CELEBRATING 20 YEARS
MPAMAGAZINE.COM.AU ISSUE 21.10
HITTING THE MARK Brokers’ top non-bank talks consistency, broker support and digital transformation WINNING NON-BANKS The lenders that scored gold in MPA’s annual broker survey
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FIRST HOME BUYERS A deep dive into new buyers’ challenges and opportunities
PHIL WAUGH Building a sustainable partnership with the broker channel
20/09/2021 2:57:43 pm
We’re not saying brokers love us. Let’s just say, it’s a strong like. We’re pretty chuffed that for the second year running, we’ve been awarded ‘Bank of the Year’ by brokers at MPA’s Brokers on Banks survey! Thank you to the thousands of brokers who trust us each year with their customers’ home loans and who motivate us to deliver better home loan experiences every day. Keen to find out about our award-winning BDM support, training and interest rates? You might find there’s a lot to like. bankwest.com.au/brokers
bank less Bankwest, a division of Commonwealth Bank of Australia ABN 48 123 123 124 AFSL/Australian credit licence 234945.
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OCTOBER 2021
CONNECT WITH US
CONTENTS
Got a story or suggestion, or just want to find out some more information? twitter.com/MPAMagazineAU facebook.com/Mortgage ProfessionalAU
UPFRONT 02 Editorial
28 FEATURES
14
NUMBER ONE NON-BANK
The CEO of brokers’ top non-bank tells MPA what the lender has done to support brokers and how it plans to keep doing so
FEATURES
BIG INTERVIEW
PHIL WAUGH NAB’s new head of broker distribution talks about his plans for a long-lasting partnership between the bank and brokers
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04 Statistics
Aussies would like to see more support from credit providers, particularly after the ups and downs of COVID-19
06 News analysis
Broker fraud is called out in a recent report as ASIC releases new guidelines on breach reporting
08 Opinion
While education is vital for new brokers, self-development is an ongoing necessity
FEATURES
BROKERS ON NON-BANKS
A new winner has been crowned in MPA’s annual survey, which reveals how brokers rate the non-banks – and the criteria that are most important to them in choosing a lender
With the growing need for flexible loan solutions, more borrowers than ever are considering non-bank lenders
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FEATURES
FIRST HOME BUYERS
Industry leaders discuss the market segment that has been exceeding expectations – and the opportunities this offers brokers
44 Taking care of business
Specialist Finance Group explains why it’s crucial for brokers to spend time working on their businesses
48 Leadership
How to invest in your team relationships and unlock hidden intelligence
51 Workplace culture
COVID-19 has changed the way the world works, and culture needs to be redesigned as well
PEOPLE 54 Brokerage insight
Driven by a passion for the industry, this team sailed through the pandemic
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56 Other life
INVESTING IN THE FUTURE
MPAMAGAZINE.COM.AU
FEATURES
Citi is looking to a positive future following its buyout by a big four bank, but it’s business as usual right now, says its head of mortgages
Sunil Kumar has brought his love of cricket to Australia from the streets of his Indian village
NOW ONLINE: Our daily newsletter. Keep on top of property market trends, business strategy, and what industry leaders have to say.
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20/09/2021 3:08:22 pm
UPFRONT
EDITOR’S LETTER
Navigating a sea of solutions
A
fter months of COVID-19 restrictions and the subsequent tightening of bank lending criteria, many borrowers are going to have to rethink how to get their home loans moving forward. The unemployment figures for July, the first full month of lockdown, were fairly positive: the unemployment rate decreased to 4.6%. There are signs of trouble though, as the number of hours worked over the month fell by three million. As Australians continue to be affected by changes to their employment, particularly those who are self-employed, there is a growing need for flexible solutions. Many borrowers will be unable to provide payslips, and company financials will be skewed after months of business closures. This could be why non-bank lenders are seeing incredible numbers at the moment. Resimac recently reported a 92% spike in its statutory net profit in the 12 months ending 31 July; its home loan settlements rose by 3%. Pepper Money also reported record originations in the first half of this year, and 95% of the non-bank’s originations come from mortgage brokers. CEO Mario
As our Brokers on Non-Banks survey shows, more borrowers than ever are open to considering a non-bank lender Rehayem told MPA recently that he was expecting a greater need for near prime and specialist lending products in a post-lockdown environment. “There’s no doubt that post the lockdowns and once we start to live with COVID and it becomes the norm, we will see a growing number of customers that are not going to be able to obtain a loan from a bank or prime lenders because of all the hardship requests that they were seeing during that lockdown period,” he said. Brokers play a vital role in helping those borrowers navigate all the options on offer from both banks and non-banks – and as MPA’s Brokers on Non-Banks survey this year shows, more borrowers than ever are open to considering a non-bank lender. It’s this flexibility and choice that is, in turn, causing borrowers to come to brokers in their droves. The MFAA announced record broker volumes in the June 2021 quarter: 47.25% up from the same quarter the year before. Mortgage brokers also achieved 59% market share – a record for the June quarter. These high settlements by brokers and non-banks show one thing: brokers are helping borrowers with solutions they might otherwise not be able to find. This is a wonderful example of the merit of mortgage brokers, and an insight into the opportunity developing for brokers to help even more Australians. Rebecca Pike, editor, MPA
www.mpamagazine.com.au OCTOBER 2021 EDITORIAL
SALES & MARKETING
Editor Rebecca Pike
Publisher Claire Tan
Contributors Colin D. Ellis, Heather Gallagher, Rob Pyne Production Editor Roslyn Meredith
ART & PRODUCTION Designer Cess Rodriguez Customer Success Manager Andi Zbojniewicz
CORPORATE Chief Executive Officer Mike Shipley Chief Operating Officer George Walmsley Managing Director Justin Kennedy Chief Information Officer Colin Chan Human Resources Manager Julia Bookallil
EDITORIAL ENQUIRIES
tel: +612 8437 4784 rebecca.pike@keymedia.com
SUBSCRIPTION ENQUIRIES
tel: +61 2 8311 5831 • fax: +61 2 8437 4753 subscriptions@keymedia.com.au
ADVERTISING ENQUIRIES claire.tan@keymedia.com
Key Media Australia (Mortgage) Pty Ltd tel: +61 2 8437 4700 • fax: +61 2 9439 4599 www.keymedia.com Sydney, Auckland, Denver, London, Toronto and Manila
Mortgage Professional Australia is part of an international family of B2B publications and websites for the mortgage industry AUSTRALIAN BROKER
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NZ ADVISER
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Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as the magazine can accept no responsibility for loss.
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Great to be a part of this Awesome, Hi-tech, Spectacular SFG family for the last 7 years! Many more to come in the future. Ash Isaacs ASH FINANCIAL SERVICES
1300 303 382 specialistfinancegroup.com.au Australian Credit Licence No. 387025
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UPFRONT
STATISTICS BORROWERS SAVING ON RATES
AUSTRALIANS WANT MORE FROM THEIR CREDIT PROVIDERS Three in five Australians felt credit providers did a good job last year of providing financial hardship assistance to those who needed it, but over half say even more support is needed this year. Specifically, consumers want to see lenders offering more flexible payment holidays or pause plans.
HOW CREDIT PROVIDERS COULD OFFER MORE SUPPORT
52%
of borrowers surveyed had haggled with their bank for a lower variable rate
73%
of those borrowers were successful in getting at least one rate cut
39%
46%
45%
50%
Proactively identifying people who could be headed towards financial hardship
Earlier communication with people who could be headed towards financial hardship
Offering alternative ways for people in financial hardship to communicate with their provider
Offering more flexible payment holidays/pause plans
HOUSEHOLD SPENDING PLANS PUT ASIDE
$1,241
Commonwealth Bank has recorded a decline in spending intentions in areas such as homebuying, retail, travel, entertainment and motor vehicles.
HOMEBUYING SPENDING INTENTIONS
in interest could be saved after one year with a 0.25% rate cut on a $500K loan*
Smoothed
HSI
100% 75% 50%
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25%
lenders cut at least one variable rate in the two months to August 2021 *Based on RBA’s avg owner-occupier variable rate of 3.08%
0% -25% Jul 17
Jul 18
Jul 19
Jul 20
Jul 21
Source: Commonwealth Bank Household Spending Intentions series, July 2021 Source: RateCity, August 2021
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DROP IN TOTAL VALUE OF NEW HOME LOANS
SHOULD A CREDIT PROVIDER CONTINUOUSLY MONITOR A CUSTOMER’S FINANCIAL POSITION? Yes
The total value of new home loans fell in June for the first time this year, according to ABS Lending Indicators data, driven by a decline in owner-occupier lending.
No
NEW HOUSING COMMITMENTS BY LENDER TYPE Major banks
45%
55%
51%
49%
48%
52%
Other ADIs
Non-ADIs
$18bn $16bn $14 bn
Home loan
Personal loan
Credit card
$12bn $10bn $8bn
65%
35%
57%
43%
$6bn $4bn $2bn
Energy/phone
Buy now, pay later
$0bn Investors
Owner-occupiers Source: Experian
CAUTION PUSHES SAVINGS UP Households have maintained high precautionary savings, meaning people are spending less and saving more than before the onset of the pandemic.
SEEKING BIGGER HOMES Buyers are looking for larger homes during COVID-19, with a rise in searches for three- and four-bedroom homes in Australia’s capitals.
HOUSEHOLDS’ SAVING HABITS We typically spend all of our income and no more
We typically spend all of our income and more
Source: ABS, June 2021/Canstar
SHARE OF DWELLING SEARCHES BY MINIMUM NO. OF BEDROOMS (CAPITAL CITIES)
We typically spend less than we earn each month
July 2020
July 2021
100% 80% 60%
40%
41%
9%
10%
36%
34%
34%
7%
9%
8%
48.4%
29.5% 24.1%
40% 20%
51%
50%
17.3% 49%
57%
57%
20.4%
58% 3.5% 3.2%
0%
Historical average
Dec 19
Jun 20
Dec 20
Jun 21
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1.2% 1.4% 2
3
4
5
No. of bedrooms Source: ME Household Financial Comfort Report, August 2021
Source: REA Insights Housing Market Indicators Report
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21/09/2021 8:31:17 am
UPFRONT
NEWS ANALYSIS
Calling out broker fraud New regulations requiring breach reporting have been released, which brokers will need to comply with. The industry was also the focus of a recent watchdog report on money laundering NEW REGULATIONS affecting mortgage brokers will help build customer trust and should be a positive for the industry in the lead-up to the remuneration review in 2022, industry experts believe. Brokers are now expected to report “reportable situations” as part of new breach reporting regulations that came in on 1 October. The reforms are a result of the Hayne banking royal commission, which raised concerns about the industry’s failure to report dishonest, deliberate, deceptive and negligent behaviour. In a statement, ASIC deputy chair Karen Chester said the new obligations would address concerns about the timeliness of breach reporting. Analysis in 2018 revealed it took more than four years on average for large financial institutions to identify incidents that proved to be significant breaches. Australian financial services and credit licensees must report to ASIC significant or likely breaches of core obligations, as well as investigations that continue for more than 30 days into whether a significant breach of core obligations has occurred, and the outcomes of those investigations; gross negligence or serious fraud; and serious compliance concerns about individual financial advisers or mortgage brokers operating under another licence. Aggregators have been preparing their brokers for the reform, which is complemented by the “notify, investigate and remediate” obligations that also came into effect
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on 1 October. Loan Market ran a webinar on all upcoming regulations at the start of September, making sure brokers were across the changes and understood how they would need to report any breaches. The group has a focus on “compliance by design”, and its MyCRM platform has the tools brokers need. “As with the introduction of the best interests duty, breach reporting should build even more trust between brokers and customers as they’ll know – by law – that their broker is held to the highest standard,” said Loan Market’s chief regulation and compliance officer, David McQueen. “Any legislation that creates transparency
these instances our role as an aggregator is to support a fair investigation that ensures that brokers are not unfairly penalised.” Broker fraud was also called out recently in financial crime watchdog AUSTRAC’s
“As with the introduction of the best interests duty, breach reporting should build even more trust between brokers and customers” David McQueen, Loan Market and increases guidance for aggregators and brokers is positive. However, while we wholeheartedly want to remove the minority that do the wrong thing, it will also be important that we protect brokers – the majority – who are doing the right thing. “It needs to be recognised that reported breaches may not be the broker’s fault, and in
report on the risks of money laundering and terrorism financing. The big four and other domestic banks were given a ‘high’ risk rating. AUSTRAC’s report found that loan application fraud was the banks’ second most commonly reported fraud, usually involving fraudulent identity documents and forged or altered payslips.
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HOW BROKERS CAN COMPLY WITH NEW BREACH REPORTING OBLIGATIONS Action
What you must do
When you must act
Action 1: Notify affected clients of the reportable situation
Take reasonable steps to notify affected clients in writing of the reportable situation
Within 30 days
Action 2: Investigate the reportable situation
Start an investigation into the nature and full extent of the reportable situation
Within 30 days
Action 3: Notify affected clients of the outcome of the investigation
Take reasonable steps to notify affected clients in writing of the outcome of the investigation
Within 10 days of the investigation concluding
Action 4: Remediate affected clients for the breach
If there is loss or damage and an enforceable right to recover, take reasonable steps to pay affected clients remediation of an amount equal to the loss or damage
Within 30 days of the investigation concluding Source: ASIC
When ranking the risk exposures of various banking products, AUSTRAC assigned home loans a high vulnerability perception rating. The watchdog’s assessment said there was a high known or
organised crime group”, the report said. In another example, a number of brokers were helping known criminals secure home loans, knowing the loans were to be repaid with illicit funds.
“It is obviously in everyone’s interests that we do everything we can to expose and manage misconduct within our industry” Mike Felton, MFAA suspected criminal misuse of home loans. The report cited cases in which fraud had been enabled by mortgage brokers. One example involved a large-scale loan application fraud operation that had been enabled by several mortgage brokers. It “involved high-level document forgery and was believed to be orchestrated by a serious and
MFAA CEO Mike Felton said that while fraud was an issue affecting every industry, the high-value settlements in the broking sector made it a prime target for cyber criminal activity. He said it was important that the industry embraced the initiatives addressing misconduct and fraud. “Some fraud, as has historically been the
case, will inevitably be related to broker misconduct, and it is obviously in everyone’s interests that we do everything we can to expose and manage misconduct within our industry,” said Felton. Also coming into play on 1 October is ASIC’s reference checking protocol, which requires mortgage brokers to be subjected to a comprehensive reference check when moving to a new licensee or industry. While the MFAA believes the legislation on this still needs strengthening, it is hoped that it will replace the letters of separation process. “Once these reforms have been implemented, our industry will have aligned interests and expectations through an unrivalled best interests duty, mitigated and managed conflicts through remuneration reforms, and improved information sharing and reporting of misconduct. I believe this leaves us well placed to proudly and confidently lean into the impending 2022 review,” said Felton, referring to the review of broker remuneration set for next year.
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20/09/2021 2:22:05 pm
UPFRONT
OPINION
GOT AN OPINION THAT COUNTS? Email rebecca.pike@keymedia.com
Never stop learning Brokers need to make learning and development a priority, wherever they are at in their career, says Heather Gallagher FINDING THE time to invest in your professional development can be challenging. It’s not just about collecting CPD points. Whether you’re looking for guidance on diversifying your offering, developing your social media marketing, or improving your compliance processes or technology, it’s imperative that you prioritise your learning. We focus a lot on the development of newto-industry brokers with mentoring programs, industry events, etc. While it’s necessary to spend time on new entrants, who have the most to learn, I often think about the brokers with two-plus years’ experience – what about them? Here are the three key steps to driving successful self-development:
1. Assess yourself and your business Look at the obvious things. What’s working in your business, and what isn’t? What is your capacity, and are you running at optimum efficiency? Work out what areas you need development in, then dig deeper! Once you’ve identified areas for development, ask yourself: are these the things you like doing? (Often the things we need development in are the things we like the least.) Assess the benefit it would bring to the business if you were the one who had this skill. Would it increase revenue? Reduce risk? And if you were working on this area, would it mean you would have to do less of something else? A successful broker cannot realistically do everything in their business. So, work smarter, not harder. Delegate tasks you don’t have capacity for, aren’t interested in doing or that are low value to a staff member, consultant or
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expert. By outsourcing, you can put more focus on self-development and upskilling.
2. Make learning a priority Make time for your own learning. Let’s use an analogy. Great brokers never stop prioritising prospecting just because they already have loans in their pipeline. Instead of flipping the switch between prospecting and loan writing, they focus on both, creating a kind of ‘loop of prioritisation’ – while each element may ebb and flow, neither is ever ‘switched off ’.
tip when meeting a new BDM for the first time is to ask them what education and marketing support they provide for brokers. • Google is your friend: There is a wealth of knowledge out there on just about any aspect of your business, so think outside the box. LinkedIn also has a huge library of content and courses on a multitude of aspects of being a business owner. • Formal education courses: If you haven’t already, you could complete your diploma or take a course in marketing or management.
3. Everyone needs help from an expert Surround yourself with people who make you better, who you can learn from. Like a mentor! Mentors aren’t just for new entrants; the most successful businesspeople have mentors for all parts of their career journey. When selecting a mentor there are some things to consider. • It’s important to find someone who is an expert in the area you want development in, but equally important to find someone you connect with. Successful mentoring requires a connection and a level of trust – so, find the right person.
Mentors aren’t just for new entrants; the most successful businesspeople have mentors for all parts of their career journey The same principle should be applied to your learning needs and integrated into your ‘priorities loop’. Make the time. Some of the following avenues of learning could work for you. • Your aggregator: All aggregators have educational offerings. As an example, at outsource Financial I run a weekly ieducate program covering a diverse range of topics to assist brokers with their development, technical training, compliance best practices, marketing and more. • Your lender partners: Nowadays, lenders truly understand the value of providing learning opportunities that deliver more than just product and policy support. Many offer online learning libraries to assist brokers with all aspects of business. A great
• A mentoring session is not a coffee catchup. Have an agenda, have homework and be accountable. • Consider a peer-to-peer mutual mentoring relationship with another broker. If you both have things you could learn from each other, why not set up a structure in which you mentor each other to fill the gaps in your knowledge and businesses? Finally, carpe diem! Make time and seize the opportunities for development when they are in front of you.
Heather Gallagher is the head of education and training at outsource Financial.
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ANZ & BROKERS
WORKING BETTER TOGETHER FOR YOUR PROFESSIONAL CUSTOMERS
Our LMI premium is currently waived, with no minimum income requirements, for eligible professional customers. For example, a medical practitioner who has an LVR of up to 95%* could save up to $36,000 based on an $800,000 home loan. Eligible Customers Include: Medical Practitioners, Specialists, Dental Practitioners, Optometrists, Chiropractors, Physiotherapists, Veterinarians, Lawyers, Accountants. The amount your customer could actually save depends on their circumstances, such as their profession, their loan amount and where their property is located.
ANZ Brokers * This LVR is for medical practitioners, specialists and dental practitioners who are existing ANZ lending customers (that have held an ANZ lending product for at least 6 months) with an owner occupier loan making principal and interest repayments. For other eligible customers, the LVR is up to 90%. Different LVRs may apply to other lending options, such as investment lending. Terms, conditions, fees, charges, and credit approvals and eligibility criteria apply to ANZ home loans. Please visit anz.com.au/promo/broker for the offer terms and conditions, including how to verify customers’ qualification/registration. © Australia and New Zealand Banking Group Limited (ANZ) 2020. ABN 11 005 357 522. Australian credit licence number 234527. Item No. 97528C 08.2021 WX248035
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PEOPLE
BIG INTERVIEW
PHIL WAUGH: IN PARTNERSHIP WITH BROKERS With a career in professional rugby and a decade in banking behind him, NAB’s new executive, broker distribution, has a strong focus on people, teamwork and creating a sustainable relationship with the third party channel
A JOB in banking and finance might not seem as exciting as representing Australia in rugby, but the passion Phil Waugh displays for the industry would have you think otherwise. The former professional rugby player was a member of the Waratahs from 1999 until 2011, and played for the Wallabies for several years too. During that time he studied for two master’s degrees, one in commerce and another in international business. In 2011 when he retired from the sport, rather than going abroad or taking some time out like other players might have done, Waugh went straight into a business career, taking up a role at Commonwealth Bank. Over the next decade he worked across private and business banking, asset finance and auto finance at two major banks before joining NAB in June of this year. He then took up the mantel as head of broker distribution at NAB, where he says he is excited to work in an industry that has such momentum. While Waugh enjoys working in finance, it’s not just this that drives him but the high-performance teams, the culture and the
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opportunity it gives him to engage with teams and customers. His focus on the team is something he brings with him from his experience playing rugby. Drawing a parallel between his two careers, Waugh says whether you are leading a
you’ve got the best engagement, you’ll have the strongest culture,” Waugh says. “Enthusiasm is very infectious, just like lethargy is very infectious. So, how do you ensure that you have that level of excitement and enjoyment in the team culture? If
“Big banks and big organisations will only succeed if they’ve put the customer at the heart of everything they do” sports team or a business team, ensuring you have the best people is really important. “I’m big on empowering people. If you get the best people, then you’ve got a lot of confidence to empower them. Then they go on and own different responsibilities across the value chain, which only drives better performance. “Then I think it’s around engagement. If you’ve got the best leaders, I think naturally you’ll attract the best people into the business. Then if you’ve got the best people, you’re going to have the best engagement, and if
you’ve got that, I think that’s very attractive to customers as well.”
Investing in the third party channel The team and the people of NAB will remain Waugh’s focus as he settles into this new role. Although his first few months have been spent in lockdown, he recognises the industry is driven by relationships, so getting to know the people around him is important. In guiding the relationship between NAB and the third party channel, Waugh says his
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PROFILE Name: Phil Waugh Title: Executive, broker distribution Company: NAB Years in the industry: 10 Rugby career lowlight: “Being injured. Mentally and physically, you know you can be the world’s best, or you think you’re the world’s best, and then when you’re injured, you’re nowhere. You know you can be the best, but you’re injured, and you’ve got to do the journey back to being at that level.” Rugby career highlight: “I think representing the country in rugby is obviously pretty good. Within that we had a pretty good run there when I was playing, in terms of winning Bledisloe Cups and Tri Nations and being in the final of our own home World Cup in 2003.”
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20/09/2021 2:42:33 pm
PEOPLE
BIG INTERVIEW
priority is to make sure the bank’s mission to be “the bank behind the broker” is supported by investment. “The beauty of being new is that you can sometimes come in and challenge the way things had been done previously,” he says. “I’m very confident that at the board level and through to the executive team, there’s strong investment and belief that NAB wants to be winning in this space.” Part of that relationship as well is looking at NAB’s value proposition in the market and how that can be improved. Understanding that mortgage brokers have had some frustrations with major banks in the past in terms of channel conflict, Waugh says he wants to make sure there is consistency across NAB, no matter what channel the customer uses. “From our point of view, we want to put the choice back in the hands of the customer, and so no matter how the customer would like to interact with the organisation, we need to ensure that experience is first-class,” he says. “We’ve got strong organisational support saying, let’s put the choice back in the customer’s hands, and let’s make sure we’ve got consistent decisioning and a consistent experience across all channels.”
WINNING BROKERS, CUSTOMERS
Strong growth, satisfied customers At 0.55% home lending growth, NAB was the second-strongest major bank in July NAB’s housing system growth multiple in July was 1.1x – making this the third month in a row of above-system growth Brokers continue to lodge a large proportion of NAB’s loans, contributing to 47.9% of new lending in the half-year to March 2021 (up from 45% in March 2020) and now at 40% of its total home loans NAB is making the experience of buying a home simpler for all customers and is improving its time to ‘yes’. These changes are resonating with brokers and customers: NAB recently saw a positive increase in its broker Net Promoter Score to +10 and its customer NPS to +11 NAB won Canstar’s 2021 award for Most Satisfied Home Loan Customers Broker and customer support NAB has secured 3,700 customers places in the First Home Loan Deposit Scheme from the FY22 release in July and remains committed to supporting thousands more NAB continues to support brokers and customers through COVID-19 and is encouraging brokers to access NAB MyCoach, a confidential counselling and coaching service
“No matter how the customer would like to interact with the organisation, we need to ensure that experience is first-class”
Customers at the heart of it From his experience of working at major banks, Waugh says he has learnt the importance of keeping the customer at the heart of everything. Although it can be easy, especially in big organisations, to get caught up internally and be very busy, he says it’s crucial to question how the customer is impacted. As part of that, he believes in simplification: explaining things clearly so customers understand why the bank is doing something and what it means. “Big banks and big organisations will only succeed if they’ve put the customer at the heart of everything they do,” Waugh says. “Then the more we actually put a customer lens on things, the better things will operate.”
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Wanting to support the broker channel beyond simply financing home loans, Waugh believes the bank has a duty to build a real partnership. One way NAB is doing this is by offering brokers access to NAB’s MyCoach, a confidential counselling and coaching service. “We’re here to build a sustainable business that’s built on relationships and partnerships. We do that by offering all sorts of services that we provide for our people but also for our brokers, and that’s probably the message they may not even realise,” he says. Looking back over his finance career, Waugh calls out his recent role heading up the COVID-19 response team in Westpac’s business division as a mix of highs and lows.
While it was a great experience, it was also intense having to navigate uncharted waters. “There were times during that period where you thought you were delivering the best outcome, but you weren’t sure,” he says. But he believes that, through their responses to COVID, the banks regained a lot of the trust of businesses and customers, and the previous ‘customer versus bank’ mentality has shifted. “There’s a real belief that we as financial institutions are there to work in partnership with our customers,” Waugh says. “I think the banks and the government can hand on heart say that they’ve done everything they possibly can to ride through the disruption, to support customers.”
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SPECIAL REPORT FEATURES
BROKERS ON NON-BANKS AGGREGATORS 2021
BROKERS ON NON-BANKS 2021 Priorities have shifted for brokers as they face a second year of lenders’ credit policies and turnaround times being impacted by COVID-19. While still needing to up their game in some areas, non-banks are making inroads with brokers and borrowers looking for alternative solutions
BROKERS’ RESPONSES to this year’s survey on non-banks say it all: the non-banks have stepped in where the banks have let brokers and borrowers down. The banks’ long turnaround times and narrow lending appetites have frustrated brokers for much of the last 18 months. While non-banks have also been affected by the pressure on turnaround times, the majority of broker feedback indicates that their SLAs and procedures have improved. As borrower circumstances have changed, so have broker priorities. While credit policy scored the lowest last year in terms of how important it was to brokers, this year it has
14
risen to be the third most important area. Brokers praised the non-banks for not having a ‘tick a box’ approach, and for being flexible with their credit policies to accommodate all types of borrowers. While it is generally accepted that nonbanks have higher interest rates – and this was one factor some brokers said was a barrier to using non-banks – the importance of rates fell this year. Interest rates were top of the list last year, but in 2021 they dropped to eighth place, suggesting that brokers and borrowers are willing to accept the higher interest rates if it means they can get a loan. Some areas remained high on the list
of priorities, like turnaround times and BDM support, but interestingly, commission structure fell to the bottom of the pile, despite usually ranking much higher in all surveys. The brokers who took part in this year’s survey were more likely to have been in the industry for a long time: more than 50% had been in broking for more than 15 years. Only 10% of respondents were aged below 35, with 37% over 55. Thank you to everyone who responded to the survey during such an incredibly busy time. Thanks also to the top non-banks that took the time to answer questions about their service to brokers.
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TYPICAL RESPONDENT
Aged 56 and above
Writes $20m to $40m worth of mortgages each year
Has been in the industry for more than 15 years
Is most likely to live in NSW or Victoria
WHAT DO BROKERS WANT? 1 = not important; 5 = very important Turnaround times
4.270
BDM support
4.252
Credit policy
4.227
Brand recognition
4.180
Communications, training and development
4.180
Product diversification opportunities
4.173
Product range
4.126
Interest rates
4.104
Online platform and services
4.086
Commission structure
4.072
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FEATURES
BROKERS ON NON-BANKS 2021
WHY USE A NON-BANK? The reasons for using a non-bank have changed over the last 12 months, with more brokers turning to these lenders for their faster turnaround times. However, the proportion of brokers’ loans put through non-banks is dropping ALTHOUGH MORE brokers said they had put more loans through non-banks than they did last year, the loans are making up a smaller proportion of their overall business. Forty-five per cent of brokers put less than 20% of their loans through a nonbank, up from 38% last year. Just 12% said they put more than 60% of their loans through non-banks, compared with 19% last year and 20% in 2019. The expected proportion of loans forecast to go through non-banks is also poorer this year than in 2020. Sixteen per cent of brokers said they expected to put more than 60% of their loans through non-banks, down from 22% in 2020 and 27% in 2019.
HIGHLIGHTS: BENEFITS OF USING A NON-BANK BDM support
Pepper Money
La Trobe Financial
Liberty
Liberty
La Trobe Financial
Pepper Money
Liberty
Commission structure
HAVE YOU SENT MORE LOANS TO NON-BANKS IN THE LAST 12 MONTHS THAN IN THE PREVIOUS YEAR? Pepper Money
31% NO
Credit policy
69% YES Mortgage Ezy
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Broker-M
$1
LMI
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FEATURES
BROKERS ON NON-BANKS 2021
There have been some positive changes, however. Brokers are still turning to nonbanks because they take a wider view of their customers than just looking at their credit scores, with around 25% of brokers saying that was the main reason they use them. In a shift from last year, 18% of brokers said faster turnaround times was their main reason for using a non-bank. Last year, this was at the bottom of the five main reasons brokers would use a non-bank, accounting for just 7% of responses. In 2019, turnaround times did not feature at all in the top five reasons, and the biggest reason for brokers choosing non-banks was put down to the banks tightening their credit policies (26%). This year, only 14% of brokers said banks tightening their credit policies was the main reason they turned to non-banks. Re-entering in last place after dropping off the list in 2020, clients lacking standard documentation was the reason 10% of brokers said they used non-banks. This is hardly surprising given that the COVID-19 pandemic has had an impact on people’s employment and income. Not much has changed in terms of the
TOP 5 REASONS YOU WOULD PICK A NON-BANK LENDER OVER A BANK
Takes a wider view than customer's credit score
25%
Faster turnaround times
18%
Banks have tightened their credit policies
14%
The client lacks standard documentation, ie payslips
10%
More personalised services
9%
non-banks that were rated best in terms of the benefits of using a non-bank. Pepper Money won gold for the fourth year in a row for its BDM support, a category that has continued to climb up the ranks when it comes to importance to brokers.
Mortgage Ezy made an impressive leap into first place for its credit policy, despite being ranked seventh in this area last year. The mortgage manager came out on top when brokers were asked which non-banks they would like added to their aggregator’s panel.
BROKERS’ LOAN FLOWS TO NON-BANKS: ACTUAL VS FORECAST 0–20%
21–40%
41–60%
61–80%
81–100%
Percentage of loans put through non-banks in the last 12 months
45%
26%
17%
6%
6%
Percentage of loans forecast to go through non-banks in the next 12 months
32%
18
31%
21%
10%
6%
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FEATURES
BROKERS ON NON-BANKS 2021
PRODUCT AND PRICING Borrowers are increasingly likely to consider non-bank products, despite brokers finding the lack of brand awareness to be an ongoing barrier
ARE CLIENTS TYPICALLY OPEN TO CONSIDERING NON-BANK PRODUCTS?
10% NO
90% YES
ALTHOUGH TURNAROUND times were highlighted as a reason that brokers were putting home loans through non-banks, they were also considered a barrier to doing so by 5% of respondents. The biggest barrier to using non-banks, however, according to more than four in 10 respondents, was their higher rates and fees. One respondent said that when they were looking for the right solution for their customer, it came down to policy, “because rates and fees will almost always be higher with non-banks”. While there is an understanding that rates and fees are typically higher at nonbanks, most brokers are still happy to use
them if they are the right fit for their clients. “Whilst there is always room for more competitive rates and less fees, turnaround times and credit policy make the [non-bank] lenders a good first touchpoint when presenting to out-of-the-box clients,” said one survey respondent. Other brokers believed non-banks had also “stepped up” in terms of their rates and fees, becoming much more competitive. Mirroring last year’s top barriers to using a non-bank lender, the second-biggest barrier in 2021 was a lack of brand awareness. There was a 3% increase in the number of respondents who said this was their main barrier.
WHAT IS THE MAIN BARRIER TO BROKERS PUTTING MORE BUSINESS THROUGH THE NON-BANK LENDERS?
20
Higher rates/fees
42%
Lack of brand awareness
27%
Customers want a branch network
9%
Poor turnaround times
5%
They are not on my aggregator’s panel
5%
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Despite this, there was incredible growth in the proportion of brokers who said their clients were typically open to considering non-bank products. Only 10% of respondents said clients were not open to non-banks, compared to just over 30% last year. Of those who said clients were not open to non-banks, they put this down to them not knowing the brand, the settlement process not being up to expectations, and interest rates being too high.
“Customers are beginning to see the benefits of faster turnaround times and comparatively better products”
HIGHLIGHTS: PRODUCTS AND BRANDING Brand recognition
La Trobe Financial
Pepper Money
Resimac
Firstmac
La Trobe Financial
Better Choice
Resimac
Interest rates
Pepper Money
Survey respondent Product range
Although some brokers said their clients weren’t typically open to non-banks, in the survey comments they noted that the nonbanks were making improvements. “I see an increasing level of participation by non-bank lenders in advertising, and customers are beginning to see the benefits of faster turnaround times and comparatively better products,” said one respondent. La Trobe Financial not only took home the gold medal for brand recognition this year, but it achieved the highest score in the entire survey. One respondent commented that while advertising and awareness was lacking when it came to some non-bank lenders, La Trobe Financial was doing better. “When I mention some non-banks to clients, the normal question is, who are they? La Trobe Financial has been pretty good with advertising and awareness.”
Firstmac
Product diversification opportunities
Pepper Money
Firstmac
Bluestone
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FEATURES
BROKERS ON NON-BANKS 2021
TECHNOLOGY, TURNAROUND AND SERVICE Brokers have had mixed experiences of the time it takes for non-banks to make decisions, and there are varying opinions on how these lenders can improve HOW HAVE TURNAROUND TIMES AND COMMISSION STRUCTURES CHANGED OVER THE PAST YEAR? Commission structures
Turnaround times
78%
31% 26%
9%
9%
26%
9%
3% Improved significantly
22
7% 1%
Improved
No difference
Worsened
Worsened significantly
THERE HAVE been two different broker experiences when it comes to turnaround times: some have seen an improvement, while others say they are getting worse. Forty per cent of brokers said turnaround times had improved – an increase of 7% from last year. Thirty-three per cent said they had worsened, the same as last year. The feeling that non-banks’ turnaround times have improved over the past 12 months fits with the higher proportion of brokers in this year’s survey who said turnaround times were the main reason they were putting business through the non-banks. Of those who thought turnaround times had improved, one broker said, “Turnaround time is faster and smoother, which is also because they improved some procedures (eg upfront valuation through RP valuation platform), and they have credit policy published to the broker platform, etc.” Another broker said, “The lenders I'm dealing with have lifted their game to capitalise on the opportunities in the market.” However, a third commented: “I believe turnaround times have improved – or have the banks’ turnaround times worsened significantly?” Several brokers pointed out that it might seem like non-bank turnaround times have improved, just because those of the banks are so poor. “I find that non-bank lenders always have a reasonable turnaround time, and improvement is now considered significant given the performance of so-called mainstream lenders of late,” one said. In the opinion of one broker who had experienced worsening turnaround times: “Non-bank lenders have attempted to become more mainstream, but this has impacted their service delivery.” Another simply couldn’t answer the question: “I don’t really know; I can’t remember what happened last week, let alone what turnaround times were like 12 to 24 months ago.” When asked how non-bank lenders could
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$ l n
E p c b a
L S m
1. fr h or C O of to P or an in N
$4,000 would look pretty nice in here. Earn $4,000 cashback with a home loan purchase of $750,000+, and $3,000 cashback with a home loan purchase below $750,000. For new purchase and refinance applications.
Limited time offer. Speak to your BDM today. mortgagebroker.citibank.com.au
1. $4,000 cashback offer where the home loan amount is $750,000 or more and $3,000 cashback offer where the amount is less than $750,000, for new purchase and refinance applications submitted from 18 January 2021 to 31 October 2021 and settled by 31 January 2022. 2. This offer is available to Australian residents aged 18 years and over who refinance or purchase a home with a new eligible home loan product under the following Eligibility Requirements: • Home loan application must be submitted within the Promotional Period (point 1 above) • Lending must be new to Citi (variations or refinances of existing Citi loans are excluded from this offer) • Repayment type can be principal and interest; and/or interest only • Available on owner occupier and investor loans (excluding Construction loans, Company applicants and Trust applicants) • Minimum refinance and or purchase home loan amount $350,000 • Eligible Citi home loan products: Basic Variable, Standard Variable, Offset Variable and Fixed • Applications are subject to credit approval • Home Loan must remain open at payment date. 3. Only one cashback offer per eligible home loan capped to one cashback offer per applicant. Where a home loan has more than one applicant and one applicant receives the cashback, all applicants are deemed to have received the cashback offer. 4. Citi reserves the right to verify, validate and disqualify any Eligible Customer if the customer is engaged in any unlawful or other conduct deemed inappropriate by Citi that jeopardise the fair and proper conduct of the Promotion. 5.Provided these Conditions including Eligibility Requirements are met, Eligible Customers will receive the cashback amount transferred electronically into their new variable loan account, or where fully fixed into their nominated direct debit account, for applications settled: by 30 September 2021 payment after 10 October 2021; by 31 October 2021 payment after 10 November 2021; and by 30 November 2021 payment after 10 December 2021 by 31 December 2021 payment after 10 January 2022 by 31 January 2022 payment after 10 February 2022. 6. This offer is not available in conjunction with any other promotion, and Citi reserves the right to vary or withdraw these Conditions at any time. © 2021 Citigroup Pty Limited. All rights reserved. ABN 88 004 325 080, AFSL No. 238098, Australian credit licence 238098. Citi, Citi and Arc Design and other marks used herein are service marks of Citigroup Inc. or its affiliates, used and registered throughout the world.
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FEATURES
BROKERS ON NON-BANKS 2021
improve their service levels, brokers’ responses were very similar to those in 2020. The majority still think better technology would help, as well as a simplified income verification process. Thirty-one per cent also called out BDMs as an area needing improvement, whether it was about having more of them or ensuring they were better trained. Among the 14% of brokers who ticked ‘Other’, some said there was nothing to
“The lenders I’m dealing with have lifted their game to capitalise on the opportunities in the market” Survey respondent improve, while others said improvement was needed in all areas. Some of the improvements asked for were clearer and consistent policies, an increase in credit processing resources, and more flexibility. One broker wanted “better verification of accountant letters”, saying “sometimes the time taken for a lender to call a client's accountant to verify an accountant’s letter can take two weeks”.
HIGHLIGHTS: TURNAROUND, TECHNOLOGY, COMMUNICATION Turnaround times
Liberty
Pepper Money
Firstmac
Communications, training and development
Pepper Money
Mortgage Ezy
Liberty
La Trobe Financial
Liberty
Online platform and services
Pepper Money
HOW COULD NON-BANKS IMPROVE THEIR SERVICE LEVELS?
27% Better technology
24
21%
19%
12%
7%
14%
Simpler income verification process
More BDMs/ credit assessors
Better-trained BDMs/credit assessors
Better communication
Other
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WHAT YOU’RE SAYING To be in with a chance of winning a pair of Apple EarPods for the best comment, brokers were asked whether they thought the non-banks had given the banks enough competition over the last year YES
NO
“Yes. Due to the stricter bank conditions and slow responses, the non-banks have taken advantage of this with their broader lending policy and have improved SLAs to take on more applications”
“No. I think clients are taken by the so-called ‘cashback’ being given out by main trading banks”
“Yes. With CCR being rolled out there are a lot more people aware and open to having finance with non-banks”
“Not enough since the big four offered large cashback incentives to clients”
“Yes, I feel that they have their place in the lending landscape. If they can't compete on rates, they must offer something else, which a lot of them do. But if they want mainstream lending, it will always come down to rates and/or turnaround times”
“No, the more product diversity and brand awareness can be created, the more business will flow to non-bank lenders”
“Yes, they offer good competition; however, I often have to educate clients around their brands and what they can actually do better than the banks” “Yes, they have an offering that extends further than the major banks’, particularly [being] more flexible in the credit area” “The non-banks have come out tops against the banks as the banks’ turnaround times have failed dismally this year; the wait times on the phones are nothing but a waste of our valuable time. The non-banks have nailed this” “It’s impossible for non-banks to compete on rate with banks. However, the service of non-banks is much greater than banks” “Yes and no – they need to do more campaigning to the public to obtain awareness, but they are now better for service turnarounds, and service by BDMs is much more expedient and their policy in many cases is more accommodating” “I think they have definitely stepped up and become a viable solution to the banks. Non-banks are now offering on-par products for prime applications, with competitive pricing and often much better turnaround times” “Yes, they do. They look at the deal as a real-world scenario, not just at if it fits in a box”
“No. Customers need everyday banking features”
“I don't think the non-banks have provided enough competition, as the traditional banks still have larger brand recognition and service networks” “They’re still behind on competitive interest rates and advanced systems such as progress draws, valuation, settlement process, etc., are not up to clients’ expectations”
WINNING COMMENT
“The answer is somewhere in between. If a client can secure a loan with a non-bank that they wouldn't otherwise have got with a traditional lender, then yes. Policy will dictate their competitiveness, because rates and fees will almost always be higher with non-banks”
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FEATURES
BROKERS ON NON-BANKS 2021
FINAL RESULTS Leapfrogging into first place in the Brokers on Non-Banks survey, Pepper Money was ranked as the best lender in several borrower categories BROKERS’ PREFERRED LENDERS
OVERALL RESULTS
We asked brokers to pick a preferred lender for each key category of borrower. The lender with the most mentions in each category won the medal
Specialist lending
First home buyers
Property investors
Pepper Money
Pepper Money
Pepper Money
Commercial
Alt-doc
SMSF
Liberty
Pepper Money
Liberty
Foreign non-residents
La Trobe Financial
26
Non-bank
Overall score
1st
Pepper Money
4.033
2nd
Liberty
3.739
3rd
Firstmac
3.715
4th
La Trobe Financial
3.710
5th
Mortgage Ezy
3.704
6th
Bluestone
3.582
7th
Resimac
3.526
8th
Better Choice
3.520
9th
Better Mortgage Management
3.069
10th
Thinktank
3.009
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LIBERTY
2nd
MPA: Your turnaround times were particularly highlighted by brokers this year. How important has this been to brokers? And how have you worked on keeping your turnaround times consistent? John Mohnacheff, group sales manager: At Liberty, service is at the core of everything we do, and we understand that turnaround times are incredibly important to brokers. Since day one, we have always sought to deliver fast turnaround times as we recognise how this can benefit both customers and business partners alike. For example, an approval has limited value if it only arrives after a cooling-off period lapses. So, how do we do it? Well, a large part of the reason why we can act so quickly is because our assessors are familiar with assessing deals that aren’t always straightforward. While other lenders might require more time to work through a complex deal with unusual considerations, for us at Liberty this is simply business as usual. And, understanding the importance of speedy approvals, we have built our systems and processes to ensure we can always provide the fast responses that brokers depend on. With direct access to our lending teams, business partners can get answers quickly and keep customers updated every step of the way. We understand that the service we deliver reflects on the broker in the eyes of the customer, so it’s our goal to help support these relationships however we can. While maintaining consistently fast turnaround times can be challenging, the highly dedicated team members in our Melbourne head office never shy away from a challenge. We recognise the important role that fast turnaround times can play in customers’ lives, and it all comes back to our mission to help more people get financial.
FIRSTMAC
3rd
MPA: You took the gold medal for your product range. Why do you think you won it? Kim Cannon, managing director: It’s because we have a very wide and innovative range of products. Our range includes basic variable, offset variable, non-resident, construction, fixed, and SMSF loans. Our Green Home Loan, which offers a deep discount for energy-efficient homes, is groundbreaking in the market, as is our streamlined residential SMSF offering. We have something to suit the needs of every prime borrower. MPA: Why is a good product range so important to brokers? KC: It’s important because no two customers are the same. Each one has different requirements and objectives, and a good product range must cater to all of those. MPA: How will you continue to work with brokers over the next year? KC: We’re employing more sales and support staff so that, as our business grows, our service level is maintained. We have a really strong service culture at Firstmac, and that is something we will keep investing in and improving. We’ll also continue to deliver superior turnaround times and service levels to brokers compared to the rest of the market, especially the banks.
LA TROBE FINANCIAL
4th
MPA: You won the gold medal for your brand recognition, achieving the highest score in the whole survey. How does it feel to be so well recognised by brokers in this area? Cory Bannister, chief lending officer: We’re very humbled to receive this recognition; we’ve been working incredibly hard over many years to strengthen our brand and ensure that brokers, and their customers, are aware of the genuine alternative solutions available to them across the mortgage market, so that each year more and more people gain access to the financial solutions they need, when they need them the most. The events of the last 18 months further support this notion. We purposely increased our marketing exposure during this period as we recognised that it was likely to be a challenging time for many, and we wanted to ensure people knew we were ready and able to assist them through this period. MPA: La Trobe Financial was the most preferred lender for foreign non-residential lending. What do you offer that brokers love so much? CB: We’ve been operating in the non-resident loan market for many years. Over this period, thanks to great feedback from brokers, we have been able to refine our product and processes to make our ‘International Borrower’ loans easy to understand and use. In addition to the engineering of the product, our specialist team of credit analysts speak multiple languages, which assists greatly in dealing with customers, and we are told this makes us the preferred lender in this space.
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FEATURES
BROKERS’ NUMBER ONE NON-BANK
Pepper Money: Investing in the broker For the non-bank ranked number one by brokers in 2021, last year’s third-place result was a wake-up call, says Pepper Money’s CEO Mario Rehayem, who explains how the lender responded to broker feedback to regain its top spot, and what’s it’s doing to hold on to it in the future RECLAIMING THE top spot in MPA’s Brokers on Non-Banks 2021 survey, Pepper Money received nine medals this year, six of which were gold. “Humbled and delighted” that brokers have chosen Pepper Money as their top non-bank, CEO Mario Rehayem says he cannot thank them enough not only for their continued support but also their ongoing feedback. “We’ve listened, and they know we have listened, because they can see how we’ve evolved over time. They’ve assisted us in building Pepper Money,” he says.
“We’re looking at the investment in the broker rather than the investment in trying to get a loan from the broker” Mario Rehayem, Pepper Money Dropping down to third place last year was “a wake-up call” after spending two years as the broking industry’s highest-rated non-bank lender, Rehayem says. This encouraged Pepper Money to do a deep dive into what brokers were saying in order
understand what the pain points were so it could address them. To have taken on that feedback and seen the results in this year’s survey, even after a more difficult 12 months than usual, is a “huge win” and a validation that the lender is
PEPPER’S MEDALS
28
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Sponsored by
doing everything it can for brokers and their customers, Rehayem says. Pepper Money’s success hasn’t happened overnight, he says. It’s the result of 21 years of evolving, learning and then implementing those learnings. One of the things Rehayem puts this success down to is consistency. Despite a 90% increase in submissions in the first half of the year compared to last year, Pepper Money maintained consistent same-day turnaround times. The lender just missed out on the gold medal for its turnaround times in 2021, and although it’s still way ahead of most other non-banks, Rehayem sees this as another goal to work towards. “There isn’t a lender in the country that isn’t focused on turnaround times,” he says. “I think where Pepper Money differentiates from everyone going hard on turnaround times is that anyone can give you a fast decision, but the consistency in their decisioning is key. “Consistency and transparency in credit decisioning is more important than just a fast turnaround time, because turnaround times with continually moving goalposts on your credit appetite means a broker then loses confidence not knowing how that loan is going to end up.”
“We’ve listened and they know we listened, because they can see how we’ve evolved over time. They’ve assisted us in building Pepper Money” Mario Rehayem, Pepper Money Journey to digital transformation Pepper Money is leveraging digital tools to create a more automated process, allowing for digital signatures and using comprehensive credit reporting instead of bank statements. Not only will this assist with turnaround times but it will enable a more seamless approach between the customer, broker and lender, and reduce effort across all interactions. “We believe that Pepper Money will be at the forefront of giving our unconditional and conditional approvals in a matter of hours as opposed to 24 hours,” Rehayem says. “This is where we want to take the journey of technology and deliver that service to brokers and their customers.” Brokers have already seen the positive impact of the non-bank’s digital transformation, with Pepper Money receiving a gold
medal for its online platforms and services. The Pepper Product Selector is a particularly important tool for brokers, allowing them to use client information to receive an indicative offer in just a couple of minutes. Rehayem says transparency is important here: customers are offered an indicative approval where there are no surprises at the end. But Rehayem says the non-bank is only “at the infancy stages” of its digital rollout. “You can just imagine how excited we are to fully roll out all the bells and whistles that we’ve got planned over the next six to eight months,” he says. “It’s a great recognition that brokers have witnessed how much we’ve invested in digital financial assistance and making their life easier for customers during COVID; but also, we know what journey we have ahead of us.”
PREFERRED LENDER
TURNAROUND TIMES Brokers on Non-Banks 2021
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FEATURES
BROKERS’ NUMBER ONE NON-BANK
Broker education and support Pepper Money has also been using technology for its broker education. Ranked first for its communications, training and development, the non-bank’s offering is clearly valued by the broker channel. Rehayem says education has been something the group has invested in over the last six years. Each year Pepper Money holds its Insights Roadshow, going around the country to keep brokers up to date and help them feel supported. Particularly over the last year and a half, Pepper Money was proactive in its communication and engagement with brokers – even beyond industry regulation and product updates. One example Rehayem mentions is when the lender reached out to St Kilda Football Club, which it sponsors, and arranged for its in-house psychologist to deliver mindfulness sessions to Pepper Money’s broker network. The non-bank also provides education pieces online, covering topics that are important to both brokers and customers. This saw its website reaching a high of 200,000 visits during COVID-19. “[People were] really starving for information because of the heightened levels of uncertainty during COVID, but we were able to deliver, and brokers were absolutely ecstatic with the level of support,” Rehayem says. “Our ultimate goal is that every Australian understands their options, and our job is to work with brokers to ensure they have adequate training, education, programs and processes to feel confident to do that. It’s about lifting the profile of non-bank lending and the level of education across the entire broker industry, and we want to play our part.”
A personalised customer experience Another area in which Pepper Money ranked highly was BDM support – also voted as brokers’ second-highest priority. Seeing BDMs
30
WHAT BROKERS HAD TO SAY Pepper Money’s alt-doc product was voted the best product of the last 12 months across all non-banks. Here’s what brokers thought of it: “Simple process, credit assessors are always positive, nothing is too difficult, and the client is assessed based on their circumstances. BDM always supports me and answers my calls and questions” “It is simple, and the BDM made it convenient to work with me” “Competitive rates, quick turnaround times and suits client requirements” “Simplified offering and process” “Amazing BDM and competent credit assessors” “Improved interest rates and income support options”
“We like to offer a personalised service. Every BDM will discuss things that are more personalised for that particular broker, as opposed to just throwing out a product guide or sending them a link and saying that’s all we’ve got – it’s not about that,” Rehayem says. As part of the Brokers on Non-Banks survey, brokers were also asked about their preferred lender for different product types. Pepper Money was ranked as the preferred lender for specialist lending, first home buyers, property investors and alt-doc lending. Rehayem says it was extremely satisfying to see brokers recognise the level of effort the nonbank is putting in to be at the forefront of those customer segments. “They really are underserved segments of the market, and we will continue to service and fill the void of those underserved segments, which are continuingly growing,” he says. “More than ever, there’s a big appetite for alternative lending. There’s so much business out there and growth potential among the new and upcoming generation of borrowers, the small business market, and the growing selfemployed market that are looking for products
“You can just imagine how excited we are to fully roll out all the bells and whistles that we’ve got planned over the next six to eight months” Mario Rehayem, Pepper Money as “the flagbearers of the business”, Rehayem says they are an important piece of the puzzle, so the lender spends time and money on making sure they are trained properly. Not only are Pepper Money BDMs the conduit between the lender and brokers, says Rehayem, but they are across other lender products too, in case Pepper Money is unable to help.
and options that are built to accommodate their real-life circumstances. “One thing I can say to the broker network is that we will continue to deliver products that will help underserved customers with alternative lending options. We’ll do it in the most consistent, transparent and innovative ways to ensure we continue to meet your customers’ evolving needs.”
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FEATURES
FIRST HOME BUYERS
Preferences shift as buyer urgency rises With low interest rates and rising house prices, there is a sense of urgency among first home buyers to get on to the property ladder. Mortgage brokers have an opportunity to step in and make sure these buyers know what options are available to them FIRST HOME BUYER purchases over the last 18 months have been record-breaking, and industry research only backs up the notion that the Great Australian Dream of property ownership is alive and well. Despite the surge of new buyers coming into the market, research also shows that there are still barriers and challenges faced by those buying a first home, paving the way for mortgage brokers to come in and educate and support these borrowers. According to a Bankwest survey, 70% of millennials and Gen Zs in Australia aspire to own their own home, and while the biggest concern is over affordability, 38% reported they had no awareness of one option that could help them achieve this: lenders’ mortgage insurance. For those worried about affordability, the current low interest rates are particularly appealing, which is one of the factors driving the significant rise in first home buyers. Bankwest’s general manager third
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party, Ian Rakhit, says the bank has seen this segment of the market peak this year at 30% of all applications, instead of the usual 10–15%. He warns that interest rates will “inevitably rise”, and brokers, as well as direct lenders, need to ensure they are
“This is one of the biggest financial decisions of people’s lives, and it’s important we do everything we can to provide the best possible experience to customers, and that starts with understanding the individual and their unique circumstances.”
“First home buyers might not have an understanding of the ins and outs of homeownership and could benefit from a broker” Ian Rakhit, Bankwest doing their due diligence when assessing a customer’s ability to service a loan. “It’s also important to be aware that many first home buyers might not have an understanding of the ins and outs of homeownership and could benefit from a broker who walks them through what many might consider to be basic information,” he says.
Bankwest’s survey shows that affordability concerns have shifted the preferences of first home buyers. While respondents said they would prefer to buy a freestanding home, 28% of Gen Zs (aged 14 to 22) said they would opt for an apartment if they were to buy right now – almost double the national average of 15%.
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Sixty-one per cent of Gen Zs said the pandemic had made it more important to buy a place that was cheap. Millennials (aged 23 to 38) were also influenced by affordability; they were more likely to look for a place that needed renovating
Rising prices lead to tough choices The increasing cost of buying a home is undoubtedly making affordability a bigger concern for first home buyers. Bank of Queensland has seen the average loan size for first home buyers grow, thanks in part
“Working with the buyers to better understand and navigate this [mortgage] process will result in the most positive outcome” Kathy Cummings, BOQ and were the least fussy about finding a ready-made home. “All of that points to significant changes in attitudes towards affordability being the priority for the current and next generation of homebuyers, as opposed to taking on higher mortgages for the sake of location or feature preferences,” says Rakhit.
to residential property prices hitting record highs, particularly in Sydney, Brisbane and Melbourne. The COVID-19 pandemic has also resulted in fewer properties being listed for sale, and with investors returning to the market, this is drastically increasing competition. General manager, BOQ broker, Kathy
Cummings, says the bank is committed to supporting first home buyers through challenges like these, and is constantly looking at ways to make it easier and more affordable to purchase a home. One unique way it has done this is by introducing a $1 LMI for first-time buyers with over 80–85% LVR. With people spending more time in their homes now, Cummings says first home buyers are faced with a tough choice: “Do they continue to try saving for a deposit while rent values and house prices go up, or consider moving out of the cities into more affordable places in the outer suburbs or regional areas?” There is good news, though. The appreciating house values and current low interest rates mean there “has never been a better time to buy … and start building equity in your own home”. Cummings says brokers play a vital role in helping first home buyers understand whether it is the right time for them and what the options are. “It’s important to understand that this isn’t just a mortgage or finance transaction, it’s a conveyancing transaction and often one of the biggest decisions in people’s lives. It’s also a critical financial transaction that involves risks,” Cummings says. “Acknowledging and appreciating this and working with the buyers to better understand and navigate this process will result in the most positive outcome, with a well-informed buyer who is pleased with their ultimate choices and happier with their ‘trusted’ mortgage broker.”
Unique opportunity to guide buyers Pointing to the growing competition as experienced property investors step back into the market, Liberty’s group head of sales John Mohnacheff says first home buyers are facing a number of challenges today. Slow wage growth is also making it harder than ever to save for a deposit.
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FEATURES
FIRST HOME BUYERS
“To add to this, many younger people work in areas that the pandemic has hit hardest, including retail and hospitality,” he says. Some first home buyers are navigating these challenges by looking beyond the capital cities for a home, and others are opting to buy investment properties while renting in their preferred suburbs. On the other hand, despite all the hurdles, “property has consistently been one of the most solid investments historically”, Mohnacheff says. “As the saying goes, the best time to buy property is always 10 years ago – so 10 years from now customers will likely thank themselves for taking action.” First home buyers can also benefit at the moment from the government’s First Home Loan Deposit Scheme. Mohnacheff says the scheme is an excellent way for first-time buyers to get into the property market. “Those who are eligible can save on the
CHEAP PROPERTIES MORE IMPORTANT TO FHBs Has buying a cheap property become more/less important to you due to the impact of COVID-19?
Gen Z
Millennial
Gen X
3%
1%
3%
9%
0%
No change
56%
38%
59%
45%
81%
More important
41%
61%
38%
46%
19%
Less important
Source: Bankwest
“Brokers in partnership with us are a fantastic resource … and having someone in your corner that has this experience is so valuable” Zeb Drummond, Gateway Bank cost of LMI, which can be a great advantage and even help some buyers get into their new home sooner,” he says. When working with new buyers, brokers “have a unique opportunity to educate customers and support them throughout the buying process”, Mohnacheff adds. “For many borrowers, it can be a daunting experience, and some may encounter information overload. So, being available to answer questions as and when they arise will help a good broker to stand out. “While this may require more work on the broker’s behalf, excellent service is likely to lead to return business as well as referrals to friends and family who may also be looking to buy.”
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Baby boomer
Total
Lender commitments to help The FHLDS is a federal government initiative that offers first home buyers a guarantee of up to 15% of the value of the property, meaning they can secure a home loan with as little as 5% deposit without the cost of LMI. As a panel member of the scheme, Gateway Bank has seen first home buyers empowered to enter the market, but brokers need to be aware of the scheme’s criteria, such as property price caps, eligibility of properties, and the finite number of places available. Committed to helping those in this buyer segment who are not eligible for the scheme, Gateway has partnered with Genworth to
offer LMI with the option to pay in monthly instalments as an alternative to capitalising LMI into the loan or paying up front. Head of customer operations Zeb Drummond says his heart goes out to borrowers who are trying to understand all the options and deal with the uncertainty and emotions involved in buying a home for the first time. “It’s not easy. When you don’t know, that’s also the biggest challenge. You’re trying to learn and educate yourself around how it works, and you have these overarching concerns of, ‘am I doing the right thing’?” he says. “We try to counter that as best as possible through education and providing first home buyers with options and helping them get as much information along the way. “Brokers, in partnership with us, are a fantastic resource in helping them grow that, because we don’t know what we don’t know, and having someone in your corner that has this experience is so valuable.” First home buyers are an important
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FEATURES
FIRST HOME BUYERS
demographic for mortgage brokers to tap into, Drummond explains. He says it’s a great opportunity to demonstrate the value of a broker-customer relationship. “This is the first step in the relationship. Borrowers will have multiple opportunities;
Education is key Even though research tells us that young adults are starting to save for a deposit earlier in life, RFi data shows that the average age of a first home buyer is now 42 years, up from 38 in 2015. Affordability
“The best time to buy property is always 10 years ago – so 10 years from now customers will likely thank themselves for taking action” John Mohnacheff, Liberty it’s pretty rare that a borrower will only purchase once in their life,” he says. “And there will be other referral opportunities as well. It’s a really good way to get into that space and help people, and grow their own business as well.”
issues mean it’s taking longer to reach savings goals. In less than a year, ING saw the average loan size for a first home buyer creep up from around $450,000 (late 2020) to $500,000 (mid-2021). Head of customer experience, service
and distribution Glenn Gibson says there are opportunities for lenders and brokers to support first home buyers through education and by helping them reduce costs. Understanding the full cost of buying a home is one area in which borrowers may need educating. “Customers often don’t realise the full cost until they’ve reached their deposit savings goal and ask for a pre-approval ready to hit the open homes. This is when they start to realise the additional costs of LMI, stamp duty, legal fees and bank fees,” Gibson says. As many first home buyers are unfamiliar with the complexities of mortgages, Gibson says they will turn to brokers for financial education, guidance and hand-holding. On top of advice on those additional costs, he says these buyers will need education on loan affordability, how much to save for a deposit, whether a family guarantee is an
GROWTH TREND OF NEW LOAN COMMITMENTS TO FHBS 20,000
15,000
10,000
5,000
0
Sep 19
Oct 19
Nov 19
Dec 19
Jan 20
Feb 20
Mar 20
Apr 20
May 20
Jun 20
Jul 20
Aug 20
Sep 20
Oct 20
Nov 20
Dec 20
Jan 21
Feb 21
Mar 21
Apr 21
May 21
Jun 21
Jul 21
Source: ABS Lending Indicators
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option, LMI, the types of home loan products available, the types of interest rates available, and repayment options. “It’s a great opportunity for brokers to establish a strong relationship with a first home buyer and to continue the relationship over the customer’s life cycle,” he says. “For instance, when the first home buyer moves on to the next stage of their life cycle, such as having a new baby, they’re very likely going to need to upgrade to a bigger property, and that’s when the broker may be able to assist with another home loan again, and in the next life stage and so on.”
Borrowers looking for a sea change After seeing the strongest demand “in a generation”, with first home buyer activity up 56% in FY21, NAB expects that recordlow interest rates and government incentives will keep demand from this segment strong through 2021. However, NAB’s executive, broker distribution, Phil Waugh, says he recognises that rising house prices are creating an increasing challenge, particularly as supply remains below average. Through its participation in the govern ment’s FHLDS, the bank has assisted more than 7,000 customers in buying a home so far. NAB is also actively supporting a further 4,500 customers who hold an active unconditional or conditional approval. Waugh says the major bank remains “committed to supporting thousands more” and secured 3,700 places in the scheme for the FY22 release in July. He adds that the bank has seen a shift in where its first home buyer customers want to buy – “the idea of a sea change or a tree change is exciting to many Australians”, particularly as hybrid working models become more common. He notes that property prices in outer-metro suburbs have not risen as much as in other areas. “Greater value has also been placed on the
size of a property and the need for good local amenities, like restaurants and shops,” he says. From saving for a deposit to searching for the right property, Waugh says buying a first home is a huge step, and first home buyers
market, where housing prices are growing rapidly and customers need to feel greater confidence, whether they’re purchasing a new home, refinancing or growing their investment portfolio.”
“Customers often don’t realise the full cost until they’ve reached their deposit savings goal and ask for a pre-approval ready to hit the open homes” Glenn Gibson, ING will need extra guidance and support through the process. “Brokers are uniquely positioned to help support first home buyers and take the stress out of one of the most important financial decisions of their lives,” he says. “This guidance is even more critical in a fast-moving property
Urgency to buy As an LMI provider, Genworth is able to help borrowers get on to the housing ladder with a lower deposit. Its recent first home buyer report found that one in five prospective buyers in Sydney have been saving for their deposit for at least five years, and there is
SHARE OF LOANS HELD BY FHBS, BY STATE/TERRITORY First home buyer loan commitments
First home buyer ratio
Number
Dwellings
Housing
13,119
34.9%
30.3%
New South Wales
3,333
31.8%
27.6%
Victoria
4,027
37.8%
32.6%
Queensland
2,533
32.6%
28.4%
716
29.0%
25.0%
1,849
41.7%
37.6%
Tasmania
216
35.1%
27.6%
Northern Territory
113
36.9%
34.2%
Australian Capital Territory
332
36.2%
31.6%
Total Australia
South Australia Western Australia
Source: ABS Lending Indicators
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FEATURES
FIRST HOME BUYERS
“Mortgage brokers take away the complexity to support first home buyers on their pathway to homeownership” Pauline Blight-Johnston, Genworth EMOTIONAL DRIVERS OF FHBS Strongly agree
Agree
I am feeling a growing sense of urgency to buy my first property as prices keep going up
35.7%
48.6%
30.4%
2021
50.1%
2020
The ‘fear of missing out’ is strongly driving my quest to buy my first property
27.9%
2021
43.2%
20.3%
40.9%
2020
I feel like I am stretching myself too much in order to buy my first property
24.3% 16.4%
41.5% 39.1%
2021 2020
I feel like I am losing hope in being able to buy my first property
22.1% 18.0%
35.4% 35.6%
2021 2020
an increasing urgency to buy a first home as prices go up. As a result, “more than 80% of prospective first home buyers with less than a 20% deposit are likely to use lenders mortgage insurance”, says CEO Pauline Blight-Johnston. “This allows many first home buyers to realise their dreams of homeownership which they wouldn’t otherwise have been able to achieve.” The research also backs up the notion that first home buyers are adjusting their expectations and behaviours to get on to the market. In the Genworth report, 77% said they were less concerned about the type of home they purchased and more focused on just getting into the market. “FHBs are adopting several strategies to fast-track their homeownership goals, from targeting more affordable properties, both by type and location, to adjusting their living expenses. Over 80% of first home buyers concede that their first home will not be their ideal or dream home,” says Blight-Johnston. First home buyers are also finding the experience of buying property to be “stressful and confusing”. Blight-Johnston says education therefore plays an important role, and mortgage brokers have a great opportunity to get involved earlier in the homebuying process. According to Genworth’s research, more than 30% of prospective first home buyers were referred to a mortgage broker by friends and family. Almost 90% of first home buyers said they recognised a broker’s value as someone who could help them cut through the complexity of the buying process. “First home buyers are typically daunted by the whole homebuying experience and process – from browsing through websites, comparing products, to working through the pre-approval process and understanding contract terms,” Blight-Johnston says. “Mortgage brokers take away the complexity to support first home buyers on their pathway to homeownership.”
Source: Genworth First Home Buyer Report, 2021
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FEATURES
BANKING EVOLUTION
A broker-first focus Brokers remain a key focus for Citi over the coming months as it prepares to be bought by a major bank. Head of mortgages Matt Wood explains why the move is exciting and what else the bank is working on
“WE ARE very much business as usual” – that’s the message Citi wants to get out there to mortgage brokers as it waits to complete its transition to NAB. As part of Citi’s global strategy to exit the consumer banking business in the Asia-Pacific, on 9 August NAB and Citi revealed they had reached an agreement that the major bank would buy out the consumer business side of Citigroup, including more than $12bn in loans and $9bn in rental deposits. For brokers who submit loans through
40
Citi and have clients with existing home loans at the bank, there is not much immediate change. If anything, Citi says the buyout will be a positive and exciting step for the bank. “Transitioning to one of Australia’s big four banks is an exciting move, and Citi looks forward to what the future will bring,” says Citi’s head of mortgages, Matt Wood. “Through partnering with NAB, Citi knows there is going to be a strong investment in our mortgages business, which will only be good for customers and brokers. NAB is a big four
with a huge presence and great reputation in the broker space, so we hope to be able to leverage their investment, particularly in the digital space.” The sale is not expected to be completed until March 2022, and until then NAB will remain a competitor just like any other bank. Any new and existing mortgage applications will continue as per standard processes, and clients can continue to use Citibank Online as well as the mobile banking services, and call Citi’s BDM teams or call centres.
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Sponsored by
Following the sale, there will still be Citibranded mortgage products available to brokers during the transition period. In fact, the Citi brand will remain in place for approximately two years after the sale.
Moving to end-to-end digital processes Although COVID-19 has certainly been a challenge, Wood says it has not had as much of an impact as he thought it might. In fact, the pandemic has forced the bank’s hand when it comes to improving its offering and moving towards more digital processes. Citi still has “some work to do” in order to have a complete end-to-end digital process, but Wood says it needed make improvements and “COVID-19 brought that to the forefront”. “We had a lead there already in my opinion; COVID allowed us to leverage the impact in pushing that forward,” he says. The bank has already had some wins.
will also help further Citi’s digital advancement. “NAB has obviously been doing that for some time now, so we look at them as probably being more advanced in that space,” Wood says. “That is a big part of the excitement as to what we can enjoy as we transition under the NAB brand, and how we can leverage what they’ve done in their digital footprint into our business with our brokers. That’s pretty exciting for us.”
1916
The National City Bank applies to open a branch in Australia
1926
The National City Bank opens a representative office in Australia
1971
First National City Bank acquires 21.7% of the Industrial Acceptance Corporation in Australia
1977
Citigroup Australia Holdings is formed and acquires 100% of the Industrial Acceptance Corporation
1982
Citibank commences operations in New Zealand
1985
Citibank is granted a full banking licence in Australia
2001
Citigroup Centre officially opens in Sydney
2012
Citi celebrates its 200th anniversary as a bank
Meeting brokers’ expectations As Citi continues to focus on its own operations ahead of the sale, it is looking at where it can improve and support brokers better. While the bank has held up well in terms of turnaround times, it does look at deals manually, and so is investing in how it can continue to maintain those strong SLAs. “That’s our first focus, that we make sure we maintain those levels of expectations
“Transitioning to one of Australia’s big four banks is an exciting move, and Citi looks forward to what the future will bring” Matt Wood, Citi It’s implemented virtual verify identification and is currently working on plans to introduce digital signatures. Even without COVID-19 forcing digitalisation, the industry has welcomed open banking and comprehensive credit reporting over the last couple of years, which was another driver of Citi’s decision to develop and improve its offering. This led to the bank looking to remove the need for paper bank statements from its requirements and leverage as much data as it can, as opposed to asking for documentation to support an application. The sale of the business to a bank like NAB
CITI: A TIMELINE
that our partners have,” Wood says. Citi is targeting 48-hour approvals for PAYG customers and 72 hours for the selfemployed; new purchases will also be “the first cab off the rank”. “What we’ve become really good at at Citi over the last 12 to 18 months is aligning our appetite and what we’re wanting to achieve and our expectations with our capacity ability in the background,” Wood says, explaining that everyone at the bank knows the number of applications that will allow them to maintain adequate service levels. “Whilst it’s a lower number in terms of what the major players in the industry would
2021
April – Citi announces exit from consumer business banking August – NAB announces intent to buy consumer business side of Citi
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FEATURES
BANKING EVOLUTION
CITI DEAL: THE NUMBERS
$7.9bn
in residential mortgages
$9bn in deposits
$4.3bn
in unsecured lending
“I feel quite lucky from a personal point of view that we’re in an industry that’s doing as well as it has been” Matt Wood, Citi be looking to target, we know where we sit from a sweet spot, and we know if we hit that number we can process it efficiently and effectively for our partners.” Another way Citi is supporting its brokers is with its strong BDM team. Working alongside brokers deal by deal, Wood says BDMs do a lot of work prior to the loan being submitted to make sure brokers’ expectations are met. As evidence of that BDM support, the bank’s loan conversion rates have improved year-on-year. “That is a great story, because getting an application is one thing, but our partners don’t get paid until that deal settles, so conversion is a metric I like to see as strong as I can get it, and the BDMs play a really big part in that,” Wood says. In addition to the strong support of its BDM team, Citi offers brokers other points of difference. For instance, its wealth arm allows brokers to assist their clients with multiple
42
transactions. As Citi’s primary target is affluent customers, there is often a great opportunity for clients to diversify.
Priorities for the year ahead With the NAB buyout being the biggest thing on the horizon for Citi, Wood says the group wants to finish the year strong. That investment into improving its turnaround time, upskilling its people and maintaining its appetite will remain key focuses. Wood says he is committed to supporting the third party channel, particularly in light of the support they have given the bank in return since the news of the sale. “We announced back in April that we were up for sale. We weren’t able to advise the market at that time who was going to buy us, but they accepted that quite well, and they continue to support us,” Wood says. “Once they got their head around that announcement, [third party lending] actually
800
Citi employees grew in the third quarter this year, and we have just enjoyed our best month of settlements in seven years in August. “Our broker partners have accepted the sale and continued their support and looked at what we’re doing in the here and now, what we’re able to provide them and what products we’re able to bring to the market. They were still willing to get in there behind us and support us; that’s why I’m so focused on wanting to support them by keeping to our turnaround times and meeting their expectations. I want to meet them as much as I can.” While the last year and a half has thrown up challenges for everybody, Wood says he has been impressed with Citi’s broker partners, who have continued to provide exceptional service to their clients. “What they’ve delivered to the Australian consumer is fantastic,” he says. “I feel quite lucky from a personal point of view that we’re in an industry that’s doing as well as it has been, and I think a reason for that is the work our business partners and our brokers are doing.”
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Lenders Mortgage Insurance can help you buy property sooner with a smaller deposit. Our recent First Home Buyer Report 2021 illustrates that on average, it takes 18 years and 12 years, respectively to save a 20 deposit for a house and unit in Sydney. Melbourne, it takes an average of 14 and 9 years respectively.
genworth.com.au Genworth Financial Mortgage Insurance Pty Limited ABN 60 106 974 305 ®Registered Trademark of Genworth Financial, Inc.
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FEATURES
EXPERT SPOTLIGHT: BUSINESS GROWTH
Specialist Finance Group: Taking care of business Although COVID-19 has come with challenges, it’s also been a blessing in that it has allowed brokers to concentrate on their businesses. Specialist Finance Group head of aggregation Blake Buchanan says he has seen a lot of brokers become better businesspeople over the last 18 months MPA: How have you seen COVID-19 affect the way brokers are looking at their businesses? Blake Buchanan, head of aggregation, Specialist Finance Group: Since March 2020, there have been multiple stages of concern, development and evolution that many brokers have been through. Thankfully, one of them was brokers being urged to focus on their systems and processes to allow them to continue to trade compliantly and digitally. In this way, COVID has been a bit of a blessing as it’s been the catalyst for brokers and lenders to sooner embrace digital efficiencies and focus on a number of areas, including marketing, use of systems, business structure and processes. SFG deployed our new CRM called SFGconnect in 2018, which even back then was COVID-ready. We didn’t have to scramble to work out solutions for things like approved video conferencing, workflow tasks, customer portals or identification processes, as they were already in-built and available to our network.
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We’ve seen brokers in record numbers who are keen to upskill so they can exploit the system to make them more efficient than ever. Being a ‘one-stop shop’, SFGconnect has all the tools a broker would need to apply their trade and more, like property reporting,
Pleasingly, between myself, William Lockett and our management team, we have run more individual strategic and training sessions than ever before. This points to record numbers of our brokers not just working in their business but on it.
“We’ve seen brokers in record numbers who are keen to upskill so they can exploit the system to make them more efficient than ever” credit checks, marketing, referrer and client portals, digital signatures, bank statement scraping tools, and so much more, which means there is a lot to explore and learn.
MPA: Why is now a good time for brokers to think about working on their businesses? BB: The best time to think about your business was yesterday, and the very next best time is today and then every day thereafter.
Being an amazing broker does not always mean that you are excellent at running a company. You should always seek to learn, look at what you are doing and adjust as needed for now and the future. Due to the high and extraordinary volumes that brokers are writing, along with excessive turnaround times, it’s more difficult than ever to step back, look at your business and evaluate how it’s going, what your customer experience is like, and look for macro and micro efficiency.
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Sponsored by
ABOUT SFGCONNECT Specialist Finance Group created its digital platform SFGconnect to provide its members with a clear competitive advantage. It offers a feature-packed solution designed to reduce broker workload, improve compliance and enable effective collaborative involvement of brokers, their staff, clients, and referral and business partners during and after the loan application process. Key features include: • borrowing capacity calculations • product search and comparison tools • stamp duty and LMI calculations • compliance tools • third party integrations • mobile phone app • client portal
“The best time to think about your business was yesterday, and the very next best time is today and then every day thereafter”
necessary. We can work out what type of investment is needed in key areas of your business to achieve it and, importantly, start working towards it. It all starts with doing something. One thing that I notice with successful and growing broker businesses is that they have good business discipline, focus on the fundamentals, and allocate time for each area of their business but especially for themselves. It’s very important that you take care of yourself first so that you can take care of your business.
However, you need to find the time as this investment, like many investments, will give you great returns, often in the areas of time, money and better customer experiences.
MPA: Why should brokers be interested in focusing on things like marketing and planning? BB: I think the time for considering
MPA: How can brokers take the initiative to grow their businesses? BB: It all begins with a plan. The best way to get a job done is to start it, and often it’s too easy to procrastinate or delay starting a task that can result in change. It can all start
with deciding what you want to achieve, and this can be a very simple starting point. Is it a sum of money you want to earn? Is it a number of people you want to help, or is it a number of transactions per year that you want to achieve? These are some of the usual goals that brokers look to achieve. I urge everyone to think on this and write it down, because once this is done, we can work backwards to yearly, monthly, weekly and daily objectives and tasks if
marketing is over. You need to have it. Our market is hypercompetitive, with hundreds of active leads, companies and franchises, social media marketing, and throw in thousands of brokers all vying for your customers. So, if you do not have a marketing program in place, you should be worried about the
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FEATURES
EXPERT SPOTLIGHT: BUSINESS GROWTH
sustainability of your business or start planning your marketing program for your business right now. Marketing is not just social media ads and email templates going out to databases talking about free property reports or how good you are; marketing programs are also for your existing customer base. You need to regularly communicate to your customers through marketing to ensure that they are kept well-informed and that you are always front of mind when it comes to their lending needs. This communication with clients forms a very important part of what brokers do, and in particular with regard to our remuneration model. The refinance market has been overactive for the past 18 months, which points to reduced loan terms. These shortened terms will increase clawbacks but also the opportunity for brokers to write more deals sooner and better protect against losses.
MPA: When brokers are reluctant to try out new systems or processes, why would you encourage them to branch out of their comfort zone? BB: In my role, I’m fortunate to have access to thousands of brokers each year, which gives me a very good cross section and understanding of brokers at various stages in their career. What is interesting is the
brokers that want more business but don’t achieve it look to blame things beyond their control, are reluctant to invest in systems or marketing, and funnily enough are usually the ones that are too busy to answer their phone or respond in a timely fashion. You compare this to brokers who write more than, say, $50m per annum, and they all have marketing systems and tools, expertly understand the power of their CRM, understand the importance of going to PD
MPA: Specialist Finance Group has experienced huge growth in recent years. What are you doing strategically with brokers for them to speak so highly of SFG? BB: At a very high level, we strive to deliver and continually improve on the
“Our brokers are our customers, and so it’s vital that our systems, support and overall value proposition meet and exceed the expectations of our members” days and other industry learning events, and respond to phone calls and emails in a timely manner. These brokers didn’t just start off writing $50m per annum, they started where we all start but they made the investment, they planned, they tried new things, they found what works, and they went for it and have been learning and adjusting ever since. Thankfully, we have all of our members using SFGconnect, so for us the journey has not been trying to get our members to try our system but to ensure that they know how to
ABOUT SPECIALIST FINANCE GROUP Founded in 1991, Specialist Finance Group is one of Australia’s leading finance aggregating companies. We operate from our head office in Perth, with offices in Sydney, Melbourne, Singapore, Dubai, Hong Kong and London. At Specialist Finance Group, we pride ourselves on being a boutique company that is able to provide outstanding value to its members. With more than 20 years’ experience, we believe that the flexibility you’ll get in choosing from our competitive agreements is one of the greatest benefits that we are proud to deliver. Our managing director, William Lockett, is actively involved in the day-to-day running of the company on both a national and international level, which gives all of our members direct access to the owner of the company if required.
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tailor it to their unique business model and maximise the customisation and automation of it to take their business to the next level.
fundamentally important areas of running an aggregation business. Our brokers are our customers, and so it’s vital that our systems, support and overall value proposition meet and exceed the expectations of our members and business partners. We do not have the distractions of trying to run a tech company or have our own home loan products to try and sell, so we’re able to focus on being really good at aggregation. This has delivered a market-leading CRM and high levels of support and service to our business partners, where our members have direct access to all areas of our business, including owner and managing director William Lockett. Our leadership team are all highly experienced, with each having a minimum of 10 years’ experience but with nearly all having more than 20 in and around the broker channel. Being able to tap into this experience regardless of your size is priceless and available to all of our members no matter the size of their business. We are encouraged by our brokers’ feedback and thank them for these outstanding results.
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FEATURES
LEADERSHIP
Unlocking hidden intelligence Leadership teams need to invest more in their relationships, problem-solving abilities and practical plans in order to improve performance. It’s important to unlock hidden intelligence in your team, says author Rob Pyne
IN 2010, five psychologists set out to test the collective intelligence of teams. They subjected teams of three to five people to hours of tests, including brainstorming, making moral judgments, negotiating and critical thinking. The results of the study by Anita Williams Woolley and her colleagues, published in the journal Science, are little known, and yet they are incredibly important to the way we work, which increasingly involves working in cross-functional teams. First, the obvious. They found that, just like individuals, teams do have an ‘IQ’ score that predicts their performance on a wide range of tests. If they were good at the brainstorming task, they tended to be better at the negotiating task. They called this ‘Factor C’, for collective intelligence.
Surprising predictors of collective intelligence Second, the not-so-obvious. While the individual IQ of each team member played some role in determining the performance of the team, it was in a distant fourth place. Of the top three top factors that predicted the performance of a team, the number of females in that team ranked in third place. The more females, the higher the collective
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Celebrating 20 years 15 OCTOBER 2021 • ONLINE
CONGRATULATIONS TO THE 2021 EXCELLENCE AWARDEES Australian Broker and MPA, in partnership with Westpac, are pleased to announce the Excellence Awardees of the 20th annual Australian Mortgage Awards. The selection of individuals and organisations across 28 categories is a true representation of excellence in the mortgage profession. They are to be congratulated for their outstanding achievements, innovation and leadership over the past year. The grand winners will be revealed at the virtual awards show on 15 October. Register for free today to celebrate and connect with your mortgage industry peers from across the country.
To view the list of excellence awardees and visit, australianmortgageawards.com.au
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FEATURES
LEADERSHIP intelligence of the team. Women, it seems, are generally better at the social dynamics needed to help teams solve tough problems. In second place was the equality of conversational turn-taking. In plain English: does everyone have equal airtime? In the study, this led to better team performance. You know those one or two people who dominate the meeting? These loud people are decreasing the chance that the team finds the best solution. And in first place, the single biggest predictor of a team’s mental performance was the social sensitivity of the individuals involved. To understand what this is, take a look at the test used to assess this. It’s called the ‘Reading the Mind in the Eyes’ test, which is used to measure the ability to judge how other people are feeling by just looking at a picture of their eyes. Social sensitivity is part of a bigger area of emotional intelligence. Social sensitivity means the ability to estimate how others are feeling. So, why does this matter to team performance?
How social sensitivity drives team performance A follow-up study by Woolley and colleagues in 2012 extended the findings. It showed that social sensitivity also drives performance in a longer-term, complex project. And, crucially, they showed that individuals with higher social sensitivity may benefit the team’s intelligence in several ways: • In brainstorms, they are seen as flexible thinkers, good at perceiving and responding to others’ input • They are seen as dependable, sharing the burden of work • They are seen as producing high-quality work, and as good communicators, respectful collaborators and able to compromise
Steps to building an intelligent leadership team My work is mainly with leadership teams. I get called in to help with ‘forming, fixing
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You know those one or two people who dominate the meeting? These loud people are decreasing the chance that the team finds the best solution or future planning’. I find that a leadership team’s collective intelligence has three distinct parts: • The team’s emotional intelligence, or EQ, as illustrated above • The team’s creative-analytical intelligence or IQ – its ability to solve complex problems • The team’s practical intelligence – which I call PQ – the ability to deliver projects, hit targets As leadership teams spend less time together than functional teams, it’s often the team’s relationships and EQ that need attention. They need to build the emotional foundations of a real team, including trust, authenticity and honesty. Breakthroughs happen when a team answers four key questions: Why? Who? How? and What? • Why does this team exist? What value are we here to create? • Who is in this team? What unique role and skills does each person bring? • How do we need to behave? How should we operate? • What are our key business priorities? Once a team’s EQ is high, you can tackle their collective IQ. If you find the members of your leadership team have long-winded discussions that don’t reach a conclusion,
then you’ll want to introduce specific problem-solving structures. For example, you may move through divergent thinking (exploring multiple perspectives) and then into convergent thinking (where you negotiate the best way forward). Finally, you need to unlock the group’s practical intelligence or PQ. Many leadership teams make decisions but fail to make plans. And if they make plans, they fail to include deadlines, owners and priorities. There will be some practically minded people in your leadership team. So, harness their skills to turn the team’s strategy and decisions into a visible roadmap of projects laid out over the year, a dashboard of key result areas and metrics, and include regular reviews of key projects in your leadership team meetings. In a McKinsey survey of leadership team members, 80% said their leadership team was not ‘high-performing’. Most leadership teams need to invest more in their relationships, their problem-solving ability and their practical plans in order to improve their performance over time.
Rob Pyne, author of Unlock: Leveraging the Hidden Intelligence in Your Leadership Team, is a leadership coach and facilitator who helps teams unlock their collective intelligence and become smarter than the sum of their parts.
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FEATURES
WORKPLACE CULTURE
Why working culture needs to change The global pandemic has changed the way much of the world works. Colin D. Ellis explains why organisations need to redesign workplace culture in order to embrace hybrid working
CULTURE, or the ‘way we do things around here’, is – and always has been – the biggest determinant of team and organisational success. When times are good, culture is invisible, save for the smiles on people’s faces, the dedication with which they approach their work, their determination to get the best out of each other, and how they collectively celebrate their successes. When times are bad, culture shows itself everywhere. O.C. Tanner’s 2021 Global Culture Report found that stagnant cultures – ie those in which employees were disengaged and demonstrated poor behaviours – were 10 times more likely to be negatively affected in a crisis, and many organisations are still suffering the effects that the pandemic has wrought on the way they operate. Conversely, the organisations that thrived during the pandemic were the ones that recognised that the way work was done had changed significantly, and as a result the micro experiences between staff would have to change too. They focused not only on the wellbeing of staff but also the interactions
between them. They recognised the fear and anxiety that people felt, and created a space where it was both OK to talk about it and still bring their most productive selves to work. In short, these organisations focused less on the tactical day-to-day of work and took a proactive approach to building emotional
has to be redesigned to suit this model. When redefining the culture required for hybrid working, organisations need to consider the following:
Personality and communication The relationships between individuals are critical for productive work in a hybrid
Cultures that were previously designed for a model in which people were interacting face-to-face when located in the same space are no longer applicable connections between people and redefining the culture they needed to be successful. If you’re moving to a hybrid working model, you need to do that too. Cultures that were previously designed for a model in which people were interacting face-to-face when located in the same space are no longer applicable. For hybrid working to be effective, the working culture
world, and this starts with people understanding themselves. The pandemic has affected everyone in different ways, so it’s important to recognise this and for people to re-evaluate who they are now, and how this has affected their purpose in life. Once they have that knowledge, empathy for others becomes easier, and communication is strong.
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FEATURES
WORKPLACE CULTURE Vision One report at the end of 2020 found that only 30% of organisations surveyed felt that they had clear consensus on their new vision post-pandemic, which led to a detrimental impact on morale. The vision is an aspirational statement of what the culture is striving to achieve, and it should provide excitement around what’s achievable in the next 12 months, not the goal pre-pandemic.
Values Values should provide emotional bonds and be lived in plain sight in every interaction between staff members. These may have changed during the pandemic. One organisation I worked with added ‘Vulnerability increases our humanity’ to demonstrate the increase in transparency required to be successful in its hybrid working.
Too many organisations still leave the definition of working culture to chance, or hope that it ‘naturally’ evolves to suit the new working conditions. It almost never does Behaviour By far the biggest impact on culture during the pandemic was seen in the behaviours of employees. Fear, anxiety, confusion and anger have understandably undermined productive work at various stages during 2020 and 2021. Redefining the behavioural expectations of staff will increase responsibility and accountability and ensure that all staff understand where their opportunities for improvement and growth lie.
Collaboration Implementing collaboration tools won’t improve the way people interact unless there is agreement as to how people will use them and respect each other’s need for time to do productive work. Technology should support collaboration, not get in the way of it.
Innovation Microsoft is one organisation that saw a reduction in innovation as a result of not moving to a hybrid working culture. Tools such as Gather can be used to create casual interactions between staff that give rise to ideas, or hold online hackathons to generate a pipeline of creativity. Too many organisations still leave the definition of working culture to chance, or else hope that it ‘naturally’ evolves to suit the new working conditions. It almost never does, and senior managers will seek to blame the new ways of working rather than their underinvestment in cultural evolution. Defining the culture required to meet the challenges or opportunities that hybrid work will bring needs to be done as early as possible. The world has changed, so the way work gets done needs to evolve to meet that.
Colin D. Ellis is bestselling author of The Hybrid Handbook: How to Set Yourself Up for the Future of Work and helps organisations around the world to transform their working cultures.
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PEOPLE
BROKERAGE INSIGHT
One Network Broking: A team driven by passion A focus on the client experience and achieving the highest possible standards meant this brokerage breezed through the challenges of the pandemic
ONE NETWORK BROKING AT A GLANCE Franchise owners: Nick Gurry and Jacob Decru Location: Melbourne Year founded: 2016 Customer base: Home loans, personal loans, investor loans, refinancing, loans to self-employed borrowers Services offered: Residential loans, commercial loans, goodwill loans, equipment finance, car loans, fitouts Number of employees: 27
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IN AN incredible pivot from his career as a carpenter, Nick Gurry decided to put down his tools and join the mortgage and finance industry. He joined the Loan Market group in 2008, and that’s where he’s been ever since. In 2016 Gurry founded One Network Broking as a franchise of Loan Market, and
15 support staff who are “driven by a passion for the industry”. Based in the eastern suburbs of Melbourne, the brokerage has a strong repeat client base, and with so many brokers it covers all spectrums of lending. “Some of our brokers have a large number of first home buyers, or renters who want to get into the market; others [look after] the older market who have built a portfolio and continue to come back for further loans and refinances. We also have the average family who just want to make sure they have the best rate they can get,” Gurry says. The business also has a close relationship with Ray White, allowing for a two-way referral partnership. Brokers attend Ray White auctions and open homes, and Gurry says this relationship provides them with new areas to jump into and endless opportunities. Knowing it’s not simply about getting the client, the team at One Network Broking build relationships with clients over time, even beyond their mortgage application. Gurry says they are dedicated to not only guiding borrowers through their applications but also ensuring the post-settlement support is there. “This is something that then builds a relationship over a period of time. The clients get a yearly check-in on their mortgage and
“The biggest compliment we can receive is when our existing clients pass our details on to their family and friends” Nick Gurry, One Network Broking it’s since become a familiar name in lists like MPA’s Top Brokerages and the finalists for the Australian Mortgage Awards. Fellow director Jacob Decru was Gurry’s first trainee broker, who started out as a teller and then progressed into lending. The duo run a team of 12 brokers and
know that our brokers are working for them and not a bank,” he says. “Clients walking away feeling supported and with a loan that they know is best for them is one of the reasons we’re able to build that relationship further. The biggest compliment we can receive is when our
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“With our staff being looked after, it made it a breeze to try to help all of our clients last year. We had personal bests in settlements” Nick Gurry, One Network Broking existing clients pass our details onto their family and friends.” In just the last five years since One Network Broking started up, Gurry has seen the industry go from one that was dominated by clients directly liaising with the banks, to one that’s now dominated by brokers. Borrowers are turning to an option that allows them to find the best possible solution for their circumstances. As part of the Loan Market group, the brokerage has to meet strict requirements to ensure its clients’ needs are detailed in writing and that the broker has considered more than one lender when looking for a loan solution. Gurry says it’s important that clients find a broker who will work in their best interests, and who understands their goals, to ensure they are getting the loan that suits them best. He says another thing to watch out for is rising interest rates. “Now is the perfect time
ONE NETWORK BROKING IN NUMBERS
$831m
loan book value as of February 2021 to jump into the property market, because rates are at an all-time low,” he explains. “However, people need to ensure that their broker is doing their diligence to ensure that if the rates jump, their clients can still afford their current total lending.” One Network Broking was prepared with strong systems and processes in place ahead of the COVID-19 pandemic, which has allowed its team to meet all the challenges head-on. “We ensured that we continued to have our weekly meetings as a whole group and provided services to our team to help with their mental health,” Gurry says. “With our staff being looked after, it made it a breeze to try to help all of our clients last year. We had personal bests in settlements last year and reached our second-highest submission target to date. And although we couldn’t celebrate our achievements as a group last year, we are honestly proud of the year we had.”
$340m
total settlements 1 March 2020–28 February 2021
12
active loan writers
5
years in operation
5x
named as AMA finalists
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PEOPLE
OTHER LIFE
2
Number of books Sunil Kumar has published
4–5 yrs
Kumar’s age when he fell in love with cricket
TELL US WHAT YOU GET UP TO Email rebecca.pike@keymedia.com
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Number of mortgage brokers at Reliance Real Estate
“It's hard to describe... I just love it. The reason I’m so passionate a bout cricket is because it’s all I know”
HITTING GREAT HEIGHTS Mortgage broker and Reliance Real Estate founder Sunil Kumar grew up playing cricket on the streets of India GROWING UP in India, cricket was like “a second religion”, says Sunil Kumar, mortgage broker and founder of Reliance Real Estate. His love for cricket began at a very early age, and he has wonderful memories of playing throughout his childhood and his years as a student. “I must have played cricket almost every day until I arrived in Australia,” he says. Although the village cricket area was too small, he “would venture out and play on school grounds, in farm fields, in the streets, backyards – anywhere we could”. “These memories are the reason I still enjoy the game today.” While Kumar doesn’t play as often now, he still plays cricket twice a month and practises weekly with his son. His love of the game has filtered into his business as well, which has an office cricket team that plays every Sunday. “Any sport, but more especially cricket, teaches you anything and everything about business or life in general. If you practise enough and work together for a common goal, you can achieve great heights.”
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