A former broker has launched an AI-based tech platform that automates the repricing and refinancing process for brokers, in a bid to help free up time and save clients money.
Adam Grocke, the former director and broker at South Australian-based financial services company Johnston Grocke, has launched a tech platform that aims to automate the repricing and refinancing process for brokers.
Sherlok is a new AI-based platform that can ‘read’ a broker’s trail book (by utilising similar technology to screen-scraping platforms) to detect refinancing and home loan repricing leads.
It utilises a predictive algorithm that calculates the borrower's rate (reportedly to within 0.1 per cent) and is looking to develop an option that will enable clients to permit Sherlok to track their rate through their online banking portal.
What it does
By comparing customer data to 150 data points, Sherlok provides a ‘retention score’ for each loan in the book (taking into account the loan amount, interest rate, current LVR and their current property value etc) and outlines how much money a client can save if they repriced/refinance their home loan with a lender on their broker’s panel.
The system then sends the customer a white-label email from the broker, outlining the savings that could be had. Brokers also have the option of having the system automatically negotiate and reprice the loan with the current lender on their behalf digitally, with an email sent to the client from the broker when this has been completed.
If the system finds that a borrower could save more than $1,000 a year by refinancing to another lender (by reviewing their current information against lender policies), then the system is also triggered to send an email to the client and the broker outlining the refinance savings from the lenders with the three lowest rates, too.
The broker is then able to start the refinance process and talk to the client about the deal, to ensure the loan is in their best interests.
‘The value of brokers is not in the processing side of things, it’s in the credit advice’
According to the founder, the platform has been built “by brokers, for brokers” to help them improve the client experience and save the broker time and money by reducing clawback.
Speaking to The Adviser about Sherlok, Mr Grocke said that he set about finding a solution to mitigate the time-consuming nature of repricing and refinancing clients while writing new business and managing a brokerage.
Mr Grocke said: “I was a broker for 12 years and, during that time, I found that I was really good at writing new business (we would see our settlements go up every single year for new loans), but that didn’t directly correlate with our trail book; we were having run-off.
“Even though we were sending marketing campaigns letting our clients know that they could refinance, and were calling them to request to review people’s loans, we found that it was being viewed as mass marketing and wasn’t getting good cut-through. Or, people were seeing that there might be a better rate in market and were refinancing themselves.
“I also had to put on more admin staff to do a lot of manual pre-work to find out what kind of savings these “mortgage prisoners” could save. So, I just thought that there had to be a better way.”
After researching the technology that was required and finding a team of advisers and investors that “believed in the vision” and committed “sweat equity”, a pilot version of the platform was built and tested with approximately 50 brokers.
“Currently, brokers are a processing house as well as an advice house. The value of brokers is not in the processing side of things, it’s in the credit advice,” he said.
“Our research found that, from start to finish, it takes brokers around an hour to 1.5 hours to reprice a single loan... that adds up if you think that a broker might have hundreds of clients,” he told The Adviser.
The founder revealed that, on average, Sherlok was currently doing 10 reprices per broker per week, saving brokers up to 15 hours a week on repricing.
“Since launching, we’ve been able to help brokers save that time and help their customers save almost $3,000 by repricing and about $2,000 per refinance,” he stated.
Following a capital raise in December last year, the product was built out and commercialised and has now reached live production.
The subscription-based platform (which ranges from $99 to $199 a month, depending on the number of loans being reviewed) is currently available to Choice, FAST and PLAN brokers – and is expected to be roll out to more brokers imminently.
He added that he is currently in conversation with other aggregation groups to make it available to their brokers, outlining that Sherlok’s aim is to be across 80 per cent of broker market by September 2021.
He revealed that the next phase of the platform is to build a “simple and quick refinancing process with auto decisioning just for mortgage brokers”.
Mr Grocke concluded: “All we want to do is help brokers lower a client’s interest rate. It’s win-win-win. If it’s a repricing, the client wins, because they get a lower rate. The lender wins, because they keep the client. The broker wins, because they keep the client for longer [and don’t get clawed back].
“If it’s a refinance, then we are helping connect that client automatically with their broker so they can have a conversation about what should happen next and ensure they’re in a loan that is in their best interest.”
Annie Kane is the editor of The Adviser and Mortgage Business.
As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts.
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