To begin with, please can you give us a brief overview of Sikoia, your role there, and a little bit about your background.
I'm Alexis Rog, the CEO of Sikoia, a B2B fintech that simplifies and automates the customer verification and onboarding process for financial services providers such as lenders and brokers.
Before I established Sikoia, I used to work as a tech investor and saw firsthand the positive impact innovation had on driving efficiencies in the financial services sector. Many of these solutions addressed longstanding challenges such as identity verification, open banking, and anti-money laundering, but despite being beneficial, they also created fragmentation, data silos and the ongoing need for cross-validation between different sources.
I felt there was an exciting opportunity to create a new type of player that could unify customer data from these different sources to automate processes that are still manual today.
Can you give us an example of how the technology works in practice?
Take, as an example, a consumer applying for a mortgage or a small business seeking a loan. The initial onboarding process is usually quick and decisions in principle are often based on credit bureau data.
However, once the application progresses past these initial stages, these efficiencies drastically decline and the process becomes bogged down by the need to manually verify, request and cross-check data from many different sources such as open banking, payslips, and other documents.
All these cross-checks lead to delays and inconsistent decisions which can also increase regulatory risk. This can be a major concern for businesses and brokers operating in the new Consumer Duty environment.
Sikoia’s Customer Verification Platform helps to address these challenges by centralising data from different sources and standardising it to allow businesses to make better and more informed decisions by automating processes such as loan application evaluations, affordability checks, or the verification of income or address.
There are benefits for customers too. Sikoia’s AI-powered tool automatically processes mortgage application documents, such as payslips, bank statements and tax returns, enabling them to receive instant updates as soon as they submit their documents, eliminating the need for a manual review.
Providing real-time feedback to customers when documents are submitted helps to avoid unnecessary back and forth and time lost by ensuring the right documents are uploaded the first time. This also enhances the customer experience.
What do you see as the main barriers to this kind of technology being implemented in the mortgage market?
The mortgage market is particularly interesting as despite the fact that many other areas of the financial services sector has evolved and adopted new technology, much of the mortgage process today is still carried out manually.
This presents both a challenge and an opportunity. For example, the heavy intermediation between lenders and brokers has created something of a catch-22: lenders want brokers to adopt new technology first, while brokers wait for lender support.
This has created something of a stalemate as no one wants to move first. Changing this mindset will take time, so we need to educate lenders and brokers about the many improvements that can be made to enhance connectivity between them.
This includes eliminating double keying, and standardising customer data across the mortgage process. Once they begin to understand, and witness, the benefits, I do believe this mindset will change.
Customer behaviour is also another major barrier, especially among the older target demographic. For example, open banking has been extremely successful, particularly among younger consumers, yet many older clients are reluctant to connect their bank account in this way, despite the fact that it is proven to be both efficient and secure.
Helping customers understand these benefits and unlocking efficiencies will take time. I do however, firmly believe it can be achieved by offering customers a range of options to share their data that takes into account their many different preferences while leading to the same unified outcome.
The relationship between a broker and their client is extremely important. What do you say to those brokers, lenders and consumers who feel threatened by the role of technology and AI, particularly given the fact that the latter is a fairly new concept?
The idea that technology will replace human interaction in mortgages is a misconception. We understand that many borrowers prefer the reassurance of speaking with a real person about their concerns.
A mortgage is a significant commitment; one that is not to be taken lightly. However, we are not looking to replace human advice in the mortgage market, we are looking to complement it.
AI can enhance the mortgage process by supporting lenders and allowing them to work more consistently and efficiently. It can handle the heavy lifting and therefore free up time for brokers to focus on the personalised, human touch that borrowers value.
Inevitably we are likely to see the emergence of fully AI-powered mortgage agent propositions over time, but I expect them to serve a niche audience in the near term, handling more straightforward cases and to streamline processes, rather than replace the advice process.
The most significant aspect of AI technology however, is that it can be implemented in a way that requires minimal changes to current processes and behaviours. A few years ago, such technology would have been costly and unreliable, but AI now fills that gap efficiently and affordably.
This can be seen in by the fact that our proprietary system quickly ingests documents and automatically generates verification checks as well as overall application completeness checks. This removes the need for a manual review that is prone to human error, and reduces hours of work to a matter of minutes. The benefits for customers, brokers and lenders alike are substantial and speak for themselves.
What does the future hold for AI technology and the mortgage market over the next ten years?
There is no doubt that AI is set to become a major part of our lives in the next five to ten years, whether the industry is prepared for it or not. Just as we can't imagine working without computers in 2024, future generations will likely find it hard to envision their work without AI.
One of the most significant developments is that unlike past technological waves, AI can handle complex cognitive tasks and is advancing at a pace that's hard to grasp. This has a lot of implications, both positive and negative. It will enhance a lot of existing jobs, create completely new ones but also render some roles obsolete.
Over the next five to ten years, I expect we will see lenders and brokers handle more cases with the same size teams, with AI making the handling of the more complex cases more cost-effective.
At the same time, more customer data will help lenders develop new products tailored to meet their specific needs and enable them to price risk more accurately.
On the downside, this increased efficiency could lead to more applications from brokers to lenders, but without a rise in the number of mortgages granted. This could lower conversion rates, raise processing costs for lenders and drive more competition.
Ultimately, I think the market is likely to divide into two tiers: those who adopt AI and those who don’t. Adopters will benefit from lower processing costs, faster turnaround times, and the ability to focus on higher-margin, more complex cases. Those who don’t, risk being left behind.
