A fintech founder with a passion to change the way banking is done, has explained why he will not be disregarding the broker channel in the future.
Speaking to Australian Broker at Salesforce’s Financial Services Basecamp in Sydney last week, the co-founder and CEO of volt, Steve Weston, said the broker proposition was “outstanding”.
Although technology and regulation will continue to disrupt the industry, he said changes to the broker role will simply provide better customer outcomes.
Volt was the first entity to be granted a restricted banking licence, after the Australia Prudential Regulation Authority (APRA) announced it would provide a new way for groups to register as a bank.
The Restricted ADI licence is meant to assist potential new entrants to the industry as they navigate the licencing process with limited funds.
Volt was granted its Restricted ADI in May and Weston believes the full licence will be granted by the end of this year.
After becoming a fully licenced bank, the 100% digital bank is planning to move from deposits to personal loans to home loans within its first year.
Explaining why Weston decided digital was the way forward, he said, “Banking has always been done the same way and banks have competed largely based on distribution. So the most successful banks were those with the most branches: that was the competitive advantage.
“The world is changing. With the growing popularity of smartphones, that’s the branch. Suddenly you’re previous competitive advantage has now become a commodity.
“It’ll be your product that’s your competitive advantage, but not product in the sense of a deposit or a loan or a car.”
Despite going 100% digital for his bank, Weston said there were certain aspects that needed human creativity.
He used the analogy of asking a robot to fetch a specific cleaning product out from under the kitchen sink, saying the human brain was much more complex and capable of understanding which product to choose.
He added, “Home loans are a really complex product suite. The biggest financial transaction that most people will make.
“Many people are going to want to see the colour of someone’s eyes before they trust a machine.
“In volt bank’s case we’ll even have our own mortgage team, but if we’re going to respect customer choice the broker proposition is outstanding, so we’ll be broker sourced.
“It doesn’t matter what I think, customers are going to need them, getting that impartial advice, being able to access a choice of providers. It’s incredibly attractive.”
Weston said with new technologies and the introduction of open banking next year consumers may be able to do things like refinance a mortgage or switch to P&I themselves.
Instead of this taking away the ongoing role of a broker, however, he said the role will change to one with a better customer experience.
Weston said, “They’ll focus on rapport building, educating customers about all the things that they need to know about home loans, to make sure all their needs are met and not just the home loan because they might only buy one home in their life. How can you pay more debt down quickly?
“Brokers will be able to service a larger number of customers.
“They’ll get them in the right home loan and then the broker’s role will change to help them get rid of the thing. The minute they have the home loan they want to get rid of it. So brokers will have more a role to help people repay loans than we have seen in the past.”