How Fintech are Disturbing Australia’s Traditional Mortgage Business
The traditional mortgage business is changing as Customers in the current economy conduct a series of tasks through new channels such as apps. It resulted in the rapid follow-up of the financial expertise (Fintech) revolution. The Wider and safe application programming interfaces (APIs) offer customers many choices.
The most recent segment where Fintech companies have created intense competition is probably the most lucrative business in Australian banking – mortgages. For years, traditional banking giants ruled the AU$1.9-trillion mortgage market and dominated the Big Four banks’ loan portfolios.
Nevertheless, Fintech firms are slowly giving competition to these banking giants now. The main reason behind the latest success of Fintechs is that the younger lot is now more open than ever in carrying out their banking online, giving Fintechs an opening.
Overview of Australia’s Fintech industry
Australia’s fintech industry has recently attracted record investment, resulting in a huge increase in its revenue streams. In keeping up with estimates by KPMG, investment in the Australian fintech sector hit US$890 million in H1 2021, an increase of 60% from US$557.2 million in H1 2020.
It included an US$89-million investment by the judo bank and mortgage fintech company Athena dwelling Loans’ US$64-million investment.
The newest moves by Afterpay and Neobank Up show that fintech players are targeting youthful residence mortgage patrons. However, it is designed with a regular assist from conventional banks.
Up, established in 2018, was created as a collaboration between software development company Feronia and Bendigo and Adelaide Bank. It has over 400,000 customers, most of whom are Australians’ younger lot. Equally, Up is also targeting young customers using its app in 2022.
Tic: Toc, a fast-growing digital mortgage business backed by Bendigo, is another example.
As well, non-bank lenders such as Nano Digital Home Loans and Athena Home Loans have appeared successfully in the recent past.
Will digital home loans dominate the future?
Just as fintech companies have performed decently, it is still a long way to go. In keeping with a survey by Finder.com in 2020, more than half of Gen Y and Gen Z are still happy to go to a branch for a mortgage.
Conventional banks have also sensed the warning and are innovating rapidly. For example, Commonwealth Bank and ANZ Bank are calculating the potential of a 10-minute mortgage in 2022.
Apple and Google are additionally planning to foray into the payments segment through their digital wallet apps.
Whereas it may take some more time for technology-based mortgage apps to dominate the segment, digital finance has emerged as fierce competition to banks, and customers can solely benefit from it.