Financial planning dealer groups may emerge as the prime target for mortgage brokers looking to gain competitive advantage, with a new report exposing effective distribution channels as the overriding key to success in the increasingly tightening mortgage market.
The report issued by professional services group Deloitte examines the future challenges for the $200 billion mortgage industry and suggests the wealth management divisions of the larger banks are in a prime position to buyout mortgage brokers.
Deloitte banking and securities leader Peter Rollason said the long-term winners will be those who control or own the distribution channels.
“The real battleground of the future will be for control of the distribution channels of direct, franchising and third party,” Rollason said.
“The emerging franchising channel is also of increasing interest with equity, long-term relationships, brand and players committing their ‘skin in the game’ all adding up to franchising success for the lenders.”
Meanwhile, Deloitte partner in corporate finance Peter Riedel said additional customer power is on offer to the bank willing to be bold and utilise its financial planning arm to make a play for a large mortgage broker.
Such consolidation looks likely with major players already jockeying for position in the sector, which has reported a year on year growth of 37 per cent and currently accounts for 4,000 individual and organisational members.
“An acquisition of a mortgage broker by one of the bank’s wealth management operations would grow and diversify the revenue stream for the planner, as well as build scale. It would enable both to absorb higher costs and make the necessary infrastructure investments.”
