Brokers face threat and opportunity as AI reshapes industry

Speaking on this week’s Business Accelerator podcast, Broker Daily director Alex Whitlock and broker coach Jason Back said the rapid rise of AI and automation is creating both risk and opportunity for brokers, depending on how they respond.

While parts of the broking process are already being transformed, the pair agreed the future of the profession will depend less on speed and volume and more on how brokers evolve their role and value.

“The broker market share is growing, but is there a point where the broking functionality is going to be challenged?” Back said.

“And from a business perspective, where should brokers be looking to future-proof their business, or what mindset should they have about what lies ahead?

“I think the biggest risk to brokers isn’t interest rates, it’s not lenders or regulation. It’s staying the same while everything else changes.”

How the role of brokers is changing

Back said technology is already reshaping core functions within broking, particularly around processing and administration.

“AI and technology, and changing consumer behaviour, are happening right now,” he said.

“AI can handle so much, service is becoming instantaneous and outcomes have evolved. Broker competition has gone through the roof. The brokers who survive won’t be the ones doing more, they’ll be the ones doing things differently.”

He said this shift will require brokers to rethink how their businesses are structured and where their teams add value.

“It’s about retooling and repurposing, where people may be processing loans now, in the future they may be doing marketing, back-book management, or concierge and triage,” Back said.

“There’s technology already here that we could plug into the system today that would pretty much make your back office disappear tomorrow.

“This doesn’t mean we don’t need more hands, it just means we need our hands doing different things.”

Back said the industry’s traditional focus on efficiency is likely to diminish as automation increases.

“We’ve been really focused on processing loans in a timely fashion, but technology is going to take that need away,” Back said.

“Technology and AI will allow for faster processing and reduce the need for manual work.”

He added that brokers operating on a purely transactional model may be most exposed.

“We’ve got what we would define as the commodity broker – very rate focused – and I think they’re the ones most at risk,” Back said.

“We don’t control the price, and there’s going to be further price differentiation between what brokers can offer and what direct channels can offer.

“If you’re a commodity broker, now is the time to reflect on what’s happening in your space and what other terms you can compete on.”

How customers are changing

Whitlock said brokers are also facing a shift in customer behaviour, with expectations continuing to rise.

“In business now, more than ever, you have to expect the unexpected. You can’t assume you can just keep doing the same thing uninterrupted,” he said.

“The customer of 20 years ago was patient and there wasn’t much choice. Today’s customer is impatient. There’s choice everywhere, and a myriad of messages across multiple channels.

“So you’ve really got to understand your customer.”

Back said these expectations are increasingly shaped by broader consumer experiences.

“Client expectations have really changed and evolved. There’s now this Amazon-level expectation of instantaneous, perfect outcomes every time,” Back said.

“Not necessarily for the better, but that’s the reality, and we have to recognise it.”

Whitlock said brokers who fail to clearly define their target market risk falling behind.

“Who is it you’re targeting? What is your proposition? If you really understand your value proposition and who your customer is – and it can’t be everybody – you’re hedging against changes in the future,” Whitlock said.

How brokers can adapt and thrive

Back said brokers who succeed will be those who move beyond transactional work and build more differentiated businesses.

“I’d like to think we’ve moved from a price-based broker to an advice-based broker. The next step is becoming a signature broker – where you become the experience,” Back said.

“That comes with a shift in mindset, from being a great broker to a great adviser and ultimately a great business owner. It’s about agility – leaning into change, being curious, testing and learning, not just turning up each day and writing more loans.

“We’ve done an incredible job building an industry around serving clients, but those needs are changing. Clients want more from us than ever.

“The part we’ve traditionally been strongest at – processing loans – is already being automated. So the question becomes: what else do clients need from us, and more importantly, what do they value?”

Whitlock said brokers should focus on staying aligned with customer needs rather than fearing disruption.

“If you can keep pace with your customer and their preferences, and understand them, you’re always going to be relevant,” Whitlock said.

Back added that while change is inevitable, those who embrace it will be best positioned.

“I don’t think you can’t be future-proof, but you can be future-ready,” Back said.

“If I can’t control it, I go with it. And then the question becomes, how do I dominate that space?”

[Related: Chasing volume like ‘tipping water into a sieve’, brokers warned]

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