Speaking to MortgageBusiness, ING DIRECT executive director of distribution Lisa Claes said an enormous opportunity exists for financial service providers to give customers the transparency and ability to self-direct through online tools.
“What banks tend to do is focus on the transactional element,” Ms Claes said. “I think where there is a lot of room for improvement – but, more importantly, scope for opportunity – is to look at the whole value chain.
“The enormous opportunity for mortgage providers is how we give customers those tools to play with that financial obligation, and harnessing digital capability through online notifications to open their eyes to opportunities.”
As customers increase equity in their home, banks could notify them on what that could mean to their overall financial wealth creation, Ms Claes said.
“Customers don’t look at products; they look at events,” she said, adding that when a customer gets a mortgage, in their mind they are not getting a mortgage, they are getting a home.
In its submission to the FSI, ING Direct recommends that rather than simply “winning competition”, banks should lobby government to make choice more freely available to customers.
“One of the focuses of ING DIRECT is to constructively agitate about how – through regulatory, prudential and legislative change – the government considers initiatives which oil the wheels of switching, for example,” Ms Claes said.
“The UK has just brought in an account switching initiative which in the first five or six months has seen 17 per cent of the market switch their bank,” she said.
ING DIRECT has been at the forefront of financial services technology, pioneering electronic verification in Australia, she continued, but the lender's most innovative mortgage solutions have been overseas.
Ms Claes said that in Germany – which she considers comparable to Australia in the complexity of its mortgage market – new distribution portals are revolutionising the way loans are written.
ING DiBa – ING’s German subsidiary – owns an electronic broker portal called Prohyp, which has the credit decision-making tools of 300 banks.
The broker can upload all of the customer’s data electronically onto the portal and that data is stored irrespective of whether the applications proceeds, is aborted or withdrawn.
Once the data have been uploaded, the broker can ask the portal to detail the best offer based on the customer’s requirements, either from an identified bank or on an anonymous basis.
“When a bank on an identified or anonymous basis spits out an offer from that portal to the broker for the customer to consider, and if the customer agrees to go through to apply via the portal by adding some final supporting documentation, the conversion rate is around 90 per cent,” Ms Claes said.
“We like it because it diversifies our revenue income.
“We certainly get the manufacturing margin if it’s a broker to ING DiBa Direct proposition.
“Through Prohyp, however, there are commission sharing arrangements in place, so even if an application goes to the 299 other banks, we share in the commission that the broker does,” Ms Claes said.
“It’s a nice piece of work.”