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With brokers having to rapidly adapt to COVID-19-related restrictions in 2020 by conducting client meetings over video conferences, one non-major bank wonders what brokers’ operating models will look like in 2021.
ING head of third-party distribution and direct mortgages, Glenn Gibson highlighted that 2020 was a year of change and adoption, particularly in relation to how brokers interacted with their clients and the manner in which they verified the identification of their clients.
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He noted that within weeks of the onset of the coronavirus pandemic in Australia last year, lenders rolled out and enabled the use of digital identification and digital signature tools for brokers and their clients’ mortgage applications.
Mr Gibson believes that now that these changes have been introduced, “it’s never going to go backwards”.
“I know from an ING perspective, we are thinking about how to enhance those capabilities even more,” Mr Gibson told The Adviser.
“Once you see some changes, particularly digital changes, they don’t go away because once you're happy with your risk profile or your process profile, you then ask, ‘what’s next?’. That’s the next question: what’s the next version of what we’re seeing?”
Mr Gibson believes brokers need to consider what their operating models would look like in 2021.
“If you think about 2019, it was all about face-to-face interviews for brokers. In 2020 it was a little face-to-face but mainly Zoom-style meetings,” Mr Gibson said.
“But what’s 2021-22 going to bring in? Is it going to be half-half? Is it going to stay the way it is? I think we just need that to play out a little bit more first before we decide what we need to do from a lender’s perspective.”
Mr Gibson believes that brokers would need to balance maximising their unique proposition – which is offering face-to-face advice to clients – with the stipulated safety protocols to contain the spread of the coronavirus.
“The challenge for ING in 2021 will be to make the most of brokers and their face-to-face proposition, while at the same time, brokers make the most of their unique selling proposition of offering face-to-face advice, within reason,” Mr Gibson said.
Several lenders implemented changes to home loan policies to enable remote verification of identity (VOI) in 2020 as Australia increasingly adopted social distancing habits to curtail the spread of COVID-19.
While the Australian Registrars’ National Electronic Conveyancing Council (ARNECC) advised in May last year that it would reassess its proposed amendments to the VOI regime amid the COVID-19 crisis, a coalition of associations called on the government to make the temporary rules that allowed lenders to process a mortgage digitally permanent.
The responsible lending shift
Mr Gibson also commented on the government’s previously announced consumer credit reforms, which includes the proposal to scrap responsible lending laws and extend the best interests duty to more credit assistance providers.
The National Consumer Credit Protection Amendment (Supporting Economic Recovery) Bill 2020 was recently introduced and read for the first and second time.
In December, it was announced that given the concerns held around proposals, the Senate has referred the bill to the Senate economics legislation committee for review, with submissions being accepted as part of this enquiry until February.
According to Mr Gibson, any changes would require a shift in mindset around regulator appetite for internal credit and internal risk.
“We’ve been walking down the stringent regulatory-type compliance lush pathway since 2014,” Mr Gibson said.
“It’s going to be a little difficult for the entire industry to shift from what’s been a normal operating rhythm for six years to change all of a sudden. This year, it will be about how that plays out and what the appetite will be for everybody, particularly the regulators.”
While he is waiting to see what the regulatory requirements would be if the changes implemented, Mr Gibson said lenders have to fulfill obligations for both their customers and regulators.
“It comes down to your forensic analysis of a customer’s application. There’s commentary around not needing to go into as much detail as they have been in the past,” he said.
“While the customers want one thing, the regulators obviously want to make sure that the lenders are protected, while the Australian Securities and Investments Commission wants to make sure that the customers are protected.”
[Related: MFAA, housing sector back consumer credit reforms]
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