With the technology boom in full swing, brokers must quickly adapt in order to stay ahead of the pack. The Adviser’s third annual technology report uncovers the trends we’re seeing brokers implement in their business when it comes to technology and software, painting a picture of what to expect from the third-party distribution channel in this space…
Digital disruption has been a driving force in the broking world.
Now, more than ever, brokers are utilising technology in order to enhance their businesses and grow their databases.
The results from this year’s annual report are anything but surprising. It’s clear that there’s been a significant increase in technology usage, suggesting that those who choose not to find their feet in what is now considered the norm will find themselves struggling to stay afloat.
Of the 236 respondents, our report revealed that a whopping 91.1 per cent use the software provided by their aggregator, while a further 82.2 per cent label it as “very important” to their overall business.
This reliance on technology is the proof in the pudding: brokers are spending more time and money carrying out new digital business practices as opposed to the traditional ones we’ve come to know over the past few decades.
How will this continue to grow? We looked at this year’s results to find out.
Many of us couldn’t imagine a world without technology in our personal lives, but it appears a number of us would struggle without it in our professional lives too. The overwhelming majority (90.64 per cent) of respondents use their software platform for e-lodgement and product comparison, while 80.85 per cent use it for CRM.
A further 76.17 per cent use their software platform for compliance support and 66.38 per cent use it for commission tracking.
Even the most basic feature – marketing – is tapped into fairly heavily, with 53.62 per cent of respondents revealing that they use the tools available in their software platform as opposed to the traditional forms of marketing we’ve seen in the past.
Could brokers be dependent on technology and software because it cuts their work in half?
Peter White, FBAA chief executive officer, appears to think so.
“Technology can make the entire process go from beginning to end in a very short period of time, whereas the more manual or more human intervention there is, the slower things take,” he says.
Throughout the report, some brokers indicated that without technology and software, their business would succumb to enormous setbacks.
“My software is crucial for my business,” Pink Finance founder Nicole Cannon says.
“It keeps my compliance in check, helps my loan processor and therefore saves our time. I cannot express how crucial my software is to my day-to-day [activities].”
Garry Megalogenis, a Mortgage Choice broker in Melbourne’s inner west, agrees that technology and software is a necessity in a broking business, noting that it creates simplicity.
“In the past I would use Excel spreadsheets to keep track of all my settlements and follow-ups,” he says. “Now it’s easier at the touch of a button.”
Aggregators and lenders
Although generally happy with the technology and software provided by aggregators and lenders, respondents say that there are still areas that need to see significant improvement.
“Faxing applications to lenders is very outdated and a waste of paper,” Kylie Murden of Partners Wealth Group notes, and it is a consistent bugbear for brokers.
Many believe all lenders should be required to move to online submissions, or at the very least have an email address for lodging applications.
When it comes to lender data provided via their aggregator’s software platform, 51.49 per cent of respondents say it’s “usually accurate”, while 36.17 per cent say it’s “very accurate”.
Still, there’s plenty of room for improvement: around one in ten brokers (9.79 per cent) say their lender data is “occasionally out of date”, while 2.55 per cent say it’s “frequently out of date”.
A general consensus was that software should be updated when new information comes out from the lenders, with some even saying it should be updated daily.
“It should be updated as the lenders update their policies, pricing and products,” Buyer’s Choice Home Loan broker Brendan Barker says.
“It is frustrating and embarrassing when you use the information contained within the software and it is incorrect.”
One broker even felt forced to change aggregators because of poor software performance and support.
“We made the decision to join our current aggregator based on its software, as our previous aggregator did not provide any support and we were spending a large amount of money on CRM and product comparison software that created incredible inefficiencies in our business,” Loan Wize business owner Jon Colley explains.
“We were able to consolidate our business to get through the GFC market due to efficiency brought about by our current software.”
The Adviser’s report, however, showed brokers also could boost their tech uptake, with 62.23 per cent admitting they do not use smartphone or tablet apps offered by aggregators or lenders.
“That’s very interesting,” Mr White says. “I must admit, I’m surprised that more people don’t use them.”
Mr White puts it down to limitations of the existing apps.
“It’s not like you can fully transact through an app to do your loan. You will be able to in the future, but today there’s stops all the way through it.”
Social media movement
The fact that almost three-quarters (71.37 per cent) of respondents are using social media as a business tool was not jaw-dropping.
“I think it is part of these evolutionary growths we’re seeing within the industry and within communities in general,” says Mr White. “People are engaging in social media more and more.
“In addition, there’s a lot more awareness going on about how to use this tool more effectively.”
Many brokers believe social media is essential in today’s world as a form of networking and in order to maintain relationships with clients.
Facebook dominated in our social media category, with just over half (52.34 per cent) describing it as their preferred platform, while 30.21 per cent nominated LinkedIn.
“The average consumer will have Facebook without issue, they most likely won’t have LinkedIn,” Mr White says, commenting on the result.
“LinkedIn is really the professional marketplace. It’s where you connect with all your broking and lending colleagues, rather than trying to get business from a borrower.”
Despite the majority of brokers using social media, 40 per cent are still unsure whether it directly improves their bottom line.
For many, it’s used purely as a complementary tool while they try to interact with clients. Others use it as a form of self-promotion and brand exposure.
However, Mr White says it can improve your bottom line, if you use it correctly.
“If they think just sending out ads via Facebook is going to get them business, it won’t,” he says.
“It has got to be visual to work on Facebook if you’re aiming for that as a means to generate business.”
He believes brokers should not rely too heavily on technology though, suggesting a mixture of old and new forms of marketing is the key.
“I think at this point in time, you need a good blend of both. You need an effective online capability. By the same token, the slightly older generation who may not be as completely switched on to social media might still like that traditional interactivity.
“You’ve just got to think about who you’re targeting,” he says.
The way forward
It appears brokers are adamant about continuing to invest time and money in technology and software. Close to two-thirds (63.68 per cent) of respondents say they occasionally spend money on new technology, while 21.37 per cent admitted to frequently doing so.
The vast majority of respondents – 85.41 per cent – agree that they’re getting value for money with their software and technology, and 62.34 per cent say they plan to spend more on technology this year than last year.
“People from all walks of life are using technology more, so we have to keep up to date, if not ahead of them, to be on the front line for service,” AWMoney broker Barry Sheaffe says.
“It’s the way of the future,” agrees Tim Reynolds from Accession Finance. “Service is king and a large part of that is being efficient. Technology provides that opportunity.”
Mr White applauds those who are at the forefront of the technology boom.
“Good on them. Technology constantly changes and the advancements that are happening are things we need to embrace,” he says.
“Although it is still relatively new, we still need to invest in technology to keep pushing the parameters and the boundaries out to speed up the process.
“We all need to be on that journey because that’s where we’re heading. Technology is advancing and we have to keep advancing with it.
“Whoever doesn’t will become a dinosaur.”
So where to next?
The rate of technological advancements is staggering, with profound impacts on every major industry on earth – including mortgage broking. While the pace of change makes it impossible to predict what the future holds, a look at current industry innovations helps shine a light onto where technology is taking this dynamic industry
At a basic level, technology has allowed businesses to thrive and evolve in ways unimaginable even just a decade ago, enhancing their ability to diversify products and services, communicate more effectively, streamline operations and improve the overall customer experience.
A recent Think Big study from accounting firm RSM Bird Cameron suggests that half of all SMEs had increased their spending in the digital space last financial year, and a further 46 per cent plan more investment in the near future.
Commenting on the study, Andrew Sykes, RSM Bird Cameron director, says that an increasing number of SMEs are seeing the commercial benefits of engaging with new technologies.
“Digital disruption or business disruption can lead to competitive advantages through the ability to deliver better services faster, regardless of company size. It’s no longer a matter of the big fish eating the small fish, but the fast fish eating the slow fish,” Mr Sykes says.
“Technology systems like Enterprise Resource Planning (ERP) and CRM are now more readily available to smaller businesses as cost and complexity reduce. And SMEs are looking to automation to achieve productivity and revenue improvements.”
Nowhere is this need more apparent than service-driven professions like mortgage broking.
“Technology is an enabler,” explains eChoice chief executive Peter Andronicos. “People talk about disruption and disrupters and how technology is a disrupter in certain fields. I find that a furphy. There is no such thing as disruption; it’s about doing things faster, better, more efficiently than was done before.”
As the name suggests, eChoice relies heavily on the virtual world to deliver its services. Mr Andronicos credits technology with empowering the broking industry to achieve better relations with consumers.
“The greatest benefit of technology to the broker is giving the broker more access to communicate with the customer [in] ways that have previously only been [possible] by banks. So it’s allowed a broker to manage a customer and deal with a customer, in some cases better than a bank does.
“Working with aggregators and working with brokerage firms like eChoice and others, we’re able to be nimble, we’re able to adapt and we’re able to deliver the solutions to the broker to give them a point of difference from a bank.”
He points to the company’s fulfilment lead tracking system (Fleats) as one such example.
“The Fleats online platform will allow a broker to do pretty much whatever they need in either a mobile, tablet or desktop form ... including virtual signatures, access to status reports, uploading of data etc.”
PLAN Australia’s Phil Quin- Conroy is another big technology advocate in the mortgage space.
“Technology has completely transformed the way brokers do business and has enabled the industry to increase efficiencies dramatically. From loan comparison software to online application capabilities, paperless processing and real-time communication, the benefits of technology have really helped to support the service proposition of the broker,” Mr Quin-Conroy says.
“Technology has also been instrumental in supporting brokers to manage their compliance obligations. In a climate of increasing regulation, having streamlined, reliable systems to reduce the red-tape burden enables brokers to concentrate on growing their business.”
Lenders too are seeing scope to expand and enhance their service offerings by embracing innovation.
Super fund-owned ME Bank recently announced the completion of a five-year rebuild of its technology systems, at a cost of almost $90 million.
The transformation saw the development of eight new banking products, while for the first time there is one centralised record for each customer.
Jamie McPhee, ME Bank CEO, said the overhaul means the bank can now process increasing volumes of loan applications without requiring additional effort.
“Our old technology restricted us to one variable home loan product. Transformation means we can offer new variable rate home loans priced competitively,” he explains.
“The time it now takes to open a deposit or transaction account has been cut from five days to five minutes; the time to get conditional approval on a home loan from three days to three minutes.”
While mortgage lending has been around a long time, new services such as peer-to-peer lending (see special feature on page 48) and mobile broking have only become possible thanks to technological developments. However it is the drive to improve process efficiencies that is the major focus for many industry players.
The recent launch of Rundl, for instance, demonstrates the capacity for businesses to collaborate in order to streamline operations and in turn promote greater efficiencies across all businesses along the property sale chain.
Rundl offers a Facebook-style workflow management tool that provides clients with real-time progress updates on a property transaction.
“A transaction isn’t paper or digital. A transaction – a conveyancing transaction or a loan transaction – is a series of paper and digital steps,” says one of its founders, Ian Perkins.
“What Rundl does is it bridges those many individual steps.”
“Ultimately, consumers don’t care whether [settlement] is electronic or manual, as they are totally removed from the machinations of the final day of settlement,” adds co-founder Richard Bootle. “We’re not disintermediating people, we’re not cutting out traditional relationships, we’re not killing a sector of this industry; we’re bringing them all together in a digital space which kind of future-proofs them.”
Around 2,000 property transaction participants are already actively using the Rundl service since its launch earlier this year.
Demonstrating the wider industry’s interest in this new service offering, Rundl has announced partnerships with major industry players including SAI Global – which introduced a virtual property settlement platform called Settlement Room in late 2014 that has already facilitated more than $15 billion in transactions – and aggregator Connective to expand its reach and usage.
“We came across the Rundl application in the marketplace, which was primarily picked up by real estate agents. We thought it was a fantastic idea and something that brokers could lead the charge of as a means of improving their service offering,” says Connective director Mark Haron.
“Brokers often get blamed for things not being ready on time, when in fact it’s not the broker’s fault in most instances. The Rundl service enables customers to have a much smoother settlement process, and it creates a method for the consumer and everyone involved in the sale process to have transparency and accountability.”
As Mr Haron points out, the service is almost certain to evolve as both technology and the demands of users change and adapt over time.
“The key thing, apart from building transparency, is that this is a collaboration tool. In the next 12 to 18 months, lots of brokers will be using this app or an app like it to streamline their processes.”
As well as the benefits of collaboration in transforming service delivery, businesses are looking to technology to deliver internal operational efficiencies.
“Technology is helping companies better adhere to industry regulations by automating tasks. It also allows employees to access documents 24/7, leading to better business performance and happier customers,” explains Bob Dunn, country manager for workflow management software OnBase.
“Gone are the days where problems were fixed by hiring more people or adding more people to complete manual processes. This, in the long run, leads to increased costs and opportunities for human error to occur.
“OnBase research has revealed companies that invest in technology enjoy up to 20 per cent increased profitability, which can be attributed to more efficient processes and better service.”
According to Mr Dunn, many businesses are becoming more proactive in their use of technology, fully utilising the features that various softwares and systems allow.
“In general terms, the mortgage industry has traditionally been more archival [in terms of technology requirements], but now it is very workflow driven in terms of new loans processing and automating this process.”
He recommends using customisable or ‘modular’ software, which enables the tailoring of systems to meet current operational needs, and then easily adding features as the business grows or diversifies.
“What is really starting to take off is mobile capabilities; being able to connect to the system on a mobile phone, tablet etc. both from a connected and disconnected basis,” Mr Dunn says.
Rise of the app
The advent of the smartphone – and since then the tablet and smartwatch – has changed the way we live our lives, with instant mobile access to everything from news to games to our finances.
Several lenders, including CBA, are rumoured to be actively developing apps with the aim of providing instant loan approvals.
A spokesman for the bank confirmed that it currently has seven mobile apps, including the CommBank Property Guide and CommBank investor relations tablet app.
However, he declined to confirm whether the app for loan approvals is currently being developed or when it may be launched, saying “we don’t comment regarding our products and services under development”.
Aside from finance, CoreLogic RP Data developed mobile apps to connect users with up-to-date property sales data, while The Adviser launched an iPad app in 2011 as a means of providing busy readers with an aggregation of key print, digital and broadcast news.
Mark McDonald, co-founder of mobile app development company Appster and a judge for this year’s iAwards, insists that the app revolution is far from over.
“With mobile technology becoming ubiquitous, customers are spending more and more time on their phones and a lot of enterprises are starting to recognise the importance of app development,” he says.
“The [global] market has been valued at $1 trillion in enterprise mobility opportunity.
“The most popular services on offer at the moment are customer support and self-service. Consumers are on the lookout for convenience. They aren’t bothered with picking up the phone and making calls – it’s all about taps these days.”
Face of the future
With our heavy reliance on modern technologies to complete even the most basic of business tasks, it is hard to fathom how the industry operated in decades gone by.
However, as everyone across the industry admits, the ultimate goal is for people to improve their skills and productivity alongside technology, not be replaced by it.
“At Westpac, we believe a computer face will never replace a human face,” Westpac’s NSW and ACT state general manager, Jamion Khan, told delegates at The Adviser’s recent Digital Marketing Boot Camp.
eChoice’s Mr Andronicos is quick to agree.
“Technology can make things faceless. I think the consumer is evolving there as well, and wants to have more interaction with a human element and not just a computer screen,” he says.
“If I want to learn about a product that’s available, I can go online and within just a matter of 10 seconds, I can find everything I need potentially.
“However, it may not necessarily be the right information. The advice and relationship is still going to be critical.”
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