While face-to-face transactions via bank branches and mortgage brokers still reign supreme, a move towards phone-based ‘brokers’ and online fulfilment is gaining momentum.
REA Group has become the latest web-based company to announce a mortgage offering after partnering with NAB late last month.
While the company has revealed that it is considering opportunities for mortgage brokers, executive director of financial services Andrew Russell stressed that new channels will be central to the success of the business.
“We want to explore and grow and develop our capabilities in phone and digital fulfilment,” Mr Russell told Mortgage Business.
“All of us in the industry are saying the industry is changing, technology is improving the way we conduct our business. Part of the fundamentals of our strategy is recognising that and leveraging both technology and new channels to create a very successful financial services business that meets consumer needs,” he said.
“If we can lead some of this change in the way people apply for loans and even the way brokers engage with their customers, that would be a big tick for us.”
Mortgage aggregators, which have traditionally been clearing houses for ‘face-to-face’ mortgage brokers, are also seeing the opportunities to offer their services to digital players.
Late last year AFG revealed that it was testing a 100 per cent digital home loan service with comparison website iSelect. Non-major banks ING DIRECT and Macquarie were also involved in the trial.
In a media statement, iSelect said the service “will allow home buyers to secure conditional approval for home loans without the need to visit a bank or have a face-to-face meeting with a broker”.
Alan Caputo, iSelect’s financial services group executive said, “By eliminating the need for face-to-face meetings with brokers and enabling customers to develop an ongoing relationship with them through phone and email contact, we have created a service that is more in tune with how people are accustomed to operating and communicating today… we feel we have created a digital process with a human touch.”
AFG general manager of sales and operations, Mark Hewitt, said all staff involved are credit reps and hold the appropriate lender accreditations.
“Their obligations, including those around responsible lending, are the same as for all brokers and are being met with the use of new technologies and some innovative process redesign - supported by the lenders involved,” he said.
The news was met with mixed reactions from traditional mortgage brokers. Some defended their business models, which had been built on “personalised customer service and trust”. Others claimed a completely digital service would compete with ‘face-to-face’ brokers.
AFG’s Mr Hewitt addressed these concerns, explaining that the aggregator is working with iSelect to help break down what is a “clunky and time consuming application process that has hardly improved in my 25 years working in home loans”.
“Our belief is that their ultimate success will be for the benefit of all brokers,” he said, adding that iSelect are to be congratulated for their “courage, investment and perseverance (almost six years) in trying to break convention”.
Such developments point to a significant breakthrough for home loan delivery in Australia. It also presents a new competitive dynamic to the traditional third-party channel.
The term ‘mortgage broker’ is being redefined to include online and telephone-based operators working behind a digital-based platform.
One major brokerage that has been highly successful in building an omni-channel experience is Australian Credit and Finance. In addition to telephone and face-to-face brokers, the group’s sister-company, Click Loans, offers white-label mortgages online.
Meanwhile, one of the UK’s largest brokerages, Mortgage Advice Bureau (MAB), which will soon launch in Australia, has built its success on a combination of face-to-face and telephone-based broking services.
The group has partnered with Mortgageport ahead of its entry into the Australian mortgage market.
MAB CEO Peter Brodnicki explained that the joint venture will embrace “many of the proven systems and processes adopted by MAB in the UK, with centralised lead generation, and telephone and regionally-based advisers combining to deliver a comprehensive service to the Australian public.”