12 mortgage broking predictions for a post-COVID world
The legacy of COVID-19 will be the digitisation of business. It will (and largely already has) forced us all to accelerate our digital plans and to look at ways of operating remotely.
For brokers, this presents a huge opportunity.
Whilst so many brokers are living in the now – helping clients navigate an extremely difficult time (and doing a fantastic job of it) – some are starting to think about what broking will look like on the other side.
And while many will say it is too early to peer out heads out and consider what the new world might be like – I see this as the perfect time to do so. It is a time for brokers to review, realign and re-present your business. What do you want it to look like?
Here are my predictions for a post-COVID world:
1. 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 including for digital signatures on documents, electronic verification of identity and automated analysis of a client’s living expenses.
This transformation will create better customer experiences, better compliance with legislation and more efficiency for brokers and lenders.
2. 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. This should produce better compliance, more transparency for regulators and better outcomes for clients.
Aggregators will use data science to spot outliers in real-time, in much the same way that banks do. At Loan Market, we are in the early stages of this, and the results are promising.
3. 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.
4. 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.
5. Our industry will be better trained and more professional than ever before.
As this crisis drags on, I expect to see new lending and refinance slow and volumes decline. Not stop, but slow.
That means that some brokers will be able to spend more time becoming trained up on new tools and technology. Of course, the adoption curve in our industry is the same as many others – there are some that are already using new technologies really well.
There are others that don’t. I am sure all aggregators have significant training plans to make sure that no one gets left behind in this bridge to the new world and all of us will be spending more time than ever before on training.
6. 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.
7. 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. With multiple handoffs and significant human input required, the speed of approving a loan has changed little over the last decade.
Whilst lenders are already looking at transforming this space, the necessity to expedite this is apparent, particularly with the emergence of several neo-banks.
Established lenders will 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.
8. 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 are going to need to invest more in IT security.
The deep relationships between the head of third party teams at the lenders and that of aggregators will extend to relationships between their respective IT teams – and these relationships will be critical.
9. The government will make it easier for brokers and customers to work together online.
There still needs to be some government legislation to support this shift – already we have seen the Australian Registrars’ National Electronic Conveyancing Council (ARNECC) allow electronic VOI.
The government in QLD, WA, NT and the ACT will do away with the need to get mortgage documents witnessed as has happened in SA, VIC and now NSW.
10. We will be ready for Best Interests Duty (BID).
The very things that we need to do to operate in this COVID environment are the things we need to do to be ready for BID. Ironically our planning for BID has made us more prepared for COVID then what we may have been.
For brokers who adapt to these systems now, the transition to BID will be seamless, save for the need to get client and file notes right. As an industry, the note-taking habit is one we need to fast track.
11. Our industry will change shape.
Could the days of one-man or one-woman bands be numbered? 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 balanced against more productive brokers)
I do think it will spur on a change to see more teams of brokers working under businesses and where leadership, infrastructure and knowledge is shared. Indeed, we are already seeing this trend at Loan Market.
12. 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 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 in some really emotional discussions. At a time when clients need them, brokers have been there.
It certainly shows that our care for our clients extends way beyond the initial transaction. I hesitate to mention because it sounds self-serving, but it shows why the current remuneration model works in the interests of good customer outcomes.
When all this is over we want to look back and be proud of how we have helped our clients during this crisis. All of us should be.
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 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.