A New Chapter for Mortgage Broking: Consolidation, Growth, and the Future of Succession Planning
by Ash Playsted | General Manager of Broker Performance - Recludo Group
The mortgage broking sector in Australia is at a pivotal moment. Forces of consolidation, technological evolution, and shifting market dynamics are transforming the industry landscape. As we enter 2025, the winds of change are gathering strength, driven by the need for scale, efficiency, and resilience in an increasingly competitive market.
Over the past decade, we've witnessed the rise of small, independent brokerages. However, many of these businesses now face challenges that demand bold strategic decisions. The key themes shaping the sector today are clear: mergers, acquisitions, and—most crucially—succession planning. For owners who have dedicated years to building their brokerages, the question isn't just about exit strategies; it's about leaving a lasting legacy.
The Drive for Consolidation
The mortgage broking market, like the broader financial services sector, is feeling the pressures of scale. Consolidation has become a dominant narrative, with more brokerages merging or aligning with larger networks to remain viable. This trend mirrors the shifts we've seen in Australia's banking sector. Mutual banks, for instance, have been engaging in a flurry of mergers to compete with the major players.
Brendan Wright, CEO of Qudos Bank, captures this sentiment well in this recent article. He noted that small banks must grow to survive. His prediction that only a handful of mutual banks will remain in a decade underscores the scale imperative. The same logic applies to mortgage broking businesses. With regulatory demands, technology investment, and market competition mounting, the need for partnerships and mergers has never been more urgent.
In mortgage broking, scale provides the ability to negotiate better with lenders, invest in customer-facing technologies, and manage compliance costs more effectively. It's not about getting big for its own sake; it's about staying relevant, agile, and profitable.
The M&A Landscape in 2025
Mergers and acquisitions in mortgage broking are no longer just theoretical exercises; they are strategic necessities. The sector has seen a wave of activity, driven by both defensive and offensive strategies. Defensive mergers occur when businesses seek to share resources and spread costs, often as a response to rising regulatory burdens or technology costs. Offensive acquisitions, on the other hand, are growth-focused, aimed at expanding geographic reach, customer bases, or product offerings.
A prime example is the recent consolidation between People’s Choice Credit Union and Heritage Bank, forming Australia's largest customer-owned bank. The same principles apply to broking. Larger brokerages with diverse capabilities are better positioned to provide comprehensive solutions, attract top talent, and meet customer expectations for personalized, data-driven service.
Yet, mergers and acquisitions are not without risks. Culture clashes, integration challenges, and leadership transitions can derail even the best-laid plans. Success depends on meticulous planning, clear communication, and a shared vision of the future.
Succession Planning: The Missing Link
While consolidation captures headlines, a less visible but equally critical issue looms: succession planning. Many mortgage broking businesses are led by founders who are now considering retirement or semi-retirement. Yet, too few have formal plans in place to ensure a smooth transition.
Succession planning is about more than preparing for an owner's departure; it’s about ensuring the continuity, culture, and client relationships that underpin a brokerage’s value. Without a well-structured plan, businesses risk losing key talent, market position, and even their reputation.
Qualified succession planning involves identifying and developing future leaders, formalizing governance structures, and considering ownership transfer options. In some cases, this means grooming an internal successor; in others, it may involve selling to an external buyer or merging with a strategic partner.
From my vantage point at Recludo Group, I see succession planning as the most overlooked value driver in our industry. Many brokers underestimate the complexity and emotional weight of this process. A common mistake is delaying these discussions until a triggering event—like health issues or an unsolicited offer—forces the conversation. Proactive planning, on the other hand, enhances business value and provides peace of mind.
Building Business Value with an Eye on Legacy
For mortgage brokers contemplating exit strategies, maximizing business value is paramount. Value isn't just about financial performance; it’s about the systems, relationships, and intellectual capital that make a brokerage attractive to potential buyers or successors.
Key value drivers include:
Diversified Revenue Streams: Brokerages that rely heavily on a single lender or product line are more vulnerable. Offering a range of lending solutions and financial products creates resilience.
Strong Client Relationships: The quality of a brokerage’s customer base—measured by loyalty, referral rates, and satisfaction—directly affects its valuation.
Operational Efficiency: Technology-enabled workflows, CRM systems, and compliance automation enhance scalability and reduce risk.
Brand Reputation: A well-regarded brand with strong community ties can command a premium in the market.
However, value creation alone isn’t enough. A deliberate exit strategy aligned with personal and professional goals is essential. Whether the goal is a sale, merger, or passing the reins to the next generation, clarity and planning are non-negotiable.
The Role of Leadership in Times of Change
In this era of consolidation and transition, leadership is more important than ever. The metaphor I often use when talking about leadership is that of a ship. Some leaders are at the bow, setting the course and scanning the horizon. Others are in the engine room, pulling on the oars and ensuring forward momentum. The best leaders know when to switch roles—balancing vision with execution, strategy with action.
For those leading mortgage broking businesses, the challenge is twofold: navigating immediate pressures while positioning for long-term success. This requires a combination of decisiveness, adaptability, and foresight. It also means embracing change as an opportunity rather than a threat.
The mortgage broking industry will continue to evolve, driven by technology, regulatory shifts, and customer expectations. Those who proactively embrace consolidation, plan for leadership transitions, and invest in their people and processes will not only survive but thrive.
Final Thoughts
The story of mortgage broking in Australia is one of resilience, ingenuity, and transformation. As we look to the future, the choices we make today will shape the industry for years to come. Consolidation, mergers, and qualified succession planning are not merely trends—they are imperatives for sustainable success.
For brokers at the helm of their businesses, now is the time to ask: What legacy will I leave? Whether through partnerships, technology investments, or nurturing the next generation of leaders, the opportunity to build something enduring is within reach.
The future of mortgage broking belongs to those who plan boldly, act decisively, and lead with vision.
