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Digitisation of loan variations ‘more important than ever’

The renewed focus on responsible lending has brought into focus the need for lenders to digitise the loan variation process for brokers, a technology sales director has said.

Speaking to Mortgage Business, NextGen.Net’s sale director Tony Carn said that more lenders needed to focus on offering digital loan variations in order to “empower brokers to actually look after customer transactions on an ongoing basis”.

Mr Carn noted that lenders had historically focused on digital loan applications for new loans but often neglected similar offerings for variations to existing loans – such as switching from interest-only to principal and interest repayments, moving from a fixed rate to a variable rate, the permanent pay down of a loan, or release of a loan guarantor.

According to the NextGen.Net sale director, lenders had often relied on brokers to assist customers with managing their loans on an ongoing basis but had sometimes neglected to make the variation process more streamlined.

He said: “In the past, a number of lenders had actually enabled loan applications to be processed digitally, but everyone focused on new loans.


“But on an ongoing basis, there’s a number of standardised loan transactions that brokers assist on (and I think it’s fair to say that it’s an important component, often overlooked, to why brokers also receive trail), and only a handful of lenders have digitised this process.”

Mr Carn suggested that those lenders that had enabled digital variations or customer variations had done so “because it establishes one process and gives clarity for how those transactions should be done”.

“It’s just a clear process of how they do that, and it works really well. But with the emergence of responsible lending, they’re a lot more important than they’ve ever been in the past. They are more important than ever. Because the process of responsible lending is just as important on a transaction on an existing loan as it is for a whole new loan,” he said.

Noting that the royal commission was seeking more clarity on what services brokers offer on an ongoing basis, Mr Carn said that “brokers, as we all know, do a lot of work to help their existing customers do those types of transactions. But the question is that, as an industry, not all lenders are actually empowering brokers to actually do those transactions on their behalf”.

He concluded: “We all know the value that brokers provide and the critical role they play, and some lenders support it very well. But I think others more broadly have the opportunity to do so. And it needs to be, I think, sooner rather than later.”


The NextGen.Net sales director added that while digitisation of the mortgage process was key – he did not believe that a fully digital mortgage would be on the horizon any time soon.

“Australia does digitisation of mortgages very well. We can have evaluations ordered and completed before a loan’s even submitted, and that valuation data can be fully integrated with a digital loan application. So, I think we do digitisation very well, but more in assisting the process rather than trying to replace the process. We have a very sound and a very comprehensive infrastructure around how we do mortgages, particularly in the broker market.

“[But] I don’t think we’ve seen any clear-cut cases of digitalisation replacing the process. We may see that in things such as robo advice, or wealth, or opening a bank account online, but where money is going in the opposite direction and to the applicant (and where larger sums of money are involved), that human intervention, I think, is going to be required more rather than less going forward,” he said.

[Related: Billionaires bet big on digital mortgage players]

Digitisation of loan variations ‘more important than ever’

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Annie Kane

Annie Kane is the editor of The Adviser and Mortgage Business.

As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts. 

Contact Annie at: This email address is being protected from spambots. You need JavaScript enabled to view it.

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