After a decade of digital disruption…what's next?

Innovations in IT have transformed the broking industry over the last 10 years, with cloud capabilities and digitised systems making pure paper-based processes a thing of the past. Now, following this decade of digital disruption, what changes can we expect moving forward? Sarah Megginson reports.

In the modern workplace, a faulty internet connection can cause mild panic. But a decade ago? Back then, it was a dodgy fax connection that had the potential to leave brokers and their support teams bereft of work and productivity for hours on end.

“Faxes were certainly the way we used to transfer documents, but these days, brokers rarely need a fax. After some recent office rearrangements we didn’t have a fax line for a number of weeks, and we didn’t even notice,” explains Glenn Lees, director of aggregator and mortgage broking group Connective.

Like the pager and car phone before it, the fax has become a redundant piece of technology. This is largely due to the fact that over the last 10 years, we’ve experienced a greater move towards digitalisation in every area of business.

“Ten years ago, everyone was still filling out paper-based loan applications and faxing them to a lender, and people quickly forget how much carnage that caused,” explains Tony Carn, sales director, NextGen.Net.

“There was always data that was missing, data that couldn’t be read. By migrating to electronic systems it has radically reduced costs, simply by ensuring that at the point of submission, all of the data that is required by a lender is validated.”

This allows for a number of checks and balances that didn’t exist before, eg. if a broker lodges a PAYG application through NextGen’s software and it is processed as seeking a low-doc loan, then the system may throw up a red flag.

3 reasons why internet-only brokers won’t work
1. The human component is critical
A loan transaction is still going to be the biggest single transaction that anyone enters into, so there is always space for a human component and a face-to-face interaction, according to Lees. “We may use computers to achieve an end, but the human component is critical,” he says. “Trust is trust, and software ­– no matter how good – can’t replace those human elements.”
2. Modern consumers are needy
“If anything, the millennial generation will be much more demanding, in terms of service, efficiencies, more accurate responses and services,” Carn says. “There’s a very small market or consumer appetite for dealing with this type of model, so time will tell.
3. Technology adds to, but doesn’t replace, personal relationships
Unquestionably, developing an online presence and leveraging the opportunities social networks present is important. But Quin-Conroy says he views technology as “a powerful tool that can be harnessed to support and strengthen client relationships, as opposed to replacing them”. “A broker who engages with potential and existing clients online as well as offline, and utilises his software and technology to its full potential, will be best placed to deliver clients the best service possible,” he adds.

“Today, electronic application lodgement is utilised by over 95% of Australian brokers; it’s well recognised as the industry standard. But there’s also been a real move towards getting data quality right for loan processing, which is being able recognise at the point of submission whether a potential issue exists,” Carn says.

“That’s been pretty significant, and I’d have to say that the last two years have delivered has much change at the last 10.”

How technology has changed the broker space

The most significant evolution for brokers has been the move to the cloud, which has had the impact of the improving efficiencies for the entire broking industry.

“Our software, Mercury, is a cloud offering; we used to have software on the desktop but five years ago we went to the cloud. It’s been one of the biggest changes we’ve made and it was the best thing we did – it’s simply the best practice, the benefits are compelling,” Lees says.

Obviously, the other big change in the last 10 years has been the transition from filling out a paper form and sending it in to a lender, to now collecting that data in a digital device for semi-automatic approval. This has had a big impact on helping brokers and lenders achieve ‘straight through processing’ (STP).

“It’s hard to imagine that just a decade ago, brokers were wasting a substantial amount of their precious time on administration tasks. But technology has come along in leaps and bounds over the past 10 years, allowing brokers to now spend their time much more efficiently,” says Phil Quin-Conroy, CEO of PLAN.
“Our software, Podium 2.0, has evolved enormously over the past 10 years, as our focus has been on simplifying procedures and creating greater efficiencies for brokers.”

What are some of the other important and impactful IT changes that the broking industry has witnessed?

Online data capture and lodgement

Gone are the days of brokers needing several face-to-face client meetings in order to fill out forms and collate client details.

“Online customer data capture tools speed up the application processing time for brokers and their customers, by enabling customers to submit their details to the broker at their own pace, in their own time,” Quin-Conroy explains.
Warning: Do not ignore social media

“We see social media and social computing as key areas of importance moving forward,” says Phil Quin-Conroy from PLAN.

“Sites such as Facebook offer brokers the opportunity to showcase their expertise and build a solid profile – as well as drive clients to engage with you. If you’re still ignoring this space, you’re potentially putting yourself at risk of being crowded out by other more active players.”

“Our eClient feature for example allows captured data to be loaded directly into Podium 2.0, so clients’ details can be used for all relevant application forms – saving brokers’ time and enabling them to have richer conversations with their customer.”

Acquiring actionable intelligence

“We not only have the ability to capture data in a digital format, but we can also use that data much more comprehensively,” Lees says.

“The efficiency of getting information from point to point, what we call the speed of transfer of information, is the part that has really changed. Now, when information is in the system, a broker can actually encapsulate the real value in their business, which is actionable intelligence.”

Software that looks for mistakes

Modern broking software acts as another set of eyes across the application, checking that all relevant information has been correctly inputted. But its ability to add value during the application process extends much further than that.
“There’s a lot of infrastructure we’ve developed and a lot of inroads we’re making in terms of enhancing data quality. For example, our software can actually check to make sure that the application meets the lender’s policy criteria, which can change almost daily,” Carn explains.

“And if the loan doesn’t service according to the lender policy, the software will say so. Before you officially push the button and apply, and it will halt the submission and alert you to the fact that the loan falls short $10k in serviceability, and ask if you want to proceed.”

Targeted marketing/harnessing big data

Savvy brokers can leverage the latent value locked up in their customer data files to create meaningful relationships and targeted marketing campaigns. We’ve barely scratched the surface of what can be achieved with big data, “whether people like it or not”, Carn says. “There’s a lot of data that is available to be utilised by everyone in the food chain.”

“Technology is giving you an efficient and effective way to market to your customers. For instance, if you notice that a client is due come off their three-year fixed rate in December, you could send them information on next fixed-rate products in November. Or you might decide to contact all of your clients that fit within a certain age bracket and certain income level, to ask whether they’re looking to invest?” Lees says.

“It allows you to become a proactive broker that provides solutions; the possibilities are absolutely endless.”

Bespoke automation

While there are clearly huge benefits in being able to market to your clients in a bespoke way, no one has enough hours in the day to look up every single file and follow up accordingly.

“The bespoke nature of this data is where the true value is, and the best thing about it is that you can automate it,” Lees says.

“If a client says, ‘We want to look at buying a new car in 12 months’, you can set up an automatic remind to contact them, and then tailor your marketing to what they’re interested in.”

Eyes on 2024: Where to from here?

The last 10 years has seen upgrades in technology rapidly change all manner of businesses. So what can we expect in 10 years’ time?

“We’ll each have a personal data vault”

“Here’s my vision for the future: everyone will have a personal data vault that will contain everything a lender needs to approve their loan. My salary data, my tax returns, data from my credit card provider and lender: it will all be stored in one place. It’ll be biometrically signed, so that a third party is validating that information all the time. With this type of system underway, you could address issues of fraud and really improve productivity in processing loan applications. You could potentially even buy a house one day and transfer all of the documents immediately, and take possession right away. I’m sure I’m not the first person to come up with this; the idea was probably thought of 30 years ago!”
- Greg Lees, director, Connective

“Machines will talk to machines”

“Going forward, we see better integration and efficiencies between systems. For instance, we’ll see services that will make things easier, faster and cheaper, with machines talking to machines to verify salary income or rental income, rather than a person having to ring an employer or a real estate to agent to check personally. The technology is definitely there already, but we’ll find ways to better utilise it. I also think we’ll see very quickly the death of the excel spreadsheet – a lot of brokers still rely on them to do serviceability calculations, but there are much more effective programs on offer that can harness lender policies and other relevant information in real time.”
- Tony Carn, sales director, NextGen.Net

“Wearable smart technology is just around the corner”

The focus of technology is going to increasingly shift from back-end efficiencies to client engagement. Cloud and mobile technologies will continue to evolve; in just a few years, smart devices and mobile technologies have revolutionised business and we see this as just the tip of the iceberg, with ultra mobile systems and wearable smart technology just around the corner. ‘Big data’ is another area to watch – that is, the use of information to better make sense of customers and their behaviour. There is a lot of potential for the industry to more effectively leverage client information in order to better understand and predict client behaviour, and I expect this to be a major area of investment in our industry.
- Phil Quin-Conroy, CEO, PLAN

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