The broking industry seems to truly be hitting its stride in the marketplace. After crashing through the 50% market share threshold last year, brokers have continued to exert their market power. With broker share now north of 52%, it would seem the broker proposition is well understood. But new research from
NAB Broker and Genworth would seem to indicate otherwise.
At a recent event to unveil the research, NAB Broker general manager Steve Kane said the survey, which polled 1,000 Australian adults, showed misconceptions surrounding the broker value proposition. More than a third of aspiring home buyers said they didn’t plan on using a broker simply because it hadn’t occurred to them. Kane said this was a surprise, but also an opportunity to raise awareness.
“That is really quite interesting given 52.5% of mortgages are done through brokers so there is an enormous opportunity around awareness in the marketplace for brokers. [The broking industry] is quite insular – we know everything that goes on it but do we still get out to the wider public in the sense of this is what mortgage broking is actually about?” Kane said.
The research also revealed that nearly half of the respondents who said they were likely to use a broker expected to pay a fee. While this could show some support for a fee for service model, Kane said the more relevant point the figure proved was a lack of understanding around the broker proposition.
“There are brokers that charge fees, there is no doubt about it – probably around 15% of the market – but to think that half of the respondents thought that they would have to pay a fee if they go to a broker once again shows that the actual selling proposition and customer value proposition to the wider market is not clear,” he said.
But rather than despair at the figures, Kane said they presented an enormous opportunity to further raise the profile of the industry. And the timing is ripe for such a consumer awareness push, Kane indicated. With regulatory changes swirling through the market, brokers can play an even more important role in educating clients.
“I think we’re still going to see APG 223 and the investment lending situation play out with all the ADIs,” he said. “That will bring significant change. From a broker perspective this is an ideal time to talk to your customer and explain what's going on.”
Kane said the responsibility to raise consumer awareness should be shared across the industry. All stakeholders, from brokers to aggregators to lenders, should help to educate consumers on the third party proposition, he said. For its part, Kane said NAB Broker was trying to lift awareness.
“That's exactly what we're doing with the Knowledge is Everything roadshows is really to get in front of the market and really talk to what is the value proposition of the channel,” he said.
But at the forefront of the consumer awareness push, Kane said, should be the industry associations.
“If I'm the
FBAA or the
MFAA and I'm looking at what is my reason for being, here is a classic example of what their reason for being is. They should be loud and proud about what brokers deliver.”
Talking the talk
Another interesting statistic revealed by the survey highlighted the importance of communication to building repeat business. Brokers did well in the survey in terms of drawing repeat business, with 65% of broker applicants saying they would use a broker again and 62% rating their satisfaction as an eight out of 10 or higher. But of the broker applicants who were dissatisfied with their experience, 21% said they had not been contacted by their broker after taking out their loan.#pb#
“It did surprise me a little bit that the numbers are so high about [brokers] not communicating to their customers. To me, every big institution spends lots and lots of money, effort and time communicating with customers. NAB and all the other banks are a brand, they are a branded proposition. But brokers, where the vast majority do not have a brand, you would think they would be spending all their time having secured that customer making sure they keep that customer,” Kane said.
Kane said NAB Broker always tries to promote the primacy of the broker relationship, but sometimes finds that brokers have fallen out of contact with their clients.
“We have a pilot going where we have been contacting customers and we have saved a significant amount of trail for a significant amount of brokers simply because we have acted in keeping the broker’s primacy and keeping them front of mind... It really is interesting that many customers are saying they really need to do something now but their broker hasn’t spoken to them so they don’t even know if they still exist.”
In saying this though, Kane said the majority of the industry was doing an excellent job in putting “the customer at the heart of everything”.
“We still see growth for the broker industry. We fully support it and are in it for the long term. It’s a valuable service they’re providing to the Australian public. It’s gone beyond a cottage industry to be the main provider of support and advice.”
