Innovation: Dead or alive?

According to a recent straw poll conducted by The Adviser, 76 per cent of brokers said they would like to see “more product innovation” from lenders, while the rest said it wasn’t an important issue.

Of course, while the third party distribution channel would like to see greater product innovation amongst Australia’s leading lenders, this is easier said than done.

ING DIRECT’s head of broker distribution, Mark Woolnough, said it was difficult for lenders to be innovative in the product space, as any niches are generally copied very quickly.

“Products are generally the same and any innovation in this space is generally copied very quickly – when one lender moves on product or price, the rest follow. Product and price are never where a lender or a broker will set themselves apart. Innovative service, however, can help brokers and lenders differentiate themselves from the competition,” Mr Woolnough said.

“I think innovation will be in the service delivery – the interaction between the bank, the broker and the customer. I think this is where there will be some really exciting developments. Moreover, I think this is where ING DIRECT, or any lender, can really make their mark on the market.”

Bankwest’s head of broker sales Ian Rakhit agreed and admitted the lender has plans to continue to innovate around its back-end processes and broker/client/lender interaction.

“We will continue to invest in our broker channel and we are committed to listening to and acting upon our brokers’ feedback,” he said.

“It is an exciting time for Bankwest as we embark on several initiatives that will focus on quality improvement and subsequently larger rewards, growth of market share and back-end processing enhancements to deliver fast timeframes to approval.”

But while Bankwest and ING DIRECT believe innovation is more likely to play out in the service space, it seems not everyone agrees.

Loan Market’s director Mark De Martino said as long as brokers continue to cry out for product innovation, lenders will be forced to respond.

According to Mr De Martino, with growth in the property market fairly flat, lenders are constantly looking for new ways to attract business and grow their share of the pie.

“All the lenders are fighting for market share,” he said.

“We have seen it for some time and we will continue to see it happen. The reality is, they can only compete on price, policy and service for so long; eventually product innovation must play a role.

“When it does, I believe we will see the return of 100 per cent loans. This was an innovative product and an innovation that will definitely return. A few years ago everyone was saying ‘We will never see the return of 100 per cent loans’. I disagree. As long as a broker does their due diligence and ensures the borrower can service the loan, I don’t see any reason why we shouldn’t have 100 per cent loans.”