Mortgage comparisons 'essential' to stay on track

by Calida Smylie09 May 2014
Mortgage brokers must not see technology as a threat but must incorporate it while expanding into advice services to survive, Deloitte partner James Hickey said.

Hickey, who recently spoke at the Financial Services Forum on emerging mortgage trends along with NAB group capital and pricing intelligence head Phillip Everett, told Australian Broker that embracing technology is part of a worldwide trend which brokers should adapt to in order to better help customers.

“Brokers shouldn’t see digital as a threat; they should see it as an opportunity. Consumers are expecting to have some degree of digital interaction – how can the broker make sure they are bringing the digital experience to the customer when meeting face to face?

“It could be as easy as making sure the broker takes a smartphone or tablet along to the meeting where they can do real-time application processing direct from their device rather than making the customer fill out a whole lot of paper forms by pen, then the broker going back to the office and manually putting that in to the computer which the lender has to fill in again.”

The process will become “far more digitised and seamless”, and technology advances will also mean more robust and customer-centric pricing in the mortgage process, Hickey said.

“There’s an opportunity for more sophisticated pricing going forward as groups become more familiar with mining big data…the opportunity to get far more rigorous and informed pricing points for customers with different needs.”

Hickey also believes it is important mortgage brokers keep expanding services into financial advice.

“Australia is very similar to the Canadian market, where brokers differentiate themselves not just by being a price comparison shop but by being advisers, doing debt structuring, understanding options and increasing their value to the consumer.

“I think Australia and Canada brokers have very much moved the dial in this respect, and I think brokers will continue to move along this advice-based model.”

He suggested brokers think about ways to broaden interactions with customers.  

“Brokers gather a lot of information about a potential customer but often that information is used just to work out what mortgage product is best, and not to have discussions on superannuation products, insurance, or other potential advice issues the customer may have. I think the opportunity is for brokers to evolve along that path of offering advice across more customer needs.”

Hickey said it is important to compare the Australian market with foreign markets to determine whether it is on the right track.

The structure of a mortgage market can change with differences such as whether consumers in each country prefer fixed or variable rates, whether the country offers equity-style mortgages, and the impact of different tax regimes.

Many Islamic countries do not charge interest at all – under Sharia law interest cannot be charged and mortgages commonly have a lease-to-own structure.

However, Hickey would come to no conclusion as to which country has the best system.

“You’ve got to work within the parameters of the sovereign aspect, such as the legislation of the country, the tax deductibility structures in place, even the cultural beliefs. Different consumers in each country can influence different outcomes.

“We’re very familiar with the way we deal with mortgages and getting consumers into property, but it’s about looking at other ways of doing things that may warrant further investigation.”

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