The legacy of COVID-19 will be the digitisation of business. It will (and largely already has) forced us all to accelerate digital plans and to look at ways of operating remotely.
For brokers, this presents a huge opportunity.
Here are my predictions for how the mortgage broking industry will change in a post-COVID world:
- Digitalisation is here to stay. Over the next few months, broking will become paperless. Interviews will move online, clients will enter data directly into a brokers system and clients will sign electronically. Lenders are moving fast looking at solutions that would have been years away were it not for COVID. This transformation will create better customer experiences, better compliance with legislation and more efficiency for brokers and lenders.
- Australians will stop using cash. The longer this crisis goes on the less likely it is that we will return to paper. That means that automated bank statement analysis becomes more accurate, as too will be the systems that are being designed by aggregators to ensure brokers can comply with responsible lending.
- Broker market share will rise. As we have seen over the last few weeks, customers reach out to brokers when they want trusted advice away from complexity and ambiguity. NPS scores for brokers will remain consistently high. That will not change.
- Clients will want ‘digitally assisted mortgages’ not ‘digital mortgages’. Some brokers may be concerned about the rise in digitalisation, assuming they will lose clients to online offerings. Whilst I’m sure good online businesses will grow - there is no doubt that more clients will want to deal with a local expert who has great technology. As technology is further adopted throughout the industry the real differentiator will be knowledge, experience and customer service. Technology won’t replace what a broker does - it will just enable them to do it faster and more efficiently, so they can spend more time helping customers.
- Broker marketing tools will become increasingly more sophisticated. The need for brokers to be able to market through social and digital channels, as well as providing ongoing targeted and relevant content for current and potential clients will be critical. Further, every communication should have the ability for the customer to start applying for a loan straight away, from their phone.
- Turnaround times for digitally-enabled brokers will improve. COVID-19 has highlighted that legacy technologies and policies are significant inhibitors for lenders when processing home loans. Established lenders will take a leaf from new entrants and up the ante in this space and adopt a more data-driven approach as they aim for real-time credit decisions, especially with the introduction of Open Banking.
- IT security will be key. As we all look for more efficiencies, lender systems and aggregator systems will need to become more integrated - that will mean more accurate information for customers, a better experience for customers as well as more efficiency for both brokers and lenders - something that will be critical in the post COVID world. This means that aggregators and brokers are going to need to invest more in IT security.
- Our industry will change shape. After years of regulation and changes we’ve seen a decline in broker numbers and while I don’t see these numbers falling dramatically (a higher broker market share will be balanced against more productive brokers) I do think it will spur on a change to see more teams of brokers working together and where leadership, infrastructure and knowledge is shared. Indeed, we are already seeing this trend at Loan Market.
- And, what of the changes for aggregators? Aggregators will need to live up to four core promises to brokers; to save brokers time, to keep them safe, to help them find and keep clients and to grow their business. We will need to make technology integrated and simple to use. We will need a team of people capable of helping brokers improve their processes - experts in things like Kaizen and process improvement, trainers and facilitators and, of course, a technology team that is thinking about the future. We will all need to have strong relationships with brokers and the capability to help them adapt to the new world.
Brokers across the country have been there for their customers, supporting them when the answers were not always clear and acting as a counsellor during some very emotional discussions. The lenders have also been outstanding. They have shown how important a strong and supportive banking industry is. They have quickly changed sacred rules, whilst being cognisant of their Post Hayne responsibilities, to support customers and reduce uncertainty in the community.
Both brokers and lenders have shown how much they want to help the customer. It shows that we have shared values. My hope is that, above all, the legacy of COVID-19 will be to closer align brokers and lenders to deliver better experiences to the customers we both want to serve.
It will be a brave new world on the other side of this, but it will be an exciting one.
Sam White is the executive chairman of the Loan Market Group