Blog

Artificial Intelligence: A vision for the future

Richard Howes

Richard Howes

15 December 2023
If you are a business owner reading this, the events of 2023 in our market may have forced you to consider the future direction of your business, which is perhaps one of the biggest challenges when running a company.  

There have been many pieces in blogs, the trade press and on LinkedIn about technological change in our industry, the recent publicity on ChatGPT heralded a raft of observations - some of it positive, but much of it negative – with concerns that we could be doomed and about to be superseded by robots.

The debates around machines and machine learning are perhaps gaining momentum now like never before. Its not new and to many extents its already here and we are all using it. Alan Turin who many see as the father of computer science asked 70 plus years ago, “can machines think”? This notion that machines will add to a dystopian world smacks of fear as opposed to what good can they do, there is a great book setting out the principles of Artificial intelligence from the Ladybird book series (which many older readers will remember) by Mike Wooldridge and is worth a read. When I say machines are already thinking for us, think of Goggle translate, originally developed by the US to translate Russian to English in the 80’s for obvious reasons, it now covers every language and we use it on our holidays! 

It is without doubt though, that with the pace of technological change and the increasing power and reach of the biggest tech companies, that our business model(s) could get disrupted before they achieve what you, the owner, want it to. 

This is one of the biggest issues you face I think as we go into 2024.

On one hand, it is logical if you have an established business to ignore any new entrants who seem to be entering the market and competing with low margins or give aways, and maybe in markets you don’t want to play in. However, ignoring this could lead to putting the handbrake on any future growth you may be looking for. Disruptors in business do not want you take action, given the growth they can achieve, meaning no one really sees them coming until it’s too late. Online businesses can grow exponentially; think of the scenario around multiples, 1 becomes 2, 2 becomes 4, 4 becomes 8, 8 becomes 16, until before long you are at 256 etc.

Supporting technology can advance your current business model’s delivery to existing customers, because in the main it lets you do what you currently do, but perhaps quicker - and dare I say, better. Disruptive technologies do something different for an unserved, or initially unprofitable, group of customers.
I have discussed before the concept of cashflow modelling which is accepted and used in the wealth management space, but could be easily adopted by mortgage advisers, with all types of clients, for example, involved in a Purchase, Re-mortgage for residential and BTL and Equity Release. To me this is sustaining innovations, allowing you to do what you do already, but better. Looking at the wealth management market shows how improvements can be made to the way advisers do their job, for example using cashflow modelling and wrap platforms, with new services also added. Those that adopted these areas can meet or exceed the performance expected from the clients they work with.

However, there is an argument that adding new services over and above this will realise no real benefits for the firm. The idea being that clients won’t pay more for things they don’t want or need, so adding to the existing service becomes a drain on profitability. I think it’s fair to assume in today’s world new entrants to a market will be digital, can operate under any market radar initially, yet can suddenly become a major threat as they gain traction. This is the well-trodden path of disruption.

While pure robo-advice hasn’t worked within and around the mainstream or specialist mortgage markets yet, it appears there are signs the existing players and any new entrants will soon start to gain traction. It might not be what you and I consider advice, but it’s a significant development and is opening up advice to other market segments who are often not served by existing financial planners, e.g. younger generations. Many commentators say artificial intelligence (AI) will never replace a human who can ask great questions, listen with empathy and guide or coach people to making better decisions.

There is an argument that advisers are not trying to compete against these players in a direct sense, but the challenge to a business is to stay relevant, and to create businesses that can survive and thrive for the next 20 years, regardless of what developments challenge the status quo. So what if you have an established business can you do?

Perhaps you can develop the disruptive technology with the ‘right’ customers. Not necessarily your current customer set who are used to you advising, being visible, providing a unique and very personalised service, but one which means finding ways to work with the next generations of clients; millennials and Gen Z, who may require something different. Adopting huge amounts of technology into your existing business which can take away your personalised service is akin to putting a square peg into a round hole, it doesn’t work.

Place the disruptive technology into a separate entity that can be rewarded with initial wins and a very defined  customer profile. Starting with a blank piece of paper, (I know paper!), conduct some research and listen to the next generation about what’s important to them personally as well as financially. A lot of research has already been done on these areas that you can also draw upon, for example the recent AMI Protection Viewpoint report gives insights that can be applied to the mortgage market also.

Why not, select some younger team members to set up as a separate business and task them with creating a financial planning firm for their friends, peers, contacts who are likely to be of a similar age, with a similar outlook, and similar expectations on customer service and outcomes. 

Maybe provide some capital, perhaps using your Paradigm profit share?

By keeping it small they can ‘tap dance’ around issues and problems as often as necessary, develop their own values and processes outside of your main organisation, and run a larger variety of experiments to find where the real needs of their clients are and to craft a solution that can work commercially in serving that need.

This is something we are talking a lot about in Paradigm with our member firms and we would be delighted to have a conversation around these areas and ideas, if it appeals, please get in touch. We can’t predict the future, but we can have a real go at trying to figure out pathways for business success and looking at relevant models in other markets to ensure your continued success.
 

Reading this blog counts towards your CPD!

Click here to add this session to your Paradigm CPD log.


7 October 2024

What may impact BTL and Resi markets in 2025?


1 October 2024

Why Gen Z could be the perfect match for protection


30 September 2024

Self-employed mortgages can be easy, if you choose the right lender


26 September 2024

Lenders and regulators must be careful not to add to adviser disillusion


19 September 2024

There may be trouble ahead…


2 September 2024

Source Go: The Modern Answer to the GI Question


29 August 2024

Pre- and post-mini Budget remortgagors need guidance in transformed market


23 August 2024

Guardian's 2023 claims report: a milestone worth celebrating


14 August 2024

Rate cuts are a positive story for advisers


7 August 2024

Mind the gap (s)...


1 August 2024

The mortgage market is set for a teeming H2


29 July 2024

Aldermore are backing more of your clients to go for it


22 July 2024

YOU SAID, WE DID!


12 July 2024

A surge of optimism for the market


9 July 2024

Distribution of Wealth


3 July 2024

Consumer Duty one year on – what might happen next?


24 June 2024

How to increase your protection business


17 June 2024

Consumer Duty will mark new era of continuously changing advice


6 June 2024

Mental Health Matters: Workplace Wellbeing


21 May 2024

Advise or refer? Ensuring the best possible outcomes for your clients


15 May 2024

Darlington Criteria Updates


14 May 2024

And The Wait Goes On


10 May 2024

Cap on broker fees sparks industry debate


1 May 2024

Expect the unexpected


15 April 2024

Ready, set, remortgage!


12 April 2024

How the mortgage market is failing new arrivals to the UK


11 April 2024

A compliance refresh will lighten unavoidable market stress


4 April 2024

What is driving the Specialist Residential and Buy-to-Let markets this year?


4 April 2024

A Government that prioritises owner occupiers at the expense of the PRS


28 March 2024

What is your website for?


19 March 2024

Exploring the value of value added benefits


4 March 2024

Artificial intelligence – friend or foe to advisers?


21 February 2024

RESTRICTIONS LIFTED?


9 February 2024

Trust your own gut when listening to market predictions


7 February 2024

Strategic thinking - Is this time for a new look at how we work as a business?


8 January 2024

The Name's Bond...


21 December 2023

PTs remain a big part of the marketplace


21 December 2023

Not all wine and roses but outlook is better


15 December 2023

Artificial Intelligence: A vision for the future


12 December 2023

Reflecting on 2023


11 December 2023

Mental Health Matters: Menopause


8 December 2023

Looking ahead: Reasons to be cheerful about the market in 2023


17 November 2023

Why TikTok could be a winning tactic for brokers


30 October 2023

How advisers can improve the quality metrics with insurers


27 October 2023

The Aggregator Market - Friend or Foe?


25 October 2023

Don’t let Charter support remove advice from the mortgage process


3 October 2023

How to strengthen your defences against cyber threats


29 September 2023

White Dragon Communications


8 September 2023

Advisers deserve recognition for keeping borrowers on lender books


8 September 2023

Claims history of an insurance should form core part of assessing true value of insurance and advic


23 August 2023

The good, the bad & the ugly of using Artificial Intelligence (AI)


14 August 2023

Accessibility in your marketing


14 August 2023

Choosing the right social media platform for you


7 August 2023

Staying safe online


4 August 2023

The blasé attitude towards sudden mortgage withdrawals is not good enough


1 August 2023

Is your content compliant?


10 July 2023

The argument for higher proc fees for better quality business is undeniable


22 June 2023

Product withdrawal timescales and how brokers can adapt


1 June 2023

We're not in mini-Budget territory yet!


24 May 2023

Skipton’s 100 per cent mortgage should be replicated, not feared


30 April 2023

Protection And Mortgage Fair Value Assessments – What Is My Actual Responsibility?


6 April 2023

Lenders will compete on mortgage rates, but don’t expect a price war


27 March 2023

Vulnerable Customers and Economic Abuse


10 March 2023

Tell borrowers to stop waiting for mortgage rates to fall


7 March 2023

Mixed messages from Bank of England boss ahead of MPC meeting


6 March 2023

Take the Consumer Duty seriously when it comes to protection


17 February 2023

Mortgage Market Update


10 February 2023

Let’s not be hasty and write off this year’s property purchase appetite


6 February 2023

Implementing Consumer Duty


9 January 2023

Income Drawdown – moving with the times


9 January 2023

Why it’s so important you tell us about your vulnerable customers


5 January 2023

Why advisers are so vital in the mortgage market


Paradigm

THIS SITE IS FOR PROFESSIONAL INTERMEDIARY USE ONLY AND NOT FOR USE BY THE GENERAL PUBLIC.

APCC MemberConsumer Duty Alliance

Paradigm Consulting is a Member of the Association of Professional Compliance Consultants and also the Consumer Duty Alliance.

Paradigm Consulting is a trading name of Paradigm Partners Ltd
Office address: Paradigm Partners Ltd, Paradigm House, Brooke Court, Wilmslow, Cheshire, SK9 3ND
Paradigm Partners Ltd is registered in England and Wales. No.09902499. Registered Office: As above

Paradigm Mortgage Services LLP
Office address: 1310 Solihull Parkway, Birmingham Business Park, Birmingham B37 7YB
Registered in England and Wales. Company No: OC323403. Registered Office: Paradigm House, Brooke Court, Lower Meadow Road, Wilmslow, SK9 3ND
Paradigm Mortgage Services LLP is a Limited Liability Partnership.

Paradigm Protect is a trading name of Paradigm Mortgage Services LLP
Office address: 1310 Solihull Parkway, Birmingham Business Park, Birmingham B37 7YB
Paradigm Mortgage Services LLP is registered in England and Wales. Company No: OC323403. Registered Office: Paradigm House, Brooke Court, Lower Meadow Road, Wilmslow, SK9 3ND
Paradigm Mortgage Services LLP is a Limited Liability Partnership.