Technology and data will be a key component in 2020 in the broking sector, and brokers need to ensure to harness technology to keep up to speed with the changing regulations, aggregator heads have told The Adviser.
When asked for their thoughts on what the year 2020 will hold for the broking industry, several aggregator heads noted that this year will be one where a plethora of regulatory and compliance changes come to fruition (for example, the best interests duty for brokers, the Consumer Data Right, new responsible lending guidance etc).
As such, technology and better use of data is expected to be a common theme this year.
Purple Circle chief operating officer and director Frank Paratore told The Adviser that one of the key assets brokers have within their businesses is their customer data and their book of contacts, and added that brokers can generate additional revenue streams through the use of customer data.
“Through effectively mining that data and keeping in touch with your clients, you can effectively look at integrating other services to support your clients,” Mr Paratore said.
“A broker can assist a client with their loans but they can also become a conduit for their clients for other financial service.”
Mr Paratore said that, by having additional revenue streams and cross-selling back into their database, brokers can protect their clients.
“We also know the likelihood of a client leaving your services diminishes if they have multiple services linked back to yourself,” he said.
Loan Market executive chairman Sam White said technology will help brokers adhere to the best interests duty, adding that the broking group was preparing its MyCRM system to comply with the requirements.
“While the detail around the duty has been limited, we’ve worked closely with the government and industry, and we are pre-empting some of the likely requirements to get ahead of the curve within our existing technology infrastructure,” Mr White told The Adviser.
“Best interests duty shouldn’t be viewed as an overhaul of our DNA. It’s a shift in how we report and communicate. But changes are required to successfully and safely transition to the new world.”
Connective director Mark Haron also advised brokers to harness data to target customers with personalised communication.
“Customer intelligence and the ability to act in real time on that intelligence is one of the key trends affecting the financial services industry, and it will drive revenue and profitability more directly in the future,” Mr Haron told The Adviser.
“Brokers need to use the CRM to build a profile of their customers and link it to a marketing tool to target them with relevant and timely communications.”
Mr Haron also foresees more fintechs disrupting the lending landscape this year, as consumers increasingly demand digital efficiencies throughout their borrowing journey. This will consequently bring cyber security into sharper focus.
Finsure Group managing director John Kolenda also noted that the role of technology will increase in the sector, stating there will be greater responsibility in proper compliance execution, audit of applications being lodged and settled, and robust reporting from brokers, aggregators and lenders to the regulator.
“We expect aggregator technology will improve the efficiencies in the implementation of the new laws and supporting brokers with not only best interests duty, but compliance, reporting, marketing and customer retention,” Mr Kolenda told The Adviser.
He also said the impending new world of open banking will change the status quo and force further adaptation in mortgage broking, with a greater focus on longer-term customer retention, regular product updates and communication, ensuring any switching is initiated by the broker.
“While we might initially view some of the possible changes as threats, I would argue there will be greater opportunities,” Mr Kolenda said.
“We need to ensure we adapt to any change and revisit our processes and fine-tune our skills in order to capitalise on continued growth.”
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[Related: Industry heads predict what’s in store for the year ahead]
Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.
Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.