Rising competition from online lenders and financial technology start-ups means brokers who want to survive and thrive must differentiate their businesses in new ways.
At the PLAN Australia High Performance Conference in March, Philip Gomm of technology and outsourcing consultancy Capgemini shared his insights on how brokers can adapt to the changing industry landscape.
Mr Gomm, who has 30 years of experience advising financial services companies, recommends brokers take the following steps to future-proof their businesses.
The first step is to add value beyond the processing of loan applications, Mr Gomm says.
With the growth of online lending, customers no longer need to use a broker to take out a loan. However, brokers can stay relevant in the changing industry by developing their role as trusted adviser.
Most brokers have deep expertise about the borrowing process and extensive knowledge of the vast array of loan options in the market, which they can use to help their customers secure the best loan to suit their individual circumstances.
“My message to the broking community is: it’s not enough to just process the application. You have really got to add additional value in terms of advice and guidance,” says Mr Gomm.
The next step is to specialise.
Find an area in which you can excel and be an expert that customers will seek out for advice.
In the current environment, the generic broker is less successful, Mr Gomm says. It’s better to focus on a smaller sub-group of customers.
“A specialist broker who services a niche market is likely to be the one who succeeds because they have affinity and they can build relationships with those customers,” says Mr Gomm.
Next, Mr Gomm says a successful digital strategy is essential.
Engaging customers digitally boosts customer loyalty, he says, and for Millennials it’s their preferred method of interaction.
While face-to-face contact is still highly valued, it needs to be augmented with a digital plan in order to maintain a connection with the customer group.
The most successful players will be those that integrate human interaction with digital capabilities, Mr Gomm says: “You can’t have one without the other.”
Do the right thing
Finally, Mr Gomm says brokers will need to focus more than ever on professional standards.
As rising competition from online lending pushes brokers to move more into providing guidance and advice, regulations will continue to rise, Mr Gomm says.
In order to adapt, it’s more important than ever to do the right thing by your customer, make sure the product you provide suits their needs, and document evidence of that needs-analysis, he says.
To that end, a good technology platform is crucial because it records interactions with customers:
“That’s a repository where the detail of the interaction is stored, and so that can become the evidence around the alignment of products with need, if there are any concerns downstream.”