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Aggregation: a future for the independent operation?

Staff Reporter 4 minute read

A recent Mortgage Business straw poll revealed that the majority of brokers believe that eventually all aggregators would be swallowed up by the banking sector.

Of the 522 respondents, 64.2 per cent said all aggregators would be acquired by banks in the future while 30.8 per cent disagreed and 5 per cent were unsure.

Choice Aggregation Services CEO Brendan O’Donnell told Mortgage Business that banks would increasingly look to the aggregation sector as an opportunity to gain a stake in the broker market, however, he said not all aggregators would appeal to the banking sector.

“In any industry there is always a place for a diversified offering.

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“If you look at ADI sector, for example, you have a banking sector and a mutual sector, and while there may be acquisitions or consolidation in this segment, certain mutuals will always remain independent from the banks.

“The same will apply for the third-party mortgage distribution industry,” Mr O’Donnell said.

Bank interest in the aggregation sector is nothing new.

In 2001 Macquarie bank took a stake in Australian Finance Group, similarly last year the Commonwealth Bank of Australia bought one third of Aussie Home Loans.

Macquarie Bank is also reportedly on the verge of taking a stake in three mid-tier groups.

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Mr O’Donnell said that while larger, quality aggregation groups will increasingly become a target for banks, boutique operations will seek to merge to create scalability and meet the increasing demands and requirements being set by regulators and majors.

Connective principal mark Haron agreed that there was still a space for smaller, boutique aggregators in the mortgage market.

“I don’t believe all aggregators will eventually be acquired by the banks. While some aggregators have been acquired by the banks recently, more will emerge in the future and create a niche space for themselves where they can grow,” Mr Haron told Mortgage Business.

Aggregation: a future for the independent operation?
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