Google’s decision to launch a mortgage comparison tool has caused the industry to question which distribution channels the banks will invest in over the next decade.
Speaking on a panel at the Australian Securitisation Forum in Sydney on Monday, J.P.Morgan executive director of Australian equities research Scott Manning provided a forecast for the Australian mortgage market by highlighting that technology behemoth Google announced last week that it has launched a mortgage comparison business in the United States.
“They are trying to insert themselves in the front end of the value chain closest to the customer and getting as much data as they can,” Mr Manning said.
“You are going to see a lot more competition from people fighting for specific parts of the mortgage value chain.”
Mr Manning said he could see online players moving into the mortgage space, noting that we have already started to see risk-based pricing in personal lending through peer-to-peer lending platforms.
“I think inevitably that will ultimately move into mortgage pricing and it may or may not be through brokers. It may be through self-discovery like Google in 10 years’ time,” he said.
“I know banks are quite passionate about the branch and people wanting a conversation and that kind of thing, a lot of that will be in tune with an online presence, whether that be through tutorial videos and online instructions or just more effective search positions.
“That will cause quite a significant rethink in where banks invest in technology versus physical presence. I think that will be a five- to 10-year story, not a two- to three-year story.”
Meanwhile, fellow panellist and SocietyOne co-founder Greg Symons said consumers will drive the development of peer-to-peer lenders to the point that they are able to provide home loans.
“It is inevitable. I get asked a lot if we are taking it to the banks, if we are competing with the banks. And the answer is it is actually not us, it’s the consumer,” Mr Symons said.
While he admits that mortgage lending is very complex compared to the unsecured lending space that groups like SocietyOne play in, he is confident that mortgages will become part of the space.
“We have a platform that could do it and we don’t do it today for a very good reason – we don’t have an underwriting team and we haven’t figured out that funding model yet,” he said.
“But it will happen. It is consumer led to a large degree, because they are looking ultimately for a better deal.”
[Related: Peer pressure]