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ISCOVER
With a lot of people winding down and heading off for a break, managing director and founder of Fair Go Finance Paul Walshe turns his mind to what’s in store for 2018.
There have been a few things gathering momentum over the last few years which will have a significant impact on brokers and lenders in 2018.
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These themes are:
- Technology
- Comprehensive credit reporting
- Regulation
There will be winners and losers in 2018, so how you adapt and adopt to these could help determine your success in the broker market.
From where I sit, the winners will be:
1. Customers in general will win by being able to transact more securely and easily when securing either a property or personal loan. The launch and evolution of the New Payments Platform will form part of the “fintech ecosystem” (personally, I hate buzz phrases like this) that will remove pain points and make access to finance easier.
2. Customers with low debt and “good” credit history should access better rates through the increased adoption of Comprehensive Credit Reporting by lenders and hence brokers.
3. Customers will get better service through the continued rise of the non-bank lenders who are starting to get scale (e.g., RateSetter, SocietyOne and others). Non-banks have now shown a growing credibility which will keep eating away at the margins of the big four banks and others.
4. The mining states like Western Australia and Queensland should bounce back with resources (e.g., iron ore and oil).
5. ASIC and the ATO. As we all start to pay a levy to ASIC, this increased funding means we should expect to see more activity from them, and the ATO will benefit with a continued reduction from the use of cash.
Those that should be worried in 2018 are:
1. Customers who are extended through a high risk (property-fuelled) investment appetite, or those needing to borrow to “get by” may be disappointed/exposed with the transparency that the Comprehensive Credit Reporting provides.
2. People that rely on cash to fund their business/personal expenses are going to struggle as the use of cash in the economy declines with faster electronic payments.
3. Companies that have not invested a significant amount of time and effort in technology in last few years will struggle to catch the leaders. It may be too late to invest just to catch up now because those that did or have are already thinking about what’s next.
4. We will all be distracted due to the Royal Commission, and this will delay other reforms currently in the pipeline.
5. Banks and credit unions will be losing quality customers to other lenders as the fintech space continues to evolve quicker than they can deal with all of the above.
6. We all lose if interest rates go up quickly, but that seems a low possibility and any change is likely to occur late 2018.
Enjoy the break and I hope we all make good decisions going into 2018!
