Fintechs not a major threat to brokers

by Miklos Bolza10 Nov 2016
Advances in financial technology are likely to bring positive change to the mortgage broker community with fintechs posing little threat to established players, according to new research by Yell Creative.
Nigel Roberts, the firm’s managing director, said that while there is a thriving fintech industry in Australia, any impact will likely be more limited than in other international markets.
“Australia has one of the strongest established financial sectors in the world. The ‘Big Four’ banks are resisting any challenge to their market share through a strategy of buying start-ups or partnering with them well before they can truly disrupt the industry.”
In the past, the broking sector experienced a reasonable amount of disruption due to comparison sites coming in, Roberts told Australian Broker. The aggregation of information on these sites was, he felt, the biggest cause of disruption in the mortgage broker field.
As the models around these sites don’t generally have all the options and tend to partner with certain providers, this can be one advantage that a mortgage broker has, he said.
Roberts continued, saying that there was unlikely to be much major disruption in the future now that comparison sites were already well-established.
“The advice brokers give is going to be hard to replicate. These decisions are rarely purely scientific and I think that’s where replacing human interaction in the biggest purchase of your life is quite difficult to do.”
While people can easily go over the different choices through these comparison sites, the decision, process and advice is hard for these fintechs to disrupt, he said.
“Their model is based on convenience and nothing else really. They will compare key points but most of the time, how do you interpret that information?”
“It’s the same as the mortgage calculator. All of these calculators and tools they come up with – they’re abstract most of the time because there are a lot of other things to take into consideration.”
Roberts said that the role of the broker in giving personal advice and the added convenience to the client when actually executing the home loan process was still highly important and was going to be very difficult to disrupt.
He concluded saying that disruption was about perspective and whether one saw it as positive or negative. One example of this was the digital platforms that did away with face-to-face meetings for brokers.
“That can mean it actually increases the reach of existing brokers. They don’t have to go and see somebody or allocate time for someone to come to their office because of the way they can process these applications online.”
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