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A young tech entrepreneur who has challenged the traditional financial services model has said that mortgage broking will inevitably experience a similar ‘digital disruption’.
Chris Brycki, the founder of online investment advice and fund management business Stockspot, said mortgage comparison websites were destined to usurp human brokers.
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The 28-year-old said a comparison website would be superior to a broker because it would have a larger lending panel and use complex algorithms to calculate the cheapest rate.
He told The Adviser that brokers would be rendered “irrelevant” in this new market if they couldn’t find a way to sell themselves on value rather than price.
“I’m surprised mortgages haven’t become more of a commoditised market over the last 10 years,” he said.
“Technology is really stepping up in financial services so that change will really step up in the next five years.”
Mr Brycki said although he was not a member of the mortgage broking industry, brokers should understand that outsiders with open minds often provide the best ideas.
However, Australian Property Finance chief executive Nathan Swain said he held no fears about the threat that comparison websites might pose to his business.
“I still think that people like to eyeball people. Are people going to be happy to make their biggest investment without seeing someone? I really don’t think so,” he said.
Mr Swain also dismissed the value in massive lending panels, arguing that the 35 or so lenders on his panel were more than enough.
“If we can’t write a loan with those lenders on the panel then the loan shouldn’t be written,” he said.
FBAA chief executive Peter White also told The Adviser that brokers had nothing to fear from comparison websites because no algorithm could ever take the place of a needs analysis.
“It’s not just the rate; it never is. You’ve got to look at what your needs are, and that’s part of the NCCP. That’s a requirement that brokers need to go through and there’s a good reason for that,” he said.
“People could take out facilities that in their mind look good but find out 18 months down the track that it was the worst decision they ever made because they didn’t speak to someone.”
[Related: RBA tells businesses to go digital or risk ‘extinction’]
