The future of competition in the mortgage market is going to look very different, Liberty national sales manager John Mohnacheff has said. While major lenders, non-majors and non-banks will continue to battle it out, everyone must be prepared for new, seemingly unlikely entrants to the market.
Already, Mohnacheff said, some of these major corporations are beginning to dip their toes in areas of financial services previously considered the domain of traditional lenders. And the trend is set to continue.
“The other day when I was in the CBD, I saw a 20-foot by 10-foot billboard advertising Cole’s home and contents insurance. I assure you, they’re going to be looking very heavily at getting into the residential mortgage and car finance space,” he said.
This could be a major shakeup to the market. As Mohnacheff explained, these large multi-nationals have market power that would be difficult to match.
“We also know that Australia Post is looking at getting into the mortgage space. These are companies with incredible databases, and they don’t compete on a one-to-one basis. They’re mass market players,” Mohnacheff said.
PLAYING IN ALL AREAS
With this in mind, Mohnacheff believes lenders and brokers alike have to prepare for changing customer preferences and a dynamic competitive landscape. He used the example of Liberty’s own evolution as a lender, and its determination to move beyond being a mono-line service provider.
“If we can look at Liberty as an example, last century when we started in 1997, we started as a non-conforming lender. That’s still one of our flagship products, but through innovation and diversification we’ve moved very heavily into the prime space with some very competitive products. We’ve also launched a great
SMSF product, as well as commercial, chattel and asset finance.”
As Mohnacheff explains, the company looked to grow beyond residential mortgages into the full suite of financial services.“If we’re going to be players in financial services, let’s play in all areas,” he said.
As such, Mohnacheff said the company would look to expand brokers’ perception of its offering. He pointed to new marketing from Liberty meant to communicate the diversity of its offering to brokers, with buzzwords like “FlexibiLiberty,” “AccessibiLiberty,” “CapabiLiberty” and “LikeabiLiberty”.
BROKERS THINKING BIGGER
This kind of thinking applies to the entire industry, and particularly to brokers, Mohnacheff said. With a fast-changing market, increasing competition and a changing consumer, lenders and brokers will have to think creatively to compete.
“The industry needs to be very innovative and really tap into the imagination of consumers, and doing things the way we did them last century – which was only 14 years ago, by the way – just no longer washes,” he said.
And as Liberty expands its own offering into a broader suite of financial services, Mohnacheff urged brokers to do the same.
“If you’re just saying to the market, ‘I’m a home loan expert,’ I’m sorry, but there’s no such thing. The consumer of the future wants flexibility. If you can do the one-stop shop model, mate, you’re onto a winner,” Mohnacheff said.
The expansion beyond being a mono-line service provider into looking after every aspect of a client’s financial needs means the broker-customer relationship can move beyond the transactional, Mohnacheff said. While some brokers may chafe at the idea of the one-stop shop model, Mohnacheff said many are beginning to embrace it. And offering a broad range of financial services will mean a more loyal customer, he argued.
“If you have one transaction with a customer, that does not make a customer for life. You’re just someone who facilitates their home loan. They have multiple product providers and they won’t have any loyalty to you. But if you’re a person who takes them on a journey, who not only does their home loan but their home and contents, their risk, asks if they plan to buy an investment property, asks how their super is. It doesn’t mean you have to do all this, but you show a keen interest in every facet of the client’s financial life.”
OLD-FASHIONED FRIENDSHIP
In forging a more loyal customer base, Mohnacheff said lenders and brokers will set themselves apart from new mass-market entrants with an appeal that – in spite of all the innovation – seems decidedly old-fashioned and time-tested: relationships.
“When you look at human behaviour, we are a very gregarious animal. We like to be looked after. It’s about having that one-to-one connection with a person that makes that person feel special, and wanted and valued. This is where real business relationships flourish and grow. It goes from being transactional to being a trusted and loyal friendship, and that can never be understated,” he said.
And while Liberty looks to expand its offering to the broker market, Mohnacheff said the key to remaining relevant to brokers remains forging a close relationship. It’s for this reason, he said, that the lender offers all brokers full access to BDMs, credit assessors and all its support team.
“We’re very much cognisant of the fact that for us to remain relevant to brokers, we have to have a one-to-one relationship with them. We have to be a trusted adviser as well as a service provider. If we have sensational products and crappy service and don’t engage in relationships, our products will wither and die on the vine.”
