Experts say fintechs need brokers more than ever
Despite the growing focus on digital-only loan platforms, experts say brokers have a vital role to play in assisting borrowers achieve their lending dream.
In fact, according to MFAA CEO Anja Pannek (pictured above left) the greater prevalence of digital lenders meant that more Australians than ever were using the services of a broker.
Pannek said the greater choice across residential and business lending had also made the lending market more complex.
“Making sense of this complexity, so a consumer or business owner can make informed decisions is specifically how brokers help their clients,” Pannek said.
Data from the Australian Banking Association shows that 98.9% of all bank transactions are now taking place digitally and cash is being used for just 13% of payments, which is down from 70% in 2007.
According to online comparison company Mozo.com.au , it’s no surprise that banks are shifting their focus towards the next generation of borrowers and developing new brands and products targeting them.
“Enter Up, Unloan and ubank, the digital offspring of some of the biggest players in the Aussie banking scene – Bendigo Bank, CommBank and NAB,” said Mozo’s money expert content and community director Kylie Moss (pictured above second from right).
According to Moss, “these digital-only bank brands have more in common than a fondness for the letter U”.
“With competitive interest rates, unique features, speedy approvals and of course, big bank backing, their home loans are proving popular choices for Aussies of all ages.”
Branch closures have helped drive digital banking
However, this move to online banking wasn’t new, said Pannek.
“Many banks have been progressively closing branches, as more of their services become accessible digitally and more consumers choose to access everyday banking services online or via their mobile.
“The acceleration of services such as tap and pay has also seen cash usage in Australia decline dramatically in the last decade.
“When it comes to lending, and mortgages in particular, we’ve seen fintechs come to market offering innovative solutions, as well as more traditional lenders starting to offer digital mortgages as well.”
Australian Property Home Loans broker Adele Andrews (pictured above second from left) said the role of the mortgage broker was to provide as much choice as possible for their clients and align their goals, objectives and wants with the right lender product.
“Online lenders complement the suite of lenders I have as options for my clients – but at the end of the day, if their product does not stack up in terms of policy, features, fees and rates, it won't make a difference whether they are online or not,” Andrews said.
“There is no doubt that the market is becoming less concerned about having access to a branch network, but an online differentiation without the product or policy to support it, simply isn't enough.
“If the client is going to save money using that product and it aligns with what they seek to achieve, that is all that matters.”
Digital platforms help drive innovation
Pannek said newer entrants had driven innovation in the mortgage market, when it came to digitisation of lending processes and the consumer experience, which was great for borrowers in Australia.
“Also, the emergence of fintechs operating in the SME lending space, and partnering with brokers, has allowed many small businesses to access capital in different ways,” Pannek said.
“By working with brokers, these fintechs have been able to reach customers they would not be able to otherwise, allowing these organisations to scale and grow. “
Andrews said these online banking platforms didn’t appeal to everyone.
“I think your more digital savvy type of client is more drawn to a lender like this – or at least, they are more aware of them and the options they bring to the table,” Andrews said.
“I do tend to find that it is a younger demographic that I get more inquiries from about them, when asking how they compare to other options in the market.
“That is where the education piece comes in from us – if the priority is to have a lender with an online presence and it aligns with every other objective, then they make a great option to be able to recommend to the market – whether they are on your panel or not.
“At the end of the day, the stars all have to align in relation to what is in the client's best interests.”
Digital loans still require due diligence
Andrews said the challenge might occur when the client went directly online to secure the loan with one of these lenders, without doing their due diligence.
“In my view, there is no substitute for securing a loan via a mortgage broker – as long as that broker is one who is prepared to sit down with you, listen, spend time educating you and provide you with quality options that you understand. No online option can do that for you.”
Mozo money expert Rachel Wastell (pictured above far right) said digital lenders used clever technology to empower borrowers and remove the laborious admin work that used to accompany mortgage applications, “and in this increasingly interconnected and fast-paced world, speed and innovation are paramount”.
“Instead of helping borrowers with the loan application and paperwork, the digital shift could see mortgage professionals taking more of an advisory approach,” she said.
“Communicating the benefits of loans and the impact of different interest rates, assessing borrowers’ eligibility for government housing grants and explaining the potential for negative equity are all key insights that mortgage professionals are uniquely positioned to provide.”
Pannek said having digital and traditional lenders and products on a broker’s panel enabled a broker to offer a broader range of choice when it came to customers seeking a digital lending experience.
“Going forward we see most lenders will offer full end-to-end digital mortgage solutions, and that these solutions will be integrated with how brokers work with their clients.
“At the end of the day borrowers want choice and a great experience – through a broker they can access both of those things with expert personalised guidance. “
What do you think about digital loans and how do you work with clients in this space? Share your comments below
