Mortgage brokers are facing a double threat from online lender Tic:Toc, which is seeing a surge in demand from consumers and interest from banks and non-bank lenders looking for cheaper distribution.
Tic:Toc promotes its quick turnaround times and convenience. The group only offers its own branded mortgages, which it says can be approved within 22 minutes through a completely online process. The fintech started lending four months ago and has received approximately $330 million of applications in that time, with conversions hovering around 17 per cent this month.
“The new competitive battleground in mortgages is speed, and that is best delivered through an end-to-end digital fulfillment process like ours,” Tic:Toc founder and chief executive Anthony Baum told The Adviser.
“I don’t just mean time to decision. Convenience is also an important factor. What we know about consumers is that a growing segment are happy to self-service and are getting more used to self-serving through fulfilling other requirements digitally in terms of purchasing products and services.
“At the end of the day, the feedback we are getting is that it is really easy, customers don’t feel pressured and they don’t feel sold.”
The online lender is currently funded by Bendigo and Adelaide Bank and offers four mortgage products. An interest-only mortgage for property investors is due to launch in the coming weeks.
Mr Baum said that the company has plans to partner with more bank and non-bank lenders looking for a cheaper distribution channel than mortgage brokers.
He explained that the digital origination process cuts costs for both consumers and funders.
“It really does open up the distribution angles and fulfillment angles. We think that is a very powerful change,” Mr Baum said. “It could be any corporate whose brand stretches to financial services products, including non-banks. We are working on some of those arrangements as we speak and hope to make some announcements in the new year.”
Unlike some fintech players looking to disrupt the home loan market, Mr Baum has extensive industry experience, having led Bendigo and Adelaide Bank’s third-party business for close to four years.
In addition to its broker ties, Adelaide Bank is a prominent wholesale funder for mortgage managers and aggregators and is widely regarded as one of the more innovative lenders in the market.
The threat of digital disruption has increased for brokers in recent years. However, many still believe that face-to-face contact with a mortgage professional will continue to be the preferred choice for Australian borrowers.
“My opinion is home loans are not actually as complicated as the industry makes out,” Mr Baum said. “They are really a means to an end, which is more a utility-style product.
“Having said that, there are certain customers who have complex situations who will always need to seek advice.”
[Related: Aussie lenders make Fintech 100 list]
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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