Australian lenders are seriously doubting whether traditional branches can continue to be a viable distribution channel for almost half of all mortgages.
The Deloitte Australian Mortgage Report 2016 asked a roundtable of banks, non-banks, mortgage aggregators and fintech providers what proportion of settlements brokers will generate in three years’ time. The majority of respondents believed broker market share would be in the region of 51 per cent to 60 per cent.
Deloitte financial services partner James Hickey said this then raises the question: where will the other 40 per cent come from?
“If 60 per cent will come through brokers, is the other 40 per cent coming through proprietary branch channels? That was heavily doubted by the roundtable,” Mr Hickey said.
“I think we are seeing the decreased focus of traditional branches to be a loan origination centre,” he said.
“Recently, they are moving to be more of a transaction hub. Therefore, where will that remaining 40 per cent come from? Will it come from a digital offering? A direct-to-consumer offering? That is where you will find some innovation around mortgage distribution, which the majors are looking at.”
Mr Hickey said that while brokers will have a very strong role, the remaining 40 per cent of mortgage customers may be the ‘digital warriors’, who are quite happy to do a lot of the work themselves through digital platforms.
Macquarie Bank executive director Frank Ganis, who participated in the report, said digital technology is critical for every business that has aspirations to grow.
He pointed to offshore markets, where online mortgage distribution channels have been more effective.
“Having spent a fair bit of time working and reviewing a number of offshore markets, and experiencing scenarios when borrowers could complete the process of application, valuation, contract execution and settlement of a loan in a short timeframe of just hours, there are challenges which would need to be overcome before this could be applied to our market.”
Mr Ganis said lenders need to be in a position to “push and pull information digitally, effectively and efficiently with customers, or they risk being left behind”.
“For example, Quicken is regularly highlighted as being potentially the fastest-growing mortgage business in the US. But ... it benefits from a competent group of professional sales and service executives who personally support the digital footprint and activities of the business,” he said.
“The combination of digital supported by the ‘human touch’ is why the Quicken offering is so compelling.”
In February, Quicken Loans made headlines in the US after it aired an advertisement during the Super Bowl for its new Rocket Mortgage product, which promises easy loans with the ‘push of a button’.
James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.
He has a sound pedigree to cover the business of mortgages and the converging financial services sector having reported for leading finance titles InvestorDaily, InvestorWeekly, Accountants Daily, ifa, Mortgage Business, Residential Property Manager, Real Estate Business, SMSF Adviser, Smart Property Investment, and The Adviser.
He has also been published in The Daily Telegraph and contributed online to FST Media and Mergermarket, part of the Financial Times Group.
James holds a BA (Hons) in English Literature and an MA in Journalism.
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