ING DIRECT's Lisa Claes explains the resilience of the broker channel in a changing online world.
MPA: I’m curious about your thoughts on the changing online environment: what are your thoughts how this is affecting the industry?
LC: From the perspective of a manufacturer of financial services and banking the impact is significant, and it is already reshaping distribution profoundly. There are several key global trends.
The strong correlation between a country's uptake of the internet/mobile devices and their comfort/uptake of online banking is irrefutable. In the early phase of the evolution of banking distribution you have bricks and mortar distribution and there are still many countries operating in that phase. A more advanced stage of the evolution is multi-channel distribution whereby banking products are accessed through a variety of channels, bricks and mortar, intermediaries and online with the result that traditional models are being reshaped.
Australia is in the middle of the multi-channel phase. While we're still comfortable using bricks and mortar more and more customers are migrating to other channels, namely intermediaries and online distribution. Then there are a cluster of countries who are at the frontier of distribution, predominantly the Scandinavian countries and the Netherlands, where the penetration of the internet is highest and so too is online banking usage.
The second complementary trend is the change to channel mix. Across the traditional retail bank product mix of – savings, current accounts, consumer lending and mortgages, the channel mix of branches, intermediaries and online is predicted to shift seismically in the next five years. The good news for mortgages is the resilience of the broker channel which, relative to other less complex financial services, is predicted to experience relatively little change in terms of its channel mix relativity.
LC: I think the resilience of the broker channel is due to another trend, one which pertains to the psyche of the modern consumer. In spite of digitisation which brings speed, real time access and efficiency, a consumer’s desire for a home remains unchallenged. Furthermore, never before have people wanted a relationship with a trusted adviser.
We're also seeing that consumers want more control: in all decisions, especially financial decisions which are significant, and we're seeing that people want to be able to execute those decisions in a digital format, but at the same time they want connection, a relationship, and they are very impressionable to recommendation (in preference to reputation). How do you choose a restaurant, a movie, where to go on holiday? You want to know what your friends, family, or social viral network think. All these trends play into the broker space.
However, brokers need to adapt to capitalise on these trends and also realise that there are risks. Recommendation today is viral and is occurring in mortgages. Although the process of referral has been around for thousands of years and is the mainstay of broker leads – the difference is that now customers can access these digital referrals anywhere, anytime.For many, if not most, it influences their decisions about what they buy and who they buy it from.
The rise of the digital economy, in spite of the fears of a totally automated and anonymous world, will make relationships and recommendations more important. As peer opinion is increasingly important, how you service your customers will be the key to garnering a consistently strong brand that is recommended. Having a social media strategy will be vital as viral recommendations can make or break a business: you can be condemned or condoned.
Traditional models are changing: it's not rocket science; but how you position your business model and brand will be key.
MPA: If we were to sit down in 12 months' time, what you want to say are your big achievements?
LC: That ING DIRECT is unequivocally the leading broker bank within Australia from a customer and broker perspective in terms of satisfaction and advocacy.
Second would be our people. Not only staff within in distribution, but also risk, operations and credit assessment. I would like all to share a sense of urgency and achievement, garnered through an understanding of a common vision of enhancing the broker experience.
Less tangibly I’d like ING DIRECT to be referred to in terms of the way we do things – that we continue to challenge our competitors to bring about fresh and innovative approaches to the way we deliver our products and services to brokers and customers. That our very strong momentum continues as we turn customers into passionate advocates.