A regional bank has busted five myths about digital disruption and mortgage broking, following the emergence of new online players over the last 12 months.
One of the biggest myths about digital disruption is that mortgage brokers are at the greatest risk from new businesses.
According to Adelaide Bank, this is incorrect: “Digital disruption (or disruption in any form really) is a threat to incumbency; businesses in dominant positions with little pressure to change are invariably smacked upside the head when the next big thing turns up.”
Adelaide Bank’s general manager, Damian Percy, says the broker industry isn't monolithic and the breadth and diversity of the offerings of individual brokers, in concert with a history of innovation and openness to new ideas, means that the broking industry, if not individual brokers, are more likely to be doing the disrupting than being the disrupted.
“Brokers have long been at the forefront of applying technology to improve their proposition.”
The regional bank pointed to new online mortgage platform uno., as “a great example of digital disruption by brokers.”
“While it's very much of the digital disruption milieu, uno. simply delivers broker benefits in a highly sophisticated, well-designed, and tech-savvy way,” the bank said.
“It is a digital mortgage broking service with technology as a key enabler, but it delivers all the benefits as would the classic mortgage broking model, including real people giving support and advice.”
Check out Adelaide Bank’s views on four more myths of digital disruption and mortgage broking below:
Myth 2: Digital sites do everything a broker does
Most of what the digital space spruiks as a challenge to broking only deals with rate comparisons. Whether it's a buying group, auction site, or comparison app these resources are great at telling you where the best rate is and providing a peek into basic product features. But more often than not that's where the ‘service’ ends.
This is not a bad thing but, put simply, identifying the cheapest rate is but a small component of what mortgage broking does for people.
Machines can't discuss your overall situation with you. They won't talk through your future plans. And they can't give advice on the benefits and pitfalls of products based on your circumstances. Only a person can do that (for now, anyway).
Myth 3: Brokers are going the way of the dinosaur
You never know when a radical technology might come along and turn the broker industry, or any industry for that matter, on its head. For the moment, we're nowhere near that.
In terms of what's happening now, let's put things into perspective with a historical example …
If you were a mortgage broker in 1995 and decided you didn't need a website, other brokers who were early adopters probably fared better. Twenty years on, if you still didn't have a website or an email address, you probably found yourself sifting through the employment pages.
There's no denying that the growth in digital, and the sophistication that comes with it, will cause broking to evolve. Along the way, while it may kill off the odd broker or two, it will also give those that use it to their advantage a very sharp competitive edge.
Myth 4: Millennials and other tech savvies only do digital
Millennials and other techies rely on smartphone apps to do just about everything. But when it comes to buying their first home, they're likely to fall back on more traditional human behaviour, like talking to someone. Or instagramming them, as the case might be.
In any case, just like any first home buyer, the tech-savvy are foreigners in the home loan world and need a hand navigating their way through it. Pretty quickly they can work out that there's no app that can do that.
Myth 5: It's never been harder to be a broker
Right now, brokers command more than half of mortgage market share. So, while talk of digital disruption taking over the industry is common, there's nothing of weight to back it up.
Historically, as technology has improved, brokers have embraced it rather than suffered at its hand.
When mortgage broking first kicked-off in the mid-80s there was no internet, barely any faxing and email was in its emergent stages. You could argue that because these changes made it easier for customers to access mortgage information, they'd make it harder for brokers to do business. But the opposite occurred.
As each technology became part of life, brokers used it as a tool to improve business. And broker market share has grown almost every year since.
So digital doesn't need to be a threat to today's brokers. Brokers just need to embrace it. Just like they have every other technology that's ‘disrupted’ their journey in the past.
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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