Non-bank distribution channels set to change

While the non-bank space lost considerable market share during the GFC, Columbus Capital executive director Andrew Chepul said that in the last three to six months the sector has seen its most activity in 10 years.

“Before the GFC the non-banks accounted for 20 per cent of the home loan market,” Mr Chepul said.

“There were 28 non-banks,” he said. “Today we are down to 12, but because of the resilience of the players who are still there, you are seeing a huge change.”

Speaking at the Finsia annual conference on Friday, Mr Chepul said one area that is already changing is mortgage distribution.

“In the financial planning sector there is a diversity play by saying ‘I’m not looking at just dealing with funds management, I’m going into the mortgage space’,” he said.

“You’ve got players who are professional, qualified financial advisers once saying they never wanted to deal with a mortgage before, that was always sent down to the local broker, but now they are looking at it as part of their whole customer service.”

Meanwhile, online is becoming an increasingly viable option for non-bank lenders.

“Online is huge,” Mr Chepul said.

“Every non-bank in the country is touching e-commerce in one shape or form,” he said.

“One of the players I can think of in the e-commerce area is writing about $170 million a month in consistent volume.”

According to Firstmac owner and Loans.com.au managing director Kim Cannon, online is the future of mortgages.

“Everybody talks about brokers having 45 to 50 per cent of the market,” Mr Cannon told Mortgage Business.

“If online was two or three per cent at the moment, that just means we’ve got another 98 per cent to go,” he said.

“Whereas with the broking side of things, where does it max out, where does the consumer get more conscious?”

However, Mr Cannon said that brokers still play a vital role in the mortgage process.

“People say to me that they still want to talk to a broker because they still want to get advice,”
he said, adding that there is currently no online channel that allows a customer to obtain a mortgage without talking to a human being.

“The online channel is a lead generation tool backed up by a sales team,” he said.

“I’ve still got salespeople talking to the customer, closing the sale, just like a broker does.

“Except a broker is giving them 92 per cent of the time to the four major banks because all of the things they get there, or they are selling the bank brand.”

Mr Cannon said that while online loans are gaining momentum, they are yet to become their own distribution channel.