It was barely 2 years ago that the external “experts” were calling the end of the broker market share and the rise of the Digital Revolution. At the time, broker market share was running at 60 percent and growing. More and more of the borrowing public were flocking to brokers to receive high quality, unbiased advice.
As is often the case when something dominates a market competition, there came attempts to undermine and discount the value of industry leaders.
Fast forward 2 years, and it’s officially over for the 2 major digital players with the most high-profile entrant shutting its’ doors in the past few weeks.
Unable to raise another $200 million working capital (on top of the $200 million raised over the last couple of years), the time came to concede that the model was not viable.
Don’t get me wrong – I am not a critic of smart people having an idea and running with it.
That said, more than ever before, these start-ups need to have a sound business model that supports funding and generates income to be self-sustaining within a set time frame.
Investors deserve a reasonable return, and will no longer accept massive accumulated losses.
What does all this mean?
Brokers will always be at forefront of the mortgage industry and continue to be the first port of call for over 65% of all borrowers. Digital distribution will be incredibly difficult to fund going forward.
The borrowing public still want face-to-face relationships with their trusted mortgage broker.
The broker community are a resilient bunch. Australia isn’t, and may never be, ready for fully digital mortgage and banking.
Go forth with confidence – mortgage broking numbers are only going one way… Up!