In a world where digital automation is only going to increase over the next 10 to 15 years, the growing emergence of digital home loan products seems natural – but does this trend signal the beginning of the end for mortgage brokers? According to 1st Street Financial mortgage and financial adviser Greg Bloom, this depends on regulation.
Speaking to MPA about the recent launch of Aussie Home Loan’s first online direct to consumer digital lending product, he said digitisation was the way of the future.
Read more: Aussie CEO: direct to consumer offering will bring new opportunities for brokers
“There’s no question that broking in 15 years’ time will be unimaginably different,” he said. “We were talking about driverless cars today and it’s hard to imagine a world where no-one drives anymore. It’s pretty likely, but it’s unimaginable.
“Likewise, you want to lend $1 million and you just literally plug your bank statements in there and boom – you’re approved on the spot because the computer can assess everything instantly through your habits and risk assess you. It’s not a crazy thought.”
From an aggregator’s perspective, compliance burdens have increased while margins have come down in recent years, he said.
“If you look at Aussie as a business, ultimately a brokerage and an aggregator, they need more margin and the only way to find more margin is to white label more products and write more loans and be more efficient, so they’re ticking a few more boxes there,” he said.
But while digitisation does seem to be the way of the future, it is difficult to know just how it will impact the need for mortgage broking in another 15 years’ time. Most brokers find that only one in 10 client scenarios are straight forward enough to ensure approval at the majority of lenders, said Bloom – leaving a massive gap in the market that brokers have been doing an excellent job bridging for many years.
Read more: Aggregation manager slams Aussie’s direct to consumer product
“As a broker, it’s hard to imagine 15 years down the line where you plug your bank statements in and you get approved on the spot,” he said. “I can’t even imagine that, but is it the likelihood? Probably. It’s really going to be down to regulation, I think.
“Provided the industry is heavily regulated, it would be harder to digitise because there’ll be so many checks that need to happen.”
Alternatively, digitisation could add huge efficiencies for brokers in terms of the application process, he said, making it more straight forward to submit the loan and receive approval following the crucial task of competing compliance.
In any case, while the online channel will grow exponentially over time, Bloom hopes that brokers will still hold a valuable place within the Australian lending environment.
“I still like to think people like to do business with people,” he said. “That’s the preference, as opposed to direct online.”
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