Online brokers a threat to small firms

Ryan Bembridge

February 20, 2017

Brokers and lenders agree that online mortgage brokers are a threat to small firms who don’t have the resources to invest heavily in technology.

IMLA’s ‘Insights into the changing shape of the lender broker relationship’ report found that lenders and brokers reckon the market is gradually moving to a point where mortgages are exclusively bought online.

Currently the likes of Habito and Trussle market themselves as digital or online mortgage brokers who use technology to automate much of the mortgage application process.

Habito in protection partnership with Zurich

Since banks will soon be required to provide third party access to customer account information, one lender suggested younger generations could access mortgages via Facebook, while he also thought robo advice could be available within a decade.

This would be attractive to regulators, he added, as the algorithm would provide more consistent advice than human advisers.

On the flipside one broker suggested the growth of online brokers could see customers get more clued up before seeing the broker rather than take business from them.

Since lenders are spending heavily on technology several interviewees expected online execution-only sales to become more prevalent, though they added that the FCA may temper this trend if it is seen to undermine consumer choice.

Daniel Hegarty, founder and chief executive of Habito, said: “Whatever is good for the customer is going to prevail; it’s less about who wins and loses than who serves the customer most effectively.”

Ishaan Malhi, chief executive and founder of Trussle, said: “The vast majority of people already start their home search online, so it’s only natural that we’re seeing growing numbers of them look online for mortgage advice.

“As services of all types are increasingly expected to be accessible online, businesses that don’t adapt will inevitably be shunned for those that do.”

The brokers questioned were Ray Boulger, senior technical manager at John Charcol, Patrick Bunton, director of London & Country Mortgages, Martin Reynolds, chief executive of SimplyBiz Mortgages and Jon Round, financial services director of the LSL Group.

The lenders surveyed were Alan Cleary, managing director of Precise Mortgages, Brad Fordham, managing director of– Santander for Intermediaries, Charles Haresnape, group managing director, mortgages, at Aldermore Bank and Kevin Purvey, director of intermediaries at Coventry Building Society.

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