The $1.8 trillion Australian mortgage market is set to be rocked by a new distribution channel that could be the biggest disruption the industry has seen since brokers emerged in the early 1990s.
Fintech company uno is led by Vincent Turner, who has extensive experience in the local home loan space after developing mortgage platform Pisces in the mid-2000s.
After five years in Silicon Valley developing fintech for the mortgage and real estate sector, Mr Turner has returned to Australia to apply consumer-first, digital-disruption thinking to how Australians finance their homes.
Launched today, uno redefines the way consumers secure a mortgage, establishing the third major wave in the property finance industry: consumer-brokered home loans.
The uno online service gives consumers access to the tools and information that traditional brokers use to find a home loan, across a wide range of lenders, providing them with the power to decide what is best for them.
“The Australian property industry is ripe for disruption and we are excited to be at the helm of a new era,” Mr Turner said.
“For the first time in Australian history, uno puts the consumer in the driver’s seat to broker their own mortgage. Secondly, uno’s home loan experts that provide advice do not personally receive sales commissions. This is a big break from the way that traditional mortgage brokers operate,” he said.
Mr Turner explained that uno takes out all of the filters and pre-decisions that traditional brokers apply before making a recommendation to a home buyer, and instead offers full transparency, putting decision-making power in the hands of the consumer.
In 2005, Mr Turner developed the enterprise mortgage platform Pisces that was used by 90 per cent of the banks in Australia, processing close to $50 billion a year in applications. However, he admits that the platform remained a step removed from the consumer.
“After 15 years of building adviser software for the mortgage industry, it was clear to me that consumers’ interests were not front and centre,” he said.
“Brokers would apply their own filters to the rich information that we could make available, so buyers weren’t able to see all of their options. I decided to change that.”
The fintech guru said that empowering consumers to broker their own home loans marks the third major wave of change in how Australians buy and finance property.
“Firstly, the deregulation of the banking system in the early 1980s allowed non-banks to enter the mortgage market,” he said.
“Following this, mortgage brokers emerged in the 1990s and their market share dramatically increased. In 1994, mortgage brokers represented two per cent of mortgage transactions; in 2016 they represent more than half.
“Uno is now leading the third major wave of change for the industry – consumer-brokered mortgages.”
The launch of the new platform comes as lenders look for new distribution channels following the rise of mortgage brokers and the consequent demise of bank branches.
The Deloitte Australian Mortgage Report 2016 asked a roundtable of banks, non-banks, mortgage aggregators and fintech providers what proportion of settlements brokers will generate in three years’ time. The majority of respondents believed broker market share would be in the region of 51 per cent to 60 per cent.
Deloitte financial services partner James Hickey said this then raised the question: where will the other 40 per cent come from?
“If 60 per cent will come through brokers, is the other 40 per cent coming through proprietary branch channels? That was heavily doubted by the roundtable,” Mr Hickey said.
“I think we are seeing the decreased focus of traditional branches to be a loan origination centre,” he said.
“Recently, they are moving to be more of a transaction hub. Therefore, where will that remaining 40 per cent come from? Will it come from a digital offering? A direct-to-consumer offering? That is where you will find some innovation around mortgage distribution, which the majors are looking at.”
Most financial transactions and research are now conducted online, and the power has shifted to the consumer across virtually every industry. Home loans are one of the last financial services space to make the move, due to the enormity of the purchase and the perceived complexity of the process.
Uno allows consumers to access real-time home loan rates based on their personal situations – not just advertised rates.
These tools – which in the past only traditional mortgage brokers have had access to – allow consumers to calculate their borrowing power across lenders, save and share their data with someone else getting the home loan, and select the option that best suits their needs.
The system is built on the premise that if people have the right knowledge and access to information, they can do better for themselves. The entire uno loan application process can be done from a desktop, tablet or smartphone, and is supported by a team of experts who can help with real-time advice.
As the spotlight on commissions and remuneration in financial services continues to shine brightly, uno has devised a different payment system.
The company’s home loan experts are not paid any sales commissions; instead, they are salaried employees incentivised on consumer satisfaction.
“The commission that uno as a business receives from lenders in no way affects the likelihood of a home loan being recommended to a consumer,” the group said.
“This commission is reinvested into the technology, platform and content provided to the consumer.”
[Related: Borrowers become brokers with new platform]