Brokers finished 2020 accounting for six out of every 10 home loans settled in Australia. When I’m asked what the future will be like for brokers, I see the industry’s market share moving up to 70 per cent – and even more – if the industry grasps the unique opportunity the Best Interests Duty (BID) offers.
Leading up to 1 January, the industry was testing, tweaking, consulting and testing again, to make sure brokers had the tech, training and support channels to absorb the future compliance requirements of BID.
Keeping our brokers safe and saving them time in the new world of regulation was the immediate priority. It required a massive amount of work with input from software engineers, CX specialists, data scientists and, of course, brokers.
When I look back on what we achieved, the mind swims trying to calculate the sum of hours the wider industry spent just to make sure brokers remained part of the financial ecosystem.
But 1 January has come and gone, and brokers have come to the grips with the new normal.
It’s now time to leverage BID so the broker channel’s market share steers a continued, upward journey.
When trust matters most
When the Prime Minister started appearing more and more on TV, and employers in different industries were using the word “hibernation” with staff, brokers’ phones rang hot.
Between April and June, there was a wave of refinancing from customers preparing for the COVID-19 storm.
And as Australia’s management of the pandemic began to reassure the marketplace, customers’ attention then turned to record low-interest rates.
Ever since, brokers had never been busier.
In the September quarter (the last available MFAA data) 60.1 per cent of loans were completed by brokers. This was record market share – 5.2 per cent higher than the same period a year earlier.
At the time, in my home town of Melbourne, we were in the grip of lockdown 2.0, with video calls the new norm. (I know one broker who opened a Loan Market business at the start of the pandemic and hadn’t met any of his clients face to face until October).
The surge in activity instilled confidence in brokers – remember, it was only 18 months earlier that the narrative coming out of the Hayne royal commission had brokers looking nervously at each other at Monday morning team meetings.
When customers are at their most vulnerable, they turn to someone they can trust – especially when it concerns their most valued assets.
So, with this momentum and connection with customers, it stands to reason that the industry will organically capture a larger slice of the home loan pie in 2021, right?
Running a business on assumptions is lazy and dangerous. You can’t sit back and wait for things to happen. That’s why brokers need to switch their focus to BID.
BID has served up a once-in-a-generation opportunity for brokers.
No one else in the mortgage ecosystem can say they must put the best interests of their customer above anything else. Anyone can promise this commitment – why wouldn’t they? – but only brokers can publicly say that legislation demands it of them. It’s a priceless declaration of independence.
But, how many customers do you think know what BID means to them?
BID is a priority for brokers, but gets blank looks from customers on a Zoom call or at the dinner table.
I mentioned before the level of uncertainty the Hayne royal commission caused the industry. The public hearings gave no voice to brokers; no opportunity to present our case.
At Loan Market, we took it upon ourselves to reach out to the community to explain our channel’s offering, led by the rallying cry of #brokersworkforyou. The sentiment resonated strongly with customers and the hashtag has taken on its own life around on Facebook, Instagram and LinkedIn today.
We need to do the same to inform customers on what brokers uniquely offer customers under BID. Services that are second nature to brokers – a panel of lenders to choose from while the direct channel has its own products; or that brokers will contact the client post-settlement if they’ve found a better-suited product elsewhere – need to be celebrated in the community under the new light of BID.
Collecting stories of outstanding customer results and promoting them to the wider community is a simple and effective way for brokers to explain what they offer customers. That’s a strategy Loan Market has been actively pursuing.
We need to be proactive and clearly educate the marketplace so the industry can bring our customer-first services to more people; so we can reach 70 per cent of the community and beyond.
We’ve ticked off keeping our brokers safe and saving them time under BID.
With the right structures and support, it’s time for brokers to leverage BID and grow their businesses.
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