Consumers are increasingly using digital channels to apply for loan products with digital applications overtaking branch applications for the first time in the past year.
New research from the
RFi Group Global Distribution Report found that the proportion of consumers applying for a loan via digital channels increased from 23% of applications prior to 2011 to 44% in the last 12 months.
However, while borrowers in Australia have an appetite for online applications, the amount of lenders with a proper end-to-end online process is limited, Alan Shields, managing director of RFi Consulting, told
Australian Broker.
“That inability to actually use these digital channels is holding back progress a little bit.”
The fact that home loan applications were inherently more complex was slowing down progress in this area, he said.
“If we think about just really putting the physical application into an online environment, there are no more efficiencies around that. What needs to happen is we have to think more about how to pre-populate consumer information on an application form.”
While banks already have plenty of data on their customers, they still provide blank application forms to potential borrowers, he said, a practice which wasn’t particularly useful.
Despite this slow progress, Shields said that the Australian mortgage industry was starting to see more digital players such as HashChing, LoanDolphin and uno providing either an online marketplace or brokerage type model.
The move towards digital home loan applications was inevitable, he added, with the speed at which this happens being dependent on how well the industry facilitates and invests in it.
“The fact that we’ve seen these players come in just over the past 12 months is indicative of the fact that even if the major players don’t do anything about it, there are going to be options for consumers going forward.”
Consumers were already stepping towards a full digital application process by doing research and making enquiries online now, he said.
“It’s only when you get to the actual application process that we start to see some of that falling away.”
Shield said that future digital applications would not be a threat to brokers as long as the process involved documentation and proof and there was a need for guidance. These online platforms could also be used to expand a broker’s reach especially if used properly, he added.
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