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The Big Story: Brokers told they're behind the times

Brokers are being urged to build a brand and create an online presence to compete with web-based products.

Video transcript below:

Donna Sawyer, Australian Broker News TV
Donna Sawyer:  Hi, I am Donna Sawyer and you are watching the Big Story on Australian Broker News TV.
Mortgage brokers have some catching up to do when it comes to building a brand.  That’s according to Kim Cannon of FirstMac who says brokers are up against some heavy competition with the continuing growth of online white label programs.
Kim Cannon, FirstMac
Kim Cannon:  The online space is still the opportunity, the market opportunity out there.  I think that’s the thing we have noticed this year.  How do brokers adapt to it?  Well they have just got to try and figure how they adapt to it, you know.  I have said to a lot of brokers, a lot of the aggregator groups are setting up white label programs.  At the moment I believe those white label programs that the aggregator groups are setting up will become the online vehicle for those aggregator groups down the track.  They have to questions if they are taking online leads and online applications via those vehicles, what’s the use of a broker.  Do they need a broker to sit down with a customer?  Can it be done with a much cheaper person?
Donna Sawyer:  But Mardee Thomas of 1st Street Home Loans says there is still room for the full service brokers offer, particularly for clients with complex needs.
Mardee Thomas, 1st Street Home Loans
Mardee Thomas:  White labelling has been around for quite some time.  It’s not a new sensation. There is always, there is definitely a presence and a need for online products.  I think people will still keep doing their research on the internet and finding out background on different products and lenders, but I think they still going to need to be that face to face kind of interview.  You know people like to have that fulfilment face to face.  In terms of you know the younger generation, I think it definitely probably going to be the next ones to probably do a lot of their lending online, but again it’s going to be very plain [way of] lending that’s going to be done on these scenarios.  All these complex deals that you know need a bit more helping hand and assistance.  I don’t think they are going to be able to be done just online.
John Kolenda, 1300 Home Loan
John Kolenda:  The cheapest rate online has been around for a long time.  A number of banks and aggregators and brokers have been chasing that business for a little while, it’s a very small segment of the market.  It’s certainly not going to detract from the broader broker offering and actually because of the complexities want to deal with the broker and needing to do it face to face.  So I think more and more consumers are still going to rely upon the advice, you know sitting in front of a broker.
Donna Sawyer:  John Kolenda, Managing Director of 1300 Home Loan says while it’s important for brokers to have an online presence, there is much more to creating a brand than having a website.  
John Kolenda:  It’s one thing to have a website, but it’s another thing to drive traffic.  So you know that’s where it could be quite a large investment you know for a broker to get their page ranking and driving traffic.  You can do it by cutting out a niche online and trying to dominate the key word or search where you actually get featured quite high.  You know with the amount of competition in that space, it’s very difficult because a lot of biggest competitors actually take up a lot of the online investment marketing, making it difficult for brokers, but there are I think there will be various different ways they can do it.  Talk to an expert in that space, so with SEO, they could even attempt some SEMs or pay per click marketing, but definitely start off, build a website, try and get some traction, try and drive some traffic to it.
Donna Sawyer:  He says independent brokers may find it difficult to compete with multi million dollar marketing budgets, but there are other ways to build their business.
John Kolenda:  When you spending you know 5 or 10 or 20,000 or investing that amount of money, it’s quite typical to get traction.  There are probably a number of people I have seen that do it quite well at their local area.  They have managed to carve out a niche either online or direct marketing, but there are very brokers, I think it’s increasingly more competitive and you are competing against brands that are spending 5, 6, 8 million dollars.  How do you do that?  Once again, the best vehicle I have seen that’s been able to achieve that is for brokers in that something like 1300 Home Loan, that ultimately helps brokers you know with a small investment actually become part of a truly national brand.
Donna Sawyer:  Kim Cannon of FirstMac says brokers need to keep pace with the changing consumer trends, especially the online space.
Kim Cannon:  Start learning the online business in a hurry, otherwise you won’t be there in the future.  You might, you know brokers have got a big market share at the moment, but there again to the consumer, what the consumer is doing now just think of your own self at the moment, how much do you spend online shopping at the moment and put the consumer in your place, that’s what they are doing at the moment, they are online shopping and you know as we found from our online business, for standbys yeah they want to talk to a broker, they want to get advice and everything like that, but second and third people, they just give me the loan, give me the cheap price and make it simple.
Mardee Thomas:  I think we are learning at this stage.  I think there is still a lot of opportunity out there, but yeah I think it is still a great phase, especially now that we also have this cross sell opportunity where we have got insurance products, bank products, credit cards, instead of letting the banks just rule and decide what they want the client to have, that we then have the opportunity to obviously have different space there too.  So yeah, it’s going to be an ever growing kind of opportunity I think.
Donna Sawyer:  For more on building your brand and other industry news, click around the Australian Broker News website.  I am Donna Sawyer and I will see you again next week with the Big Story.