Change is inevitable in any industry – and mortgage brokers around the globe are tapping into shifting sands as a source of opportunities.
If there is one constant in the home loan business it’s that nothing stands still for long.
Over the last seven years, our industry has experienced many sweeping changes – some in response to the global downturn; others the result of regulatory reform like the National Consumer Credit Protection Act (NCCP). Some changes reflect advances in technology – especially internet-driven developments – and the expanded range of choices this provides.
Nonetheless, change can be confronting. It’s something we’re not always comfortable with. Yet if we look at what’s happening overseas, it becomes clear that the future of both lending and mortgage broking hinges on being able to seize the opportunities that change can bring.
Spain – harnessing technology to deliver personal insights
In Spain for instance, lenders are taking real advantage of the so-called ‘digital age’. Banks there are using customer data to interact on a more personal level with borrowers.
They are offering tailored online tools that can be customised to show what a borrower’s home loan would look like if, say, they doubled repayments or moved to an interest-only loan. Lenders are even tracking personal milestones such as when a customer has paid off a particular percentage of their loan – and celebrating these achievements with borrowers.
It’s seemingly simple stuff. Yet it sends a powerful message that the lender cares enough about each customer to provide scenarios that reflect the individual.
The Netherlands – transitioning from commissions to fee-for-service
Heading north to the Netherlands, that nation’s broking industry has had to adapt to legislation that saw brokers move from a commission-based model to a fee-for-service approach.
Rather than sounding the death knell for brokers, this change saw a positive swing in the way brokers and lenders interact. Shifting the broker’s fee from the bank to the customer has given home buyers in the Netherlands the option to base the services they receive from a broker on their personal needs and budget. Customers looking for a more complete service, for instance, will pay more. Those seeking an execution-only service pay less.
Interestingly, ING continued to demonstrate support for the broker channel in the Netherlands by levying a fee on its direct channel because it knew brokers had to do likewise. Plenty of other lenders have since followed this lead.
Germany – online portal opens the door to lenders’ world
Finally, in Germany, where over 2,000 banks vie for business, brokers provide a valuable service in a crowded market. Assisting this, a unique online portal known as DiBa gives brokers access to aspects of the mortgage process that are often closed here in Australia. This provides brokers with opportunities to more accurately tailor lending solutions to customer needs. As a guide, brokers can ask for the best deal not only on price but also for features.
While change takes us out of our comfort zone, it also allows for a more informed and knowledgeable consumer – and that’s a step forward that should always be championed. Sure, change inevitably means our customers will expect more bang for their buck, but for those who can meet this demand, the opportunities are mind-boggling.