I read an article in The Adviser this morning around “Digital Disruption”, questioning whether or not the mortgage process will ever be done completely online. I believe without a doubt it will.
With acquiring a mortgage being such an important decision, the argument is that you would at some point need to sit down and consult a professional. And that, the value of meeting with someone face to face will never expire.
But, the Internet is disrupting every industry and I don’t think mortgage broking is exempt. For example, it has changed the retail industry, with online stores now offering same day delivery making it far easier to shop. And, we have just welcomed the arrival of Netflix — the company that put blockbuster out of business and changed the way we watch TV.
I see Brokers being fairly similar to this model in so far as they don’t sell their own products or lend their own money; they are facilitators.
I hear people say that consumers won’t feel comfortable taking out a mortgage online. That they would prefer to deal with a person, and have their hand held through the process. Furthermore, they say online lenders can only offer “vanilla products” which narrows their audience.
The questions this article raises are just the beginning, as with the early days of the Internet when people said they would never put their credit card details into a computer. The same people that also said they’ll never have a Facebook account, and those that 10 years ago said they’d never buy a mobile phone because a pager works just fine.
We are living through the biggest culture shift that has ever happened. Consumers are behaving differently; the youthification of society means the buying behaviour of a 40-year-old woman is looking more like that of a 29-year-old, 10 years ago. The fastest growing age group of people taking selfies is women between the age 35 and 45. There are grown men reading this that have, in the last 24 hours, text LOL or OMG.
At the end of the day it comes to the attention of the consumer. The next generation of borrowers give the majority of their attention to their smart phone and to social media sites like Instagram and Facebook. Your consumers are already online in multiple ways.
If you’re a broker and you’re not present where your consumer lives, you’ll fail. With that, those that don’t take their presence online will eventually become redundant.
There are online options with NAB’s Ubank and Firstmac’s loans.com.au, and admittedly at the moment they aren’t causing brokers much grief. But does that mean they never will? There was a company called Magic Taxi around 3 years ago that did the same thing as Uber before Uber did, but it fell flat — competition breeds innovation and the more people doing it, the better and quicker it will grow.
Todays online options within the mortgage broking industry may not be making much of an impact, but its very early days. And, there’s certainly merit in being an early adopter.
People used to love going out and buying a CD, but have now adapted to the ease of downloading it instead. Or people that prefer to lie on the sofa in their underwear and press one button to watch a film instead of getting dressed and walking to get a DVD. The broker will go the same way — there will soon be an online mortgage solution that will appeal to the next generation of borrowers that use their smartphone for everything.
There is no doubt the mortgage process will be 100% done online — it’s just a case of when.