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The head of a major aggregator is confident that the broking industry will further capitalise on the growing distrust of the established banks.
Speaking at a Loan Market forum, chairman Sam White claimed that amid scrutiny from the financial services royal commission, which has highlighted the failings of the big four banks, mortgage brokers are well positioned to strengthen their place in the lending landscape.
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“[Out of the royal commission’s hearings,] who would you trust? Brokers are clearly the ones who customers are turning to,” Mr White said.
Mr White pointed to the continued growth in broker market share, which sits at 55.7 per cent, and claimed that mortgage brokers are on a “one-way ticket to 60–70 per cent market share” reported in the United Kingdom.
“We are focusing on the customer. The [bank] branch manager is focusing on their employer,” the chairman continued.
However, also speaking at the forum, Loan Market’s executive director, Matt Lawler, encouraged brokers to prepare for potential changes to the broking model.
Mr Lawler pointed to the banning of trail commissions in New Zealand in 2006, adding that brokers moved to an upfront structure that aided cash flow but constrained long-term sustainability.
“We’ve seen this movie play out and had to pivot our business strategy to navigate this field before,” the executive director said.
Mr Lawler suggested that brokers broaden their appeal to consumers by diversifying their product and service offering.
“Our strategy is to keep our client base engaged by being the person they turn to for financial options,” Mr Lawler added.
“We don’t own one product or push one service as a bank manager does. We can offer multiple solutions across a number of services.”
In addition, Mr White suggested that brokers introduce ancillary services such as asset finance and wealth advisory to existing customers, which he said would help broking businesses absorb any remuneration changes.
“We recognise what an unsettling time this is for some brokers and that they are working harder than ever before,” the chairman said.
“Right now, you are having your value questioned, and the future viability of your business questioned.
“We fully understand that and share that with you. We believe the best thing that you can do for your business is to keep looking after your customer, as you always have done, and look at ways to offer them more reasons to work with you, by becoming the trusted adviser.”
[Related: Aggregator CEO highlights broker resilience]
