Is the Equity Release Industry Ready for Artificial Intelligence?

With an increasing number of mortgage lenders and brokers using Artificial Intelligence it’s perhaps unsurprising that later life lending advisers have also begun to delegate it certain tasks. Here we explore whether this is problematic for this form of lending, and what to be aware of if you’re planning to utilise AI functionality to assist in servicing later life lending leads.

What type of AI can be used to streamline the equity release process?

AI has been seeping into the mortgage industry for some time now, with many tools that are already used by brokers utilising certain elements of machine-led intelligence. While for many people software like Chat GPT and Gemini spring to mind when we think of AI, in reality, automated information gathering tools and data mining tools also use this technology.

Automating certain tasks can prevent repetition of simple tasks, freeing up brokers to focus on more necessary human-led tasks, like talking to clients. AI can also be used successfully to help quickly crawl criteria to match clients to a suitable equity release provider.

Other areas where AI can be useful in all businesses, but are also being adapted to the mortgage industry, are in cybersecurity and fraud detection, as well as maintaining predominantly data-led web content, such as rates tables, and industry statistics.

What are the limitations of AI in Equity Release?

Given that at this point in time those looking for equity release products are 55 and over, the client base are typically less familiar with AI technology, especially those in the upper age brackets. Working with automated tools with no human interaction can be both intimidating and frustrating to those who are more comfortable with face to face human sales. This could dissuade the intended audience from looking for later life lending services in a fully automated environment. Of course, this won’t be the case for all equity release clients, and an increasing number of people entering this demographic are likely to feel comfortable with AI processes as time passes.

Another limitation could be the complexity of later life lending. Equity release won’t always be the only option for over 50s in the current market, so it’s important that this is not looked at exclusively. There are a range of other options available, including RIO and interest-only products that may suit older borrowers. However, the FCA has already supported the use of AI in streamlining many elements of the mortgage industry, and continues to develop best practice.

Lastly, machine-led processes are still yet to demonstrate emotional intelligence. There are many factors to consider when looking at later life lending. Many decisions will be made based on the future of family members, as well as the individuals borrowing. Planning for later life won’t always be strategic, and emotional decisions can alter the path of what would be the best outcome for any client. This type of complex advice is still likely to be best made by qualified humans, especially given the additional consumer duty regulations surrounding this clientele.

The future of AI driven Equity release

Incorporating AI functionality such as automation, data sharing and standardisation of processes into the equity release market will likely result in greater efficiency for brokers and a smoother outcome for clients. Integration with fraud prevention services also makes for a safer industry for both businesses and consumers alike.

However, it’s important to get the balance right with AI and human-led services. When it comes to advice, human understanding is still key. In an area as important as later life lending, the predominant human element of talking through options and life choices should be complemented, and not replaced by AI.

Helping clients to understand that while data is entered and shared automatically, the advice given and any recommendations made will be carefully considered by a qualified equity release adviser, should provide comfort to those concerned with AI use in the industry.