Majors fight back against digital threat

By developing multiple touch points via branch networks, digital platforms, video conferencing and the third party, Australian lenders are challenging digital disruptors, which have thus far revolutionised the payments space and are beginning to threaten the majors’ dominance of the mortgage market.

Speaking to Mortgage Business, CBA head of mortgages Clive Van Horen said digital disruptors are a real threat, particularly overseas where they have made significant inroads.

“In the US you have Quicken Loans,” Mr Van Horen said. “Fifteen years ago they were an accounting software company and today they are the second biggest writer of mortgages in the United States, behind Wells Fargo.”

“They have a digital contact centre – they don’t have branches.

“I’m not saying they are going to be in Australia in the next few months, but digital disruptors can very quickly enter the market.

“I think the challenge they would have is overcoming the multiple touch points of the banks.”

Multiple touch points marry the digital experience with the face-to-face experience, Mr Van Horen said, as the bank looks to adapt its offering for customer convenience. 

“A customer might want to talk to somebody in person, or pick up the phone, or go online and they don’t want to have to re-enter information and go through everything from scratch, so that is something we have been integrating across all channels,” he said.

“A customer can start a mortgage application online and finish in a branch or a mobile lender can visit them. 

“It is much more integrated.” 

ING DIRECT executive director of distribution Lisa Claes has seen evidence overseas of customers migrating between different channels. 

“We have lots of evidence of customer journeys here and internationally, particularly in the northern hemisphere where they will quite happily migrate between third party, digital and direct,” Ms Claes told Mortgage Business. 

“If we didn’t have a slick offering and experience in those respective channels we would lose that customer,” she said.

“In the Netherlands, when they mandated a fee for service, it reduced the broker cohort from 14,000 to 4,000 and what they are doing now is integrating brokers, bank, direct, and potential branch as well with digital.

“They are cutting the fee according to how much DIY the customer does. 

“But they are charging a fee even if the customer goes to digital as well, so they are protecting their brokers.”

UBank chief executive Alex Twigg agrees, telling Mortgage Business that far from being a substitution, NAB’s online bank compliments its branch network and third-party offering.

"It is not a substitution process at all, it is a complimentary channel in exactly the way that the broker services became a complimentary channel to branches,” Mr Twigg said.

“Over time you will see the development of new and existing channels and I think you will see more as we go forward,” he said.