NZFSG CEO's predictions for a post-Covid-19 market
NZFSG CEO Brendon Smith has shared his top predictions for how the mortgage advice industry will change after the Covid-19 crisis.
Tuesday, April 28th 2020, 8:24AM 
3 Comments
Brendon Smith
As New Zealand moves into alert Level Three today, Smith believes digitisation will be a key change for mortgage brokers after the covid-crisis.
Smith believes it is time for advisers to “review, realign and re-present” their business in the new world.
Smith outlined his top 12 predictions for the post-Covid market:
Digitalisation is here to stay
“Over the next few months, advice will become paperless. Interviews will move online, clients will enter data directly into an adviser's system and clients will sign electronically.”
Kiwis will stop using cash
“The longer this crisis goes on the less likely it is that we will return to paper. That means that automated bank statement analysis becomes more accurate, as too will be the systems that are being designed by groups to ensure advisers can comply with responsible lending.”
Adviser market share will rise
“As we have seen over the last few weeks, customers reach out to advisers when they want trusted advice away from complexity and ambiguity.”
Clients will want ‘digitally assisted mortgages’ not ‘digital mortgages’
“Whilst I’m sure good online businesses will grow - there is no doubt that more clients will want to deal with a local expert who has great technology.”
Our industry will be better trained and more professional than ever before
“I am sure all groups have significant training plans to make sure that no one gets left behind in this bridge to the new world and all of us will be spending more time than ever before on training.”
Adviser marketing tools will become increasingly more sophisticated
“The need for advisers to be able to market through social and digital channels, as well as providing ongoing targeted and relevant content for current and potential clients will be critical.”
Turnaround times for digitally-enabled advisers will improve
“Established lenders will up the ante in this space and adopt a more data-driven approach as they aim for real-time credit decisions.”
IT security will be key
“Groups are going to need to invest more in IT security. The deep relationships between the head of third party teams at the lenders and that of groups will extend to relationships between their respective IT teams - and these relationships will be critical.”
The government will make it easier for advisers and customers to work together online
“Digital Identity Verification, there still needs to be some government legislation to support this.”
We will be ready for Good Customer Outcomes
“Ironically, our planning for GCO has made us more prepared for COVID than what we may have been. For advisers who adapt to these systems now, the transition to GCO will be seamless.”
Our industry will change shape
“I do think it [Covid-19 will spur on a change to see more teams of advisers working under businesses and where leadership, infrastructure and knowledge is shared. Indeed, we are already seeing this trend at NZFSG.”
Changes for groups
“Groups will need to live up to four core promises to advisers; to save advisers time, to keep them safe, to help them find and keep clients and to grow their business.”
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Once customers are eventually told by their mortgage broker that the owner of the dealer group has been in receipt of their personal and financial information, without their consent, numerous customers lay complaints with the Privacy Commission and things quickly escalate from there. No need for me to highlight the very serious implications for the mortgage broker and his or her business with the Financial Markets Authority becoming involved.
The various bank head of third parties are all subsequently asked to explain why their bank is in receipt of loan applications where customers haven’t consented to their personal and financial information been held by a third party other than the bank been approached for finance. Under the current ANZ Engagement rules for mortgage advisers – clause 15 states “the adviser must maintain confidentiality and not disclose information concerning a customer’s affairs to any party other than those agreed to by the customer”.
All banks going forward subsequently require written acknowledgement now from customers confirming that their mortgage broker has disclosed to them all third parties who are in receipt of their personal and financial information and that the customer has given his or her consent to this.
Mortgage brokers understanding that their customers (millennials in particular) are very sensitive nowadays about who holds their personal and financial information opt out of using their group owned CRM and elect to use an independent CRM instead i.e. Trail CRM. They also elect to become their own FAP instead of working under a dealer group FAP.
Banks under significant public pressure to safeguard customers personal and financial information all move quickly to build online portals to allow mortgage brokers to submit loan applications directly to them and without a dealer group’s involvement.
No matter how good a CRM is, unless it talks to each bank's portal for straight through processing, its not speeding things up (maybe they will in future?).
Surely regardless of what CRM you use, it's still a third party having access to and storing the client info? Then you could argue Google, Gmail, Outlook has access to it and so on and so on.
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The bigger concern would be if lenders enforced brokers to send applications via dealer groups CRMs as this would in my view lower the quality of applications even further as current qualities of CRM generated applications are not great as BNZ have confirmed via their continuous quest to improve the quality of CRM generated applications sent via NZFSG made compulsory via the group.
Quality brokers that send deals direct to BNZ have a super fast turnaround time.
Then we get to customer privacy and protection on the consumers personal banking information which will need to be seriously addressed before the full digital process is adapted as currently I think this is an area still very much lacking in our industry with privacy act requirements and FMA rules around this area already being breached.
Most lenders have in their terms of engagements with advisers a basic rule around person client information, for example.
“” Adviser must maintain confidentiality and not disclose information concerning a customer’s affairs to any party other than those agreed to by the customer.””
But I would bet by requesting a copy of any of the current NZFSG members disclosure statements 80% of their advisers will not be disclosing to their clients that
a. That the customers personal banking information is being shared by third parties
b. Disclosing in detail who these third parties are.
These are basic requirements and if are not being done are in clear breech of privacy laws and could be subject to penalties for the adviser/dealer group/ banks.