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An expected surge in the use of generative AI in the finance industry could have major implications for brokers.
Over the next three years, the Australian finance industry’s adoption of Generative AI is set to double, with mortgage applications among the areas set for change, according to new research.
A new report, commissioned by the Australian Finance Industry Association (AFIA) and conducted by firms King & Wood Mallesons and Sapere, said that AI is expected to bring significant productivity gains to the finance industry and wider economy, particularly in areas like employee productivity and process automation.
Businesses that are investing heavily in generative AI expect to use it to improve customer experience by increasing the speed at which customers receive services and simplifying the customer experience, the research found.
Generative AI could also be used to help eliminate pinch points in mortgage applications, AFIA said, guiding customers through processes and complexities.
The report reads: "For example, if a bank requires a customer to use a digital banking tool for one task (such as initiating a mortgage application) but requires the customer to follow a different process for another task (such as changing their address), Generative AI could be used to proactively identify the various processes and guide the customer through them."
Other areas that could benefit include scam prevention. AFIA noted that the Commonwealth Bank of Australia (CBA) has said that its use of AI has delivered several improvements for customers, including a 50 per cent reduction in customer scam losses, aided by AI security features.
The major also noted a 30 per cent reduction in customer-reported frauds due to measures like generative AI-powered suspicious transaction alerts and a 40 per cent reduction over the last financial year in call centre wait times, helped by AI-powered app messaging.
As well as improving customer service, the research found that AI can significantly cut costs through a reduction in wages and employment and benefit the economy. The report's economic modelling demonstrates that, in net present value (NPV) terms, the finance industry’s investment in Generative AI is projected to increase the finance industry’s revenue by a cumulative total of $15.9 billion over the period 2025 to 2035 under a 'medium adoption' scenario.
Further, the finance industry’s adoption of Generative AI is projected to cumulatively add $48.9 billion to GDP by 2035 (in NPV terms) under the medium adoption scenario. This would represent an increase of $690 per capita annually in additional GDP by 2035.
Commenting on the benefits of AI for businesses, AFIA CEO Diane Tate said: “AI has the power to significantly enhance the Australian finance industry, driving efficiency, better experiences for customers and giving local finance firms a competitive edge globally.
“AI doesn’t just have advantages for financial firms, but also for customers. People increasingly expect efficiency, simplicity, and speed from their financial providers – they want less complexity and more clarity, and AI can help deliver that.”
Sluggish AI uptake
Despite the potential benefits of using AI for businesses, its uptake in the Australian finance industry over the past two years has been slow, AFIA said.
Just one-third of respondents had integrated generative AI within their existing business function.
Businesses that did use AI were generally cautious in their approach, research found, with the tech generally augmenting rather than replacing human decision making, while there was only limited direct interaction between AI and consumers.
Slow uptake among businesses and brokers was due to what AFIA described as the “unique risks” associated with generative AI, including accuracy, transparency, privacy, and the risks tied to buying the tech from a limited number of third parties.
A lack of regulation was also a concern for many, with AFIA calling for a balanced approach to oversight that offers protection but does not undermine innovation.
Brokers tap into AI
Brokers are increasingly using AI to overcome common challenges and several have built new technology platforms that use the tech.
Last month, former MoneyQuest broker Michael Richardson (CEO) and seasoned technology executive Russell Lewis (CTO) launched Cynario, a new AI platform to help brokers navigate lender mortgage policies.
Similarly, fintech and asset finance brokerage LoanOptions.ai recently unveiled its new AI-powered tool, HAILO, which aims to make the mortgage application process faster and easier for brokers and clients alike.
Specialised tools built by brokers, including Quickli and BrokerEngine, can also be used for streamlining core broking tasks.
Non-bank lender Bluestone Home Loans is also using AI to detect fraud and speed up applications, but it remains conscious of the tech’s limitations and views the technology as enhancing rather than replacing brokers.
Speaking exclusively to The Adviser in March, chief commercial officer Tony MacRae said: “[We] see it growing but the key thing, for me, is I see it supplementing the great experience that brokers and lenders like us do, not replacing it.
“The most important financial decision that most people will make is getting a home loan. People like the comfort of having someone help them through that. And so brokers are important.”
You can find out more about the technological innovations in the broker space in the April edition of The Adviser magazine.
[Related: Brokers reveal the tools and tech they use to free up time]
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