Want to know what the future of banking, finance and mortgages will look like in the next decade and beyond?
Hopefully this small insight will give you some idea of what's in store - and it's coming soon!
We've all seen the fintech disruptors arrive delivering online solutions and advanced software and AI. This has been happening for some time now across the professional & financial services sectors. It's had a heavy influence in evolving the financial planning sector immensely, and their sights have been set on the accounting sector for at least the last few years. Accountants are now realising the days counting beans in the back office are over - AI and cloud accounting software is already taking care of the heavy lifting and manual labour. Banks have been investing heavily into numerous fintechs, creating a feeding frenzy of competition among themselves. A lot of money has changed hands over the last 12-18months.
We're seeing this evolution in every sector and we're starting to get use to the technological changes - even embrace them, led by the millennials. More and more companies are enjoying a greater level of efficiency and therefore effectiveness, giving a sharp edge over their competitors, but there's another evolution coming and you're not hearing the banks talking about it.
If you watch for clues, you'll see what's happening - right now.
Since at least the last quarter of 2016, the banks have been pouring millions and millions of dollars into what will be the Internet 2.0. It's called blockchain. If you're not yet use to change, you' better buckle-up - there's a lot more still to come.
You may have noticed that the banks have a renewed interest in their internal distribution channels - their branch networks. We're no longer seeing mass branch closures like we saw across the previous two decades. In a 360 degree back-flip, the banks now have a highly cost effective use for their branches as part of a Master-plan to bolster profits and market share.
It's a delicate balance of public communication and PR to NOT discourage brokers or let on that they aren't that interested in the third-party channel currently - 'but don't go anywhere Brokers, we still love you'. Noticeably, the major banks have lost an appetite for their third-party channels whilst they're building (and currently testing) their online platforms on blockchain. You can read more about it here (link to my recent blockchain article).
Mind you, whilst the major banks may lose some interest in brokers in lieu of their internal distribution channels, other second and third tier lenders will gladly soak up the void and vie for additional market share. You'll see some, maybe less recognised, lenders stepping up and becoming more prominent - like La Trobe Financial and Pepper Money have done in the last decade. You'll also see some newcomers to the market - especially in niche products and services. This will be great for consumers as it simply means more choice, ease of access and fast approval & settlement times.
Whilst this is happening right now and is expected to be ready to launch relatively soon, don't get too excited as I highly doubt the banks are going to set this competitive advantage loose to the third party channels for a while. This is something they will want to drive solo for a while as they pull back the percentages of broker settled vs bank direct mortgages.
We'll also start to see the evolution of the role the banks will play in the market. Gone will be the days of banks seen as deposit taking institutions and retailers of products. The future role of banks will be leaning more towards intermediaries (still) and we'll see the emergence of banks as regulators. The role of providing payment systems will start to diminish greatly as blockchain becomes widely adopted and accepted. You should expect this emergence and acceptance to be one of the most rapidly distributed and adopted transformations we've ever seen. I've heard whispers that we could see the unveiling from the first banks in Australia as early as the first half of next year. Internationally, it's already happening. It's also not far away before we see the first digital bank in Australia being born.
John J Maxwell, senior mortgage and finance consultant, Cocalex Holistic Consulting
If you have any questions or contributions relating to this article, please take the time to comment below and share your thoughts or opinions for the benefit of others reading this. No doubt this topic commands interaction, innovation and collaboration. The more answers that are delivered, the more questions that will arise. If you have any personal questions or queries, please feel free to contact me on 0434 455 225 or email: [email protected]
About the author:
John Maxwell is founder and Senior Finance & Business Strategist at Cocalex Holistic Consulting. John has over 17 years' experience in the financial services sector, and has owned and managed 9 mortgage franchises and has developed a background across the holistic financial services realm. He has particular focus and passion for: Leadership Training and Development, Franchise Development and Business Networking.