Powered by MOMENTUM MEDIA
the adviser logo
Broker

Robo-advice could threaten broker channel

by James Mitchell4 minute read

A leading market analyst has questioned how relevant the third-party channel will be in five years if customers flock to digital channels for their home loan needs.

Speaking at the launch of the JP Morgan Australian Mortgage Industry report last week, Digital Finance Analytics (DFA) principal Martin North said that while mortgage customers are currently receiving a greater experience through brokers, the digital channel remains a significant threat.

“There is no doubt in my mind that brokers have the opportunity to increase their share going forward,” Mr North said.

“The feedback from consumers is that the experience they get from brokers in terms of customer service is more positive than the banks. But we have to take into account digital.”

Advertisement
Advertisement

Mr North highlighted that the rise of mobile devices, online banking portals and a general migration towards digital channels by consumers is an important factor for the Australian mortgage market.

The question is, in five years’ time, will mortgages be sold via a broker or will they be sold via robo-advice systems? That’s an open question,” he said, adding that regulators have recently revealed their thoughts on the matter.

On 21 March, ASIC released a consultation paper and a draft regulatory guide on regulating digital financial product advice, commonly known as robo-advice.

ASIC commissioner John Price said the regulator is keen to see a healthy and vibrant digital advice sector.

“We see digital advice as having the potential to offer Australian consumers access to good quality, low-cost, financial advice,” Mr Price said.

Mr North said his own research suggests consumers have a “huge appetite” to use digital channels for financial services.

“That includes shopping for a mortgage. There is a huge opportunity for players to think about the digital distribution of mortgages and how brokers play into that is a really interesting question.”

[Related: Google mortgage play threatens brokers]

siren  x

James Mitchell

James Mitchell

AUTHOR

James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.

JOIN THE DISCUSSION

You need to be a member to post comments. Register for free today

MORE FROM THE ADVISER

CEO Sleepout Pepper Money

Mortgage industry raises more than $160k in CEO Sleepout

On 23 June 2022, several CEOs and directors in the mortgage and finance industry spent a night without shelter to...

READ MORE
alex whitlock

New membership program revealed for The Adviser

Members will be able to access exclusive sales and marketing strategy, business intelligence and exclusive market...

READ MORE
Hot property TA

Hot Property: The biggest property headlines from the week 27 June to...

Welcome to The Adviser’s weekly round-up of the headline stories and news that are important not only for the...

READ MORE
magazine
Read the latest issue of The Adviser magazine!
The Adviser is the number one magazine for Australia's finance and mortgage brokers. The publications delivers news, analysis, business intelligence, sales and marketing strategies, research and key target reports to an audience of professional mortgage and finance brokers
Read more