After an eventful year of economic and regulatory twists and turns, Tas Bindi finds out what the broking industry expects will be in store in 2019.
Mr Moore says he expects to see:
Increase in professionalism as quality standards are raised
“This will positively influence the perception of our industry and will attract more customers to the broker channel. We’re taking a leading role in supporting brokers through our active involvement in the Combined Industry Forum. We will continue to advocate for higher quality standards through industry-led reform, and we stand firmly by our statements that broker trail commissions are a fair and equitable remuneration structure,” he says.
Continued convergence of physical and digital
“There will be quality in-person conversations overlapping with the optimisation of client data online. This amalgam will deliver more efficient and better customer outcomes, but it will be increasingly important for brokers and aggregators to have the right technology infrastructure in place to facilitate this,” Mr Moore explains.
Better collection and use of data
Mr Moore says: “The open banking regime will officially commence on 1 July 2019, unlocking vast amounts of data and untapped opportunity. Brokers are in the box seat to benefit from this, but having the ability to effectively manage and protect this data will be crucial. We’re continuing to make substantial investments into our technology, and the next generation of our Podium CRM will provide improved data collection, management and optimisation processes.”
Continued growth of the broking industry within the residential market
“I expect this growth to continue into other areas like commercial and asset finance. This is a natural progression for the industry, which continues to grow from strength to strength, and is something which we should see a lot more of in 2019,” he says.
“History shows us that brokers thrive in challenging environments. In times of uncertainty, customers need quality advice and this elevates the importance of the broker channel as a source of reliable and valuable information. Since the global financial crisis, the broker market share has grown from 30 per cent to 55 per cent today, which is indicative of the positive impact brokers have for customers. I think it is a good time to consider becoming a broker,” Mr Moore concludes.
Mr Bough believes there will be:
A surge in borrowers opting for smaller regional banks and non-bank lenders
“The Hayne royal commission has depleted consumers’ trust in the big four banks, and now they’re looking for genuine alternatives. There is going to be an opportunity for smaller banks to reach out to more consumers through the broker channel. In our home state of Tasmania, one in every four loans written by brokers goes to MyState,” he says.
A continued increase in customers choosing brokers
“If you look at the data, one thing that customers do say is that brokers provide a greater experience, and that is not going to change,” Mr Bough says.
A rise in demand for a holistic digital banking experience
“Customers are expecting new online everyday transaction accounts as well as real-time cashless payment services such as Apple Pay, Google Pay, Samsung Pay, Garmin Pay and Fitbit Pay. MyState is also going live with Docusign for mortgages. All of these services enable the broker to offer a total package for the client that goes beyond the home loan,” Mr Bough states.
A movement in M&A among smaller banks looking to get scale
“As majors lose market share, there’s great opportunity for smaller players. Smaller players in the market are already starting to see that,” he says.
A new norm for compliance
“The industry is going to continue increasing professionalism and compliance,” Mr Bough says.
“Brokers will need to be even more vigilant around how they verify and report customer information, which will have an impact on daily operations. As customers expect instant outcomes, I think brokers are going to have to find a balance between additional administration functions and meeting the customers’ expectations for fast results. The challenge will be how the broking industry adapts to the potential introduction of additional regulation because overregulation often has unintended consequences.”
Mr Halliwell expects to see:
Aggregators, brokers and lenders implementing the recommendations of the Combined Industry Forum
“Some recommendations, such as the removal of volume-based bonuses and soft dollar benefits, are relatively straightforward and have largely been implemented,” Mr Halliwell tells The Adviser.
“The recommendations around industry governance is more complicated. It’s going to require lenders to provide data to aggregators, including the number and type of loan applications that brokers are submitting and the performance of their book. Aggregators will need to collect some information and provide that back to brokers. I think we’re really going to see increased governance across the industry.”
A lift in standards
“From a lender’s perspective, we’re keen to ensure that aggregators have got the right standards in place for brokers operating under their license or business, and that they’re making sure brokers are meeting these standards. There will potentially be a higher bar over the next year or two,” Mr Halliwell says.
Mr Carn foresees:
Mr Mason remains optimistic about the future of the broking industry, saying there will likely be:
Favourable outcomes from the royal commission
“Once that subsides and people get back to what they’re good at – and that is writing loans – I see the industry taking more market share,” Mr Mason says.
“The broker market share will improve on the back of the royal commission results, and there will be plenty of opportunities for new brokers to come into the marketplace and for established businesses to keep growing in 2019 and 2020.”
Tas Bindi is the features editor for The Adviser magazine.
Prior to joining Momentum Media, Tas wrote for business and technology titles such as ZDNet, TechRepublic, Startup Daily, and Dynamic Business.
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