The head of lending at Yellow Brick Road (YBR) has backed a recent report that shows ANZ is reducing its branch presence while bolstering its broker channel, saying it is another signal that brokers are the future of the mortgage industry.
YBR CEO of lending, Tim Brown says the group’s strategic vision to dramatically increase broker numbers is being reinforced by the actions of the big four bank and by the statistics around popularity of brokers with property purchasers.
The J.P. Morgan Australian Mortgage Industry Report released last week
revealed that ANZ has been steadily reducing its branch presence since 2011, in favour of increasing its broker usage – a trend which J.P. Morgan banking analyst Scott Manning told Australian Broker
will continue across the banking landscape over the next five years.
The report also highlighted that the broker channel may be perfectly placed to capture greater market share with 75% of refinancers expected to use brokers.
“If we look to trends overseas, a move towards utilising brokers for a larger percentage of lending has already been happening for some time. In the UK, 76% of loans are done through a broker and 87% of the actual loans are through mutuals, building societies or regional banks,” Brown said.
“That same trend is now beginning here as banks realise old ways of operating aren’t working.”
Brown says there is no doubt that the traditional bank structure plays into the hands of intermediaries.
“In this day and age, people want to have access to service providers outside the typical 9-5 business day. Our brokers at Yellow Brick Road and Vow Financial don’t work limited business hours, they are driven to take care of the customer’s desire for convenience and that means being flexible with the time and place that suits the customer’s needs,” he said.
“Brokers also have a small business mentality that banks just can’t compete with. They are integrated into their communities in a way banks can only pretend to be. They work harder because that way they build a reputation and make more money. Running the bank’s capped income model is never going to be as popular with consumers long term as the alternative of a broker who is incentivised to give better service, work longer hours, bring more customers in and provide customer-centric service.”
Last year, the Deloitte-run industry roundtable found that more than 51% of mortgages written are going through a broker and also predicted further growth, with expectations of an increase to 60%.
In their recent strategy update, YBR said it had a goal of growing to 300 branded branches and 1,000 broker groups by 2020.
“Hearing that one of the big four is forgoing its branch presence in favour of a greater emphasis on the third-party broker channel reinforces the increasing consumer popularity and effectiveness of brokers,” Brown said.