Adapting to the new normal

by Sarah Megginson17 Aug 2020

If you roll back to the start of the year or even to 2019, onething was already clear about the broking industry, argues PLAN CEO Anja Pannek: it is nothing if not ceaselessly resilient.

“When you consider the challenges of the last year, from the scrutiny of the royal commission to the biggest regulatory change in a decade, that was really unsettling for a lot of people. Then you factor in the bushfires and a global pandemic, and these truly are unprecedented times,” Pannek says.

“I think this is something all of us will learn and grow from and that will become absolutely core to the broker and their business in the future: this resilience and the ability to continue to be adaptable and change with the times.”

It’s always been the case that the most effective and successful brokers are those who don’t just react to current conditions but proactively plan ahead to prepare for a range of different outcomes. Of course, no one could ever have predicted a pandemic would be thrust upon us, but that element of the unknown is part and parcel of running a business, Pannek says.

“In the economy, there will be things that we would never expect to happen thrown at the industry, and your business has got to be adaptable,” she says.

“When you’re running a broker business, now more than ever, it’s critically important that you spend time thinking about different scenarios and how your business could evolve and how you’re engaging with and supporting your customers. What is your business plan and succession plan? How are you diversifying? Amidst all of this change and certainty, what can you be doing to improve your operations? Are you regularly communicating with all your customers? What more can you do in the current environment to support them? I am one to say ‘never lose sight of a good opportunity’, and depending on the mindset you’ve got, right now there are many opportunities to diversify and grow your business.”

PLAN Australia: Key highlights of 2019This is not to downplay the very real and challenging situations many brokers have found themselves in over the past six months. Since the onset of the pandemic in March, brokers have been under pressure from all angles – internally, in managing their own staff and keeping their own business afloat, while also assisting their clients who are financially stressed.

“Brokers play such a critical role in helping customers understand policy and structure their finances, so it’s key to your success and growth to stay connected to your customers”

How can those brokers who are really struggling with these challenges pivot their businesses to adapt in a post-COVID-19 world?

Pannek advises that this is the time to focus on only those elements that you can control, rather than getting too lost in the bigger picture.

“You have to focus on your controllables. There’s so much uncertainty, and it’s difficult to plan in that type of environment; it’s very easy to get overwhelmed. But there are some fundamentals in broking that hold true, and we keep coming back to those with our professional development programs, which we do with our members,” she says.

“It starts at the very foundational level of: do you have a business plan? Do you actually understand the key drivers in your business, and are you clear about your customer value proposition? Where are your biggest costs coming from and what can you do differently? What type of work are you doing around referral partners? These are all areas of your business that are in your control, and you can effect really significant change by focusing here.”

It all comes back to the concept of working in your business rather than on your business, Pannek says. When you can step back and look at the business from a broader, more holistic point of view, you  can then become clear on where you are right now and where you aim to be.

“At the heart of it, there’s quite a bit of friction involved in getting a consumer to be assessed by a lender, and a broker plays a big role in managing that friction”

“The changes you implement at that point could be dramatic. If you’re on your own, you could decide to go and work with another group or start a new partnership. Or you might reinvigorate your referral partners. It could be as simple as reviewing your CRM so you’re really clear on who your customers are and what are their needs,” Pannek says.

“Brokers play such a critical role in helping customers understand policy and structure their finances, so it’s key to your success and growth to stay connected to your customers and keep them informed so you become that trusted voice amidst a lot of mixed messages about the broader economy.”

Anja Pannek, CEO, PLAN Australia
Anja Pannek, CEO, PLAN Australia

Whatever way you slice it, there’s no denying that COVID-19 has had a massive impact on the way brokers do business. As Pannek points out, however, it’s not necessarily all bad; in fact, there are certain clunky aspects of the mortgage and finance industry that may be left behind for good  following the pandemic.

“Brokers already had a competitive advantage because many of them worked with customers right across the country. But now, with greater flexibility in terms of how people can work and how they are now prepared to interact with important advisers to make financial decisions, many of those geographical barriers won’t be considered barriers any longer,” Pannek says.

“Because many brokers are already accustomed to delivering a flexible service, many of our members stepped immediately and seamlessly into digital means of communication. I really hope that we continue with that, because it gives brokers the ability to scale their businesses.

“There’s always a role for face-to-face discussions, but everyone should be challenging themselves in terms of how they can be really effective with some of these digital transformations that allow us to connect more freely.”

Advances in technology are creating opportunities in myriad ways, with respect to communicating with clients and marketing to customers. They also pave the way for more effective and meaningful analysis and use of CRMs – something that has been a strategic focus for PLAN.

“We have invested significantly in Podium, using it to its full extent for every part of the customer journey, to help our brokers identify customer needs, to segment customers and allow a more meaningful level of service,” Pannek says.

“We’ve seen a continued shift towards putting the customer right at the core of everything we do. When broking first started it was a transactional sport, but now it’s very much about brokers developing relationships over the long term with their customers. We have this opportunity to truly innovate, and with lenders addressing processes and open banking, and at the same time new regulation is being introduced, we’re absolutely seeing a pivot towards customer-centricity.”

In terms of looking forward, Pannek says the introduction of the Consumer Data Right (CDR) is set to influence how customers interact with brokers, along with the services they expect brokers to provide.Open banking is essentially about consumers sharing their data, including both transactional and lending data, and has the potential to reimagine the entire loan processing experience.

“At the heart of it, there’s quite a bit of friction involved in getting a consumer to be assessed by a lender, and a broker plays a big role in managing that friction. It’s the role of the broker to help the customer through the stress and uncertainty of that. With  open banking and the ability to quite freely share data, it’s going to enable brokers to help their customers make the best possible decisions based on a full set of data,” Pannek explains.

“Because many brokers are already accustomed to delivering a flexible serving, many of our members stepped immediately and seamlessly into digital means of communication”

“It’s not about verifying bank statements; it’s about working with your customer to ensure they’re in a great product that meets their needs now and in the future.”

With advances in technology and these regulatory changes, Pannek expects processes around ID verification to get easier, and this should lead to an improvement in turnaround times.

“We’ve seen to some extent in Australia that data aggregation platforms will help consumers get more educated around what’s out there and what they should be going for. But one thing that’s really important with open banking, and will be legislated in due course, is that brokers will be able to work with aggregators to work it into their business processes,” she says.

“We’ve got some members who already use digital means, and they’re already starting to work with their customers and almost make them CDR-ready. It’s all about building trust from the customer’s perspective and getting them to the point where they say, ‘I trust you; I trust you to share my information. You’ve proven that I can count on you’.”

With so many different changes to keep up with now – compliance and regulation, the best interests duty, open banking, conflicted remuneration, and the expectations of regulators – how can brokers stay on top of everything going into 2021?

Pannek says her key piece of advice to brokers is to “stay absolutely connected to your aggregator and partnership manager, because all of us in the industry have been working very closely” on preparing the industry for these changing times.

“It’s important to stay connected to your industry bodies as well,” she adds.

“Post royal commission, it’s about shaping the regulation so that it’s landing in a way that helps to build a really resilient, stable industry.”

No brokers should feel like they’re in this alone, Pannek says, as there are many resources and programs available that can help them engage with these changes and adopt them into their business models.

“At PLAN, we’re reshaping Podium to help brokers and guide them through the experience of BID so our members feel confident that they’re meeting the obligations of the law.

“We are also rolling out national webinars, e-learning and peer-to-peer learning platforms, as some of the best learning comes out of learning from your peers, and we’ve long recognised that,” Pannek says.

“We’ve got some exciting stuff we’re launching later in the year around business diagnostics and comparing your business against others in the market across the PLAN membership. We’re really excited about launching this and providing this value to our members.”

Partner in progress