The Intermediary – October 2026 - Flipbook - Page 80
T E C H N O L O GY
Opinion
Finding value in
traditional banking
D
igital banking has
transformed the
mortgage market.
For lenders, the focus
is increasingly on
where technology
can remove manual processes and
handle higher volumes.
Given the pace at which artificial
intelligence (AI) is developing, large
lenders are likely to focus initially
on areas where they can achieve the
greatest volume and cost savings
across the mass applicant base. That
raises a different question: what
happens to the cases that are harder
to standardise?
As more of the straightforward
work becomes automated,
human judgement could become
increasingly important in areas where
circumstances are more complex.
However, this may be a relatively
short-term advantage. As AI
capabilities develop and the gains from
automating mainstream lending are
realised, specialist areas are likely to
become the next focus for investment.
Reaching its limits
Not every mortgage application
is equally straightforward. Selfemployed borrowers, people with
variable incomes and those working in
certain industries can have financial
circumstances that are harder for
automated systems to assess. The same
applies to properties that fall outside
standard lending criteria.
These cases can require someone
to look beyond the information
presented by a system and understand
the circumstances behind it.
For building societies and other
lenders with a strong presence in
specialist lending, this creates a shortterm opportunity. They can continue
to focus on areas where human
judgement and specialist expertise
add value, while considering how
technology can improve the customer
experience around those services.
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The Intermediary | October 2026
However, the opportunity may not
last indefinitely. As AI becomes more
capable, larger lenders are likely to
turn their aention to more specialist
areas once they have captured the
efficiency gains available from
mainstream lending.
Human judgement
There is also a service consideration.
Buying a home is a significant
financial commitment, oen
involving borrowing over several
decades. For some customers,
being able to speak to someone who
can explain the decision making
process and provide reassurance
remains important.
That creates an opportunity for
lenders to think carefully about where
human interaction adds value.
For specialist lenders and building
societies, the challenge is to take
advantage of the current opportunity
without assuming that specialist
lending will remain insulated
from automation. AI is progressing
quickly, and areas that currently
require manual intervention may
become increasingly capable of being
automated.
Lenders therefore need to consider
both sides of the equation: where
human interaction genuinely adds
value today, and where technology
could improve the experience in
the future.
The risk equation
Increasing use of AI and automated
systems also changes how lenders need
to think about risk.
The underlying control process
remains familiar: lenders need to
monitor whether decisions are being
made appropriately and whether their
systems are operating as intended.
What changes is what risk teams are
looking at.
Where lenders have historically
monitored the work of underwriters,
fulfilment teams and sales staff,
EMMA HEATHCOTE
is UK banking lead at 4most
greater use of automation means they
will increasingly need to monitor the
systems and AI making or supporting
those decisions. That requires
different skills and greater focus on
model and data risk. Governance
therefore needs to be considered
alongside the initial investment
in automation.
There is another consideration. The
same technologies being adopted by
lenders are also available to fraudsters.
As AI becomes more accessible,
lenders will need to understand how
those tools could be used to circumvent
existing controls and adapt their
approach accordingly.
The opportunity
The role of specialist lending is likely
to change as AI develops. In the short
term, lenders can capture significant
efficiency gains by automating
mainstream mortgage activity. This
creates an opportunity for lenders
with expertise in specialist lending
to focus on cases where human
judgement remains important.
Over time, that position is likely
to face greater pressure. As AI
capabilities improve and mainstream
lenders look for their next source of
efficiency and revenue, specialist areas
could become increasingly aractive
for investment.
The future of mortgage lending
is likely to involve technology and
human expertise working alongside
each other, with the balance
continuing to shi as AI develops.
For lenders, the priority is to
understand where human judgement
creates genuine value today, while
continually looking for ways to
make the customer experience more
efficient as technology advances. ●
