How digital mortgages might be set to take over the Australian market in 2022

"We thought it would be a 3-5 year market shift, but we now believe it's 12-18 months"

How digital mortgages might be set to take over the Australian market in 2022


By Mike Wood

Digital mortgages could be the biggest disruption that brokers see in 2022, according to one of the lenders blazing a trail for the product in Australia.

2021 has seen the digital-first home loan go from strength to strength, with many now predicting that it will grow exponentially next year as customers and brokers in Australia catch up with their counterparts overseas.

“From an industry perspective, our view is that, like all disruptions, you end up with early adopters being the people that are your initial customers,” said Andrew Walker, CEO of Nano, who boast the quickest digital mortgage in the world.

“This type of mortgage product, and these type of customer journeys, are rapidly mainstreaming. When I say rapidly: we thought that this would be a 3-5-year market shift, and we now believe it’s a 12-18 month market shift. That’s the velocity that we’re seeing.

“You pick up a newspaper every day and you hear a CEO of a bank talking about this being the new battleground in mortgages. The market is mainstreaming and moving fast.

“If you look at the global data, you see how far behind Australia is in adoption of this. It’s less than 3-5% at the moment, and in the US last year, over 30% of mortgages were originated digitally.

“If we average up to the global benchmark, as it looks like we are rapidly doing, that suggests that there is over $100bn shift in channel flow that is going to happen in the next year and a half.

“The reason that will happen, frankly, is because the customer journey and experience is better. The amount of lifting that a customer needs to do is far less. Typically, the products are more transparent, have fewer fees and are easier to understand.

“That’s where we see the market going, and it shouldn’t come as any great shock if you think about what is actually going on.

How quickly will digital mortgages be adopted in Australia?

“What you are seeing is the largest asset class and the biggest part of the banking market remaining stable over so many years, largely because the oligopoly haven’t had any incentive to change or innovate.

“If you have 80% market share and business comes your way by virtue of market structure, the incentive to innovate is low.

“The banking system is late to the game, and their technology is inadequate to move quickly – that’s where the likes of ourselves and others have sprung up and found an interesting opportunity to deliver value for customers.”


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