a borrower’s existential dread over interest rates or the nuances of their “furlough-adjusted” income.
Then came API connectivity, the fintech favourite, which promised to integrate platforms, CRMs, lenders, surveyors, and even conveyancers into a frictionless symphony of digital efficiency. And sure, APIs made some headway—fraud checks are slicker, and data flows more freely—but the dream of a seamless end-to-end process remains exactly that: a dream.
Most borrowers are still asked for physical documents, while brokers continue to re-key and wrestle with the quirks of incompatible systems. If we mapped mortgage APIs onto a Tube map, it would be more likely to resemble spaghetti junction than the Elizabeth Line.
Enter Open Banking, hyped as the death knell for bank statements and pay slips. It was supposed to deliver instant decisions and bespoke pricing, rewarding borrowers with squeaky-clean transaction histories and punishing those with dubious “Money4Drugz” references in their accounts. The reality has been underwhelming. Lenders have indeed become better at deciphering and processing financial data, but consumer understanding of Open Banking remains woeful.
Five years on, borrowers are still understandably wary of sharing their bank details, and the value chain has barely scratched the surface of its potential, let alone the wider opportunities within broader Open Finance. And as for blockchain, let’s just say that most of us in the mortgage industry know it exists, but only because someone insists on bringing it up at every conference. The potential is there, but we’re yet to see tangible benefits on a meaningful scale.
And Now: Artificial Intelligence
So here we are, with Artificial Intelligence stepping into the limelight as the latest revolutionary promise. But does AI stand a chance of breaking the cycle of overpromising and underdelivering? Is it a game-changer, or simply the next chapter in a long history of tech letdowns?
AI feels… different. Unlike robo-advice or blockchain, AI doesn’t just nibble around the edges of the mortgage process; it infiltrates every aspect, from the borrower’s first tentative online enquiry to portfolio management at the other end. It’s not just a tool—it’s an ecosystem. The real question isn’t whether AI will change the industry but how deeply and how quickly.
Why AI Might Succeed
So, why does AI feel like it might finally deliver where its predecessors stumbled? Three reasons stand out:
A holistic upgrade
APIs may have oiled the wheels, and Open Banking may have reduced paperwork, but AI transforms the entire mortgage lifecycle. From streamlining affordability checks to flagging compliance issues in real time, it offers a level of integration and insight that no previous innovation has come close to achieving.
Instant impact
Blockchain might eventually change the world, but it requires a complete overhaul of existing systems—hardly a quick fix. AI, by contrast, slots neatly into current workflows and delivers immediate results. Faster processing times, fewer errors, and smarter underwriting aren’t just promises; they’re realities.
It gets smarter
Unlike previous tech, AI evolves. It learns, adapts, and improves, keeping pace with the market. This makes it uniquely suited to an industry as fluid and unpredictable as mortgages. It’s no coincidence that AI is already a staple in fraud detection, customer service, and even marketing.
Tempering expectations
Of course, let’s not get carried away. The tech industry thrives on cycles of hype, and AI is no exception. It’s unlikely to deliver a utopian mortgage process (or dystopian, depending on your view). Borrowers will still want human brokers for complex cases, regulators will insist on transparency, and ethical concerns around bias will need to be addressed. AI won’t eliminate these challenges; it’ll just give us better tools to navigate them.
The mortgage industry is no stranger to revolutions, but most have failed to live up to their billing. AI, however, feels like it could be the exception. Its potential lies not in flashy promises but in real-world applications: faster approvals, smarter risk assessments, and a smoother journey for everyone involved. AI won’t replace, reinvent, or revolutionise the industry – it simply turbocharges it.
As with any revolution, success depends on knowing when to embrace it and when to remain sceptical. AI won’t replace humans in mortgages—but it will replace the clunky, outdated, manual processes we’ve long relied on. And who knows? Perhaps this time, the tech revolution will actually deliver.
Alex Beavis is a consultant at LHV Bank