Mortgage Professional Australia 20.02 by Key Media

MPAMAGAZINE.COM.AU ISSUE 20.02

THE SECRET IS OUT

The customer-owned banks are taking market share and supporting brokers

REFINANCING Low interest rates and great products mean more choice

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BROKER EDUCATION It’s never been more important as the changes keep coming

CAMPBELL SMYTH The CEO of Bluestone talks about the lender’s evolution

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FEBRUARY 2020

CONNECT WITH US

CONTENTS

Got a story or suggestion, or just want to find out some more information? twitter.com/MPA_Australia facebook.com/Mortgage ProfessionalAU

UPFRONT 02 Editorial

Incredible acts by brokers

04 Statistics

Positive sentiment continues to grow

28 FEATURES

REFINANCING

With record-low interest rates, is now a good time to switch?

CUSTOMER-OWNED BANKS ROUNDTABLE

Bluestone's CEO looks at the continuing evolution of the lender

Will new buyers benefit from government help?

10 Opinion

How borrowers can prepare for the impact of bushfires

42 Expert spotlight

Equity-One takes a look back at its development

Mutual banks gathered to discuss their growth in market share and their relationship with brokers

CAMPBELL SMYTH

08 News analysis

FEATURES

SPECIAL REPORT

BIG INTERVIEW

06 Head to head

Brokers’ thoughts on the first home buyer scheme

FEATURES

BROKER EDUCATION

Two industry professionals talk about how they work with brokers

46 Team management

How to inspire ‘ambiverts’ in the workplace

50 Productivity

Six ways to work smarter and take back control

52 Leadership

Why optimistic realists make the best leaders

PEOPLE 54 Brokerage insight

MPA chats to The Financier’s Group

56 Other life

What this baseball-loving adviser has learnt from the game

40 FEATURES

TECHNOLOGY

NextGen.Net looks ahead at new innovations in the broker space

MPAMAGAZINE.COM.AU 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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UPFRONT

EDITOR’S LETTER www.mpamagazine.com.au FEBRUARY 2020

United around the world

write this letter from a very cold England, where the first thing everyone is asking about is obviously the bushfires. It’s great to know that the concern is shared this far away, and one of the things I continue to mention is that, amid all the sadness and the horror, there have been some incredible displays of human care. Across the country there have been volunteers bringing supplies to fire-affected communities, people taking in animals, and others raising money in whatever way they can. Here at Key Media, a group of staff took part in a trail run, raising more than $4,000. In the mortgage and finance industry, broker groups and associations have formed a united front to raise funds in support of these communities and the firefighters who are risking their lives. I even know of some brokers who, as volunteer firefighters, have been in these areas helping to fight the fires, putting aside their businesses – and their own safety – to do their bit.

Broker groups and associations have formed a united front to raise funds in support of communities and firefighters You can read more about the bushfire efforts online as we continue to follow the updates and support the industry in its fundraising. Turning to this issue of MPA, we kicked off the year with a roundtable for the customer-owned banks. The Christmas season had clearly been a big one, with one representative turning up in a moon boot with a torn Achilles heel, and another being replaced due to a problem with his eye. Nevertheless, the conversation was brilliant, and as always everyone was really starting to get into the flow of things as time ran out. I have probably said this before, but my favourite thing about roundtables or group interviews is seeing how well everyone gets on across the brands. They laugh and joke among each other – particularly about each other’s injuries – and it just makes for a much nicer and more relaxed atmosphere as we discuss the industry.

EDITORIAL

SALES & MARKETING

Editor Rebecca Pike

National Sales Manager Claire Tan

Journalists Tom Goodwin, Abel Riototar Contributors Brian de Haaff, Molly Moseley, Carson Tate, Paul Walshe Production Editor Roslyn Meredith

ART & PRODUCTION Designer Cess Rodriguez Traffic Coordinator Kristine Jamir

Global Head of Communications Adrijana Monevska

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 Regional head office Level 10, 1–9 Chandos St, St Leonards, NSW 2065, Australia tel: +61 2 8437 4700 • fax: +61 2 9439 4599 www.keymedia.com Offices in Sydney, Auckland, Denver, London, Toronto, Manila, Singapore, Seoul

Mortgage Professional Australia is part of an international family of B2B publications and websites for the mortgage industry CANADIAN MORTGAGE PROFESSIONAL neil.sharma@kmimedia.ca T +1 416 644 8740

Rebecca Pike, editor, MPA 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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DON’T JUST TAKE OUR WORD FOR IT... I’ve been part of the mortgage broking industry for 20+ years I have been affiliated with a number of different aggregators, all with different software platforms, however I have found that Specialist Finance Group offers a superior technology platform with valuable integrations that benefit my broking business immensely. Throughout 2018 my goal was to grow The Loans Suite and expand the impact of my business beyond Penrith, NSW. We have clients far and wide and so we needed people and systems that could accommodate significant geographical spread whilst still offering an unparalleled service to all of our clients. SFGconnect ensures my business has the capacity to continue growing through its team functionality, advanced administrative and compliance checks, and automatic workflow processes. Additionally, the communication elements and added integrations (such as Bankstatements, MyConnect and MailChimp) within the system allow me the opportunity to provide every client of The Loans Suite with an exceptional experience throughout every loan application, and long after!

SPECIALIST FINANCE GROUP OFFERS A SUPERIOR TECHNOLOGY PLATFORM WITH VALUABLE INTEGRATIONS THAT BENEFIT MY BROKING BUSINESS IMMENSELY. Running a small business takes an enormous amount of time and effort so, I value the all of the support options offered by Specialist Finance Group. However, the advanced training provided by SFG’s dedicated technology support resource and access to the Live Chat team directly through my SFGconnect account results in my business experiencing very minimal downtime and the security of support that means I can focus my energy on other aspects of my business. As a mentor to brokers in my team and in other businesses, SFGconnect provides me one access point to all of the loan applications that require my review. This feature saves me an enormous amount of time and affords me the ability to offer a superior mentoring service required in the modern age of broking. With direct access to a mentee’s full loan application I can easily assist with providing valuable feedback and brainstorm with the broker to find the best possible outcome for the client. SFGconnect continues to evolve and improve, just as my business is expanding. I have experienced enormous benefit in my business when utilising comprehensive technological solutions that save my team time, improve internal processes and offer superior services to my clients including, faster loan approval times and superior post-settlement support. I will continue to encourage my team to improve their proficiency in software platforms such as SFGconnect and integrated solutions including Bankstatements, RP Data, etc.

Karlie Scharfenberg Managing Director

1300 303 382 specialistfinancegroup.com.au Australian Credit Licence No. 387025

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UPFRONT

STATISTICS DISCRETIONARY SPENDING REINED IN

Conﬁdence on the rise

The changes in house prices have had varying effects on respondents’ financial situations. While savings behaviour has seen an improvement for many, general financial confidence and their willingness to spend on eating out has been negatively impacted.

Research shows sentiment towards the property market is growing, but people are still cautious ME BANK’S Property Sentiment Report for the last quarter of 2019 shows that Aussies’ financial confidence is rising. Forty-two per cent of respondents felt positive about the market, up nine percentage points from the previous report. Forty-seven per cent expected prices to rise in the next 12 months. While the outlook was more positive across almost every capital, respondents in WA were less convinced. Only 25% expected prices to rise, 28% said they would fall, and 36% believed they would stay the same.

33%

Millennials, investors and those planning to buy in the next year were the most positive. Despite growing confidence, many are still worried about spending on discretionary items. ME general manager home loans Andrew Bartolo said, “Reduced concern about property values falling is likely connected to the increased sense of optimism about house prices. “Affordability is a much more complex issue than the price of houses, and this enduring concern highlights that much more needs to be done to address the issue.”

89%

58%

of first home buyers feel negative about the market

47%

believe housing affordability is a big issue in Australia

believe tighter credit policies will make it harder to refinance

believe house prices will rise this year Source: ME Quarterly Property Sentiment Report Q4 2019

NERVOUS FIRST HOME BUYERS

While investors are particularly confident about the property market, first home buyers are a little more apprehensive. Overall, how do you feel about the property market?

Positive

Neutral

Negative

INVESTORS MORE OPTIMISTIC

All buyer groups were consistent in thinking property prices would increase, but the biggest change in opinion was seen in the investor and owner-occupier groups. What do you think is likely to happen to the value of your property in the next 12 months?

First home buyers 38

Q3 27

Q4 30

Investors

Stay the same

Not sure

22 13

Investors

Q2 44

Q3 40

Q4 51

Owner-occupiers

Owner-occupiers 43

Q2 31

Q3 35

Q4 46 20%

40%

60%

80%

100%

Source: ME Quarterly Property Sentiment Report Q4

Down

First home buyers

Q2 27

27 14 12 20%

40%

60%

80%

100%

Source: ME Quarterly Property Sentiment Report Q4

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National NSW 04-05_Statistics_SUBBED.indd 4

83%

84%

VIC

88%

QLD

80%

75%

82%

TAS

77%

ACT

83%

77%

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Savings behaviour

EFFECT OF RISING HOUSE PRICES ON FINANCES What impact have recent property price movements in your area had on the following aspects of your financial situation? Negative

21%

20%

36% net positive 15% 38% net positive 17%

37% net positive 17%

Debt situation Q2

net negative 4% 27%

Positive

22% 20%

23%

26% net positive 4%

29% net positive 9%

Willingness to spend on discretionary items like entertainment or eating out Q2

net negative 6% 30%

24%

net negative 11% 32%

21%

net negative 3% 28%

25%

General financial confidence Q2

net negative 2% 30%

28%

net negative 5% 31%

26%

27%

33% net positive 6%

Sense of wealth net negative 1% 28%

net negative 4% 28%

Q3 22%

27% 24%

31% net positive 9% Source: ME Quarterly Property Sentiment Report Q4 2019

UPLIFT IN MORTGAGE APPLICATIONS

Growing confidence was reflected in the rise in mortgage applications in the September quarter (as reported by Equifax) – the first increase in nine consecutive quarters. Consumer credit applications – Indexed by type Personal loan

Application volume index

1.4 1.3

Credit card

1.2

Respondents in the NT were the only ones who thought there was not enough choice in the property market. Do you feel like there’s enough choice in the property market?

1.1

Mortgage

1.0

LACK OF CHOICE IN THE NT

0.9

Yes – 50%

0.8

No – 27%

Mar

Jun Sep Dec Mar

2015

Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar

2016

2017

2018

Jun Sep

2019

Source: Equifax Quarterly Consumer Credit Demand Index (Sept 2019)

Not sure – 23%

NSW

28 28

VIC QLD

16 16

WA SA

TAS

30 44 44

11 25

NT ACT

10%

9 0%

20%

30%

40%

50%

60%

70%

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80%

Source: ME Quarterly Property Sentiment Report Q4 2019

10/02/2020 3:02:23 PM

UPFRONT

HEAD TO HEAD

What are your views on the first home buyer scheme? With mixed reaction from industry groups about the new scheme, MPA asks brokers for their thoughts

Kirsty Dunphey

Xavier Quenon

Mortgage broker Up Loans, Tasmania

Mortgage broker and principal Go Mortgage, Queensland

“The implementation of the scheme, despite having the right intentions, feels rushed and clumsy. So many questions are unanswered, even when you go to the lenders themselves. Why roll out the scheme with just two major lenders in the first month? Why have a scheme that is designed to help first home buyers but has capacity limits, meaning even two weeks into the scheme many are unable to secure a spot? “My advice to my first home buyer clients has been to not rely on this government scheme at all due to capacity limits and a questionable pre-implementation and initial implementation period. If they qualify for it and are able to secure it, great. If not, we need to be in a position to buy without it.”

“The scheme is still in its very risky early stages of implementation, so ‘water under the bridge’ will be required to see how it rolls out and what impacts it has for all parties, namely first home buyers, banks and brokers. Providing it is managed properly it should eventuate as a positive initiative for those who manage to obtain an allocation. “One aspect of the implementation was disappointing – that is, the discrepancy between the government’s rhetoric, which was originally to favour smaller lenders, and the fact that, upon implementation, the ones to benefit the most were two of the big four banks, which got both an early start and more allocations. It was also disappointing that it was all delivered at the last minute with very little communication.”

Tristan Cleggett Mortgage broker Infocus Advisory, NSW

“The first home buyer scheme is an excellent initiative to assist first home buyers. There are around 110,000 entering the market every year, and while the scheme isn’t able to assist everyone, something is better than nothing. Saving a deposit is a bigger issue than affordability, particularly in Sydney; this allows a shortcut while not charging any mortgage insurance or a premium interest rate. “Bank of mum and dad and security guarantees are a larger contributor to the number of first home buyers each year; I believe it would be a positive move if this initiative focused on the applicants without access to that assistance. It is a big step in the right direction, and given CBA’s allocation was exhausted in the first week of January, there is a lot of demand.”

ASSOCIATION HEAD ADVISES CAUTION FBAA managing director Peter White says the First Home Loan Deposit Scheme has created an enormous amount of interest, but there are hurdles and limitations that brokers must be aware of before providing assistance to borrowers. “It is important to note that the scheme will not be available to everyone and is limited to 10,000 people per financial year, so brokers need to do some research before walking potential borrowers down this path,” he said. White noted that brokers should also be aware that the price cap varies according to postcode. “For example, in Sydney and Newcastle the maximum amount someone can borrow is $700k, whereas in many regional NSW centres it decreases to $450k,” he said.

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UPFRONT

NEWS ANALYSIS

High hopes for ‘restricted’ scheme While a few concerns have been raised about the government’s First Home Loan Deposit Scheme, commentators already expect it will provide a boost to the market THE FIRST Home Loan Deposit Scheme (FHLDS) received both heavy criticism and praise after it was announced by the federal government last year. Since coming into play on 1 January 2020, nothing much has changed in that respect. There are still those who think the scheme is seriously flawed, while others believe it will have a positive impact on the first home buyer market. The scheme provides a guarantee that allows eligible first home buyers on low and middle incomes to purchase a home with as little as a 5% deposit. One of the biggest criticisms has been that only 10,000 people would be able to receive help in each financial year. From 1 January, 3,000 potential first home buyers were registered, and the remaining 7,000 places were released on 1 February, with the full panel of 27 lenders available. Of those lenders, two are major banks, 20 are customer-owned banks and the rest are non-majors like Auswide, Bendigo Bank and Mortgageport. All the non-major lenders had an allocation of 5,000 loans between them. Commonwealth Bank and NAB were the only two major banks with the opportunity to offer the FHLDS, but within the first week of 2020 there were complaints about the banks’ allocation being exhausted. In a CoreLogic report shortly after the federal election last year, its former analyst,

Cameron Kusher, raised a concern about the number of places on offer. “Over the past 10 years there has been an average of 103,485 first home buyer finance commitments per annum. Given this, only around 10% of first home buyers will be able to access this scheme,” he said. He also pointed out that first home buyers could already buy a home without a 20% deposit – for instance if they took out lenders mortgage insurance – and borrowers would still need to go through all the usual credit checks, which meant that no one who couldn’t

tion from. Mitchell also commented on the limit of 10,000 first home buyers. “[The] new measure introduced by the federal government to improve housing affordability grants a group of first-time buyers the opportunity to get on the property ladder sooner, but getting a place in the scheme might be as unlikely as securing a winning lottery ticket,” she said. “While the scheme does what it says on the

“While the scheme does what it says on the box … the fact that it is available to such a small number of Australians is disappointing” Susan Mitchell, Mortgage Choice already take out a mortgage would benefit from the scheme.

Doubts raised around choice Mortgage Choice CEO Susan Mitchell said the brokerage had done a survey and found that 46% of first home buyers were unsure whether they were able to apply for the scheme, and 47% did not even know where to get informa-

box and allows some first-time buyers to enter the property market sooner without having to pay LMI, the fact that it is available to such a small number of Australians is disappointing.” While organisations like the Customer Owned Banking Association have said that access to 27 lenders under the scheme bolsters choice, some brokers have pointed out the limitations that actually reduce choice.

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VALUE OF NEW HOUSING LOANS BY BUYER TYPE – NOV 2019

Value of new loans

% change from previous month

% change year-on-year

Owneroccupiers

1.56%

9.97%

Investors

2.24%

-3.24%

First home buyers (owneroccupiers)

2.13%

19.71%

Total housing

1.75%

5.90%

Note: Seasonally adjusted figures. Figures exclude refinancing.

Source: ABS lending to households and businesses statistics for November 2019

Louisa Sanghera from Zippy Financial said the selection of lenders had not been transparent, and the use of some regional banks was of no help to many first home buyers who lived in Sydney or Melbourne. “Many of the lenders are also not available on mortgage brokers’ panels, even though brokers write about 65% of mortgages in Australia, so we have no access to them,” she said. “How can restricted access to all banks

in the FHLDS is a strong endorsement of the choice that is available to borrowers in the home loan market,” he said.

First home buyers filling market The scheme was designed to be a boost for the first home buyer market, which has already grown to make up almost 30% of all owneroccupiers in Australia. According to the ABS, the value of loans to first home buyers

“The strong demand for deposit bonds is increasing in the tough property market as lending conditions and loan approvals are now more difficult” Grant Bailey, Deposit Power be a good outcome for everyday Australians trying to get into the housing market? How has ASIC even approved this scheme?” But COBA CEO Michael Lawrence said the inclusion of 20 customer-owned banks showed the sector’s strong commitment to serving first home buyers and providing competition and choice. “The range of lenders chosen to participate

increased by 19.71% in the year to November 2019 – the highest level of new lending to this segment since October 2009. In line with this, lender Deposit Power has seen a higher uptake of its guarantee product by first home buyers since the federal election, mainly in regional areas. General manager Grant Bailey not only raised concerns about the scheme’s limit of 10,000 people but said he

was worried about the unintended consequences of a government intervention, particularly one that could prove “too popular”. “Our product works where the buyer doesn’t have the full deposit ready that the vendor needs to exchange but they will have it when it comes time to settle, and this is often the case with first home buyers,” Bailey added. “The strong demand for deposit bonds is increasing in the tough property market as lending conditions and loan approvals are now more difficult and complex in the wake of the Hayne Royal Commission.” Paul Marshall, CEO of RateCity, said first home buyers were taking the bull by the horns. “Three RBA rate cuts, a housing market that had lost some steam, and changes to serviceability increasing the borrowing capacity for some people – a perfect storm for first home buyers,” he said. “November saw the highest level of new borrowing on record since October 2009 – around the same time the government’s first home owner boost ended. “While we haven’t returned to the peak of first home buyer levels, we’re likely to see more buyers continue to surge into the market this year, particularly helped along by the First Home Loan Deposit Scheme.”

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UPFRONT

OPINION

GOT AN OPINION THAT COUNTS? Email rebecca.pike@keymedia.com

Preparing for the fallout from a disaster In the wake of the devastating bushfires, a spotlight has fallen on the impact natural disasters can have on people’s financial wellbeing, writes Paul Walshe THE AFTERMATH of a disaster, especially if you are not prepared, can be a recipe for short-term financial hardship and have longterm consequences that limit your access to finance in the future. If you have been affected, or could be, a few key steps will help protect your credit: • Be prepared – have a plan (who, what, when). • Contact your credit provider(s) and flag your hardship as soon as possible. • Restructure your financial repayments to be more manageable during this time. With the broad adoption of comprehensive credit reporting (CCR), a sudden interruption to regular income and personal cash flow due to a natural or personal disaster can drag your credit rating down. CCR requires that the repayment performance by individuals with credit facilities (eg credit cards, car loans and mortgages) is reported to credit bureaus and, as a result, arrears drag your score down. It’s not surprising that repayments are not possible or are deprioritised following what the financial hardship legislation describes as “the destruction of, or severe damage to, the home of the individual”, and this is why the legislation was implemented by the government, which credit providers must follow as part of their licensing conditions. Importantly, once you have been recognised as being in ‘financial hardship’, repayment information is not shared with the credit bureaus, so your score should be maintained until you come out of hardship and resume normal repayments. Note that utility providers do not report this repayment information, but they do have hardship processes people can access.

So, with our recent bushfires in mind, what can you do before and after to be disasterready, and how might lenders be able to help?

How to prepare financially • Try to maintain an emergency fund if you can, even if it’s a few hundred dollars. Saving takes time but will help insulate you from financial shocks. • Start today by completing a checklist of all your utility and credit providers and store this “in the cloud” (eg email it to your partner, parent or yourself ). Include the account reference number, contact details for each provider and typical due dates so you can identify if a bill has gone missing. • Nominate a trusted third party to have access to your accounts so in the event you are unable to manage your affairs personally they can call the providers and discuss the options available. Give your third party a copy of your checklist, remembering to update it whenever you change providers. • Arrange for online bills rather than paperbased ones in case your property is destroyed and you must relocate. • If it suits you, have direct debits in place for all bills to ensure they get paid, even if you miss receiving the bill. Using a credit card responsibly and having credit available on it will mean some bills will automatically be looked after.

What to do right after a disaster • Given that everyone’s circumstances are different, contact your creditors as soon as possible to inform them of the disaster and its impact on you. They will discuss options available to you for the time between the event and when you expect to be able to

return to a more normal situation, so you can resume your repayments in full or as agreed. • If needed, apply for disaster relief from the government and check what other government resources you may be entitled to. • Obtain a copy of your credit report. If your credit score is negatively impacted soon after the disaster, you can provide this copy as evidence that it was the disaster fallout and not previous financial mismanagement that damaged your credit score. • Prepare a post-disaster budget. It’s essential you conserve cash as best you can until your life stabilises.

Support from lenders/credit providers • In the event of a natural disaster, lenders can obtain a list of postcodes of affected areas from Australia Post. This enables them to search their customer database and proactively reach out to those potentially impacted. But it’s still extremely important that you contact your lenders/providers as soon as you’re able to. • Responsible lenders and credit providers should have defined hardship processes and procedures in place to work with you and help protect your credit status. As we’ve seen recently, natural disasters hit with little warning. Planning ahead not only positions you to recover but will help protect your financial wellbeing and credit score, preventing a short-term event from having long-term consequences. Paul Walshe is the CEO of Fair Go Finance, an online lender that provides credit for those who aren’t getting a fair deal.

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PEOPLE

BIG INTERVIEW

CAMPBELL SMYTH: IN PRIME POSITION Following the lender’s latest rollout of a new product set, MPA talks to Bluestone’s CEO about the evolution of the business

THE LAST seven years have seen some big changes for Bluestone. Since re-entering the mortgage space in 2013, the lender has split from the Bluestone Group and was purchased by Cerberus in 2018. It then made its way from specialist lending to near prime lending and now into prime. Overseeing Bluestone’s evolution has been CEO Campbell Smyth. With a background in investment management, having worked at a hedge fund and life company for a number of years, he joined Bluestone in 2011. The group was not writing mortgages at that time, so Smyth’s job involved acquiring performing and non-performing loan portfolios until he took over as CEO in 2014, which put him in a prime position to lead the business as it went through its takeover. Talking about that time, Smyth says he had to operate in a “neutral mode”, working with both the seller and potential buyer of the company to ensure they had all the information they needed. “That was a pretty big process,” he says. “It did take up a lot of a 12-month period when

your day job doesn’t stop, because you’ve got to keep your business growing and running. But then you also have to facilitate a sale program.” In addition to working with bidders, he says he also had to make sure his staff were looked after. In 2012 there were only around

The sale itself has also been a positive. Being backed by a group like Cerberus has meant that Bluestone can invest heavily in the business. Smyth gives the example of how much it’s been able to allocate to technology: of the 280 employees, 60 are

“As long as we continue to improve and we’re better today than we were yesterday, then we’re heading in the right direction” 40 employees in the APAC business, but over the years this has grown to around 280. During the sale to Cerberus, Smyth wanted to ensure there was certainty around opportunities for staff and that they were being continually updated. “When you have potential change like that it can be a little unnerving for some people, so we tried to reassure the team as much as possible, and as it’s turned out it’s been a very positive outcome,” he says.

focused on that space, something it would not have been able to do before. Bluestone also now has the opportunity to execute much larger-scale transactions and “throw its resources” at what it wants to do, such as its recent white label launch in New Zealand. The lender teamed up with NZ Financial Services Group and invested significantly in the product. Having worked hard to win the contract for the white label product, delivering a

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PROFILE Name: Campbell Smyth Company: Bluestone Title: CEO Years in the industry: 20 Career highlight: “I think when we transacted with Cerberus, that was the start of the highlight. Every day, as we do new things, and invest weeks and months in something to achieve an outcome, that is a highlight for me. Getting the transaction done was a great achievement in itself, and seeing how far we’ve come since then inspires me to push the business forward to even greater achievements.” Career challenge: “Here’s one that stuck with me: A long, long time ago when I worked with a fund, I made an incorrect announcement on the ASX. I rectified it, but I didn’t inform management and I didn’t have the delegation to be doing that.”

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11/02/2020 10:38:58 AM

PEOPLE

BIG INTERVIEW

BLUESTONE’S KEY MILESTONES

2011

2013

2018

Apr

Apr–Jul

2018

2019

Campbell Smyth joins Bluestone Group

Lender re-enters mortgage space

Bluestone acquired by Cerberus

Moves into near prime space

Applications and settlements double

Expands into prime lending

successful outcome was not only “satisfying” but achieved results that were beyond Smyth’s expectations. “It felt great for me personally – but it’s ultimately a team success. I think that’s the key to it,” he says. “The fact that we actually executed it well, engaged well and are seeing the results is the bit I find exciting. Even more than that, my excitement is about where we can go and where we can take that. Generally, those things are only restricted by your imagination and your ability to deliver on whatever you imagine.” Most recently, the lender rolled out its new prime offering and replaced its entire product suite with a streamlined offering of four products – prime, near prime, specialist, and Specialist+. Smyth says “binning” your old product set and replacing it with a new one is a daunting process. “You do everything you can to ensure that when the old products disappear and the new products go live, you continue to grow and you don’t restart the clock,” he adds. “There was a lot of work done in the months leading up to that launch to ensure as best we could that we were going to have the most successful uptake of the product – and as it turned out, we did. Without being complacent, I don’t find that overly surprising;

Feb

there’s generally a very strong correlation between how much effort and care you put into something and the probability of it succeeding.” Bluestone’s launch into the prime space took place in early November last year and resulted in the business seeing its biggest month of applications ever. “If you turn your mind back five years, we were thought of as a more specialist non-

Nov

As Bluestone continues to work with brokers, Smyth says that relationship has been an evolution. Bringing in new chief customer officer James Angus is the next stage in the non-bank’s journey in terms of how it engages with the third party channel. Smyth adds that feedback has often shown that working with Bluestone can feel “transactional” for brokers. This is something he wants to move away from, to focus instead on creating

“There’s a lot of brokers who Bluestone is now relevant to ... It’s about ensuring that that relevance is understood” conforming lender, and then we were near prime and now prime,” Smyth says. “It takes some time to get that message out to the market, and there’s a lot of brokers who Bluestone is now relevant to, when previously we may not have been as relevant. “It’s about ensuring that that relevance is understood, and for that reason there’s a more sustained and drawn-out growth period. We don’t expect to see a big spike and then drop off; we actually expect to see that as we get to more brokers and as more brokers understand what we do we’ll see continued increasing levels of flow.”

more genuine long-term relationships. “As long as we continue to improve and we’re better today than we were yesterday, then we’re heading in the right direction,” Smyth says. “One of the things which we’ve done well and are doing even better now is taking on board and being quite open and candid about the feedback that we get. When you chat to another CEO of a lending business, they probably wouldn’t tell you about what is relatively negative feedback, but for me that’s the best feedback, because it allows us to improve.”

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11/02/2020 10:40:18 AM

bankaust.com.au/ cleanmoney Bank Australia Limited ABN 21 087 651 607 AFSL/Australian Credit Licence Number 238431.

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11/02/2020 10:40:28 AM

SPECIAL REPORT

CUSTOMER-OWNED BANKS ROUNDTABLE

FIGHTING FOR THE CUSTOMER

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11/02/2020 10:25:28 AM

The customer owned banks saw a huge boost after the Hayne Royal Commission. One year on and their market share is growing as customers continue to see their value

LAST YEAR this feature’s headline declared that customer-owned banks were the industry’s “bestkept secret”, but as these banks have continued to see success over the past 12 months, the secret might be coming out. Although there was a slight dip in the early months of 2019, the mutual banks’ market share has grown to more than 3% of broker business since the royal commission began. The sector’s growth has corresponded to a drop in loans settled with the major banks, as well as regional banks aligned to the majors. On top of this, an independent report by KPMG has demonstrated that mutual banks, credit unions and building societies managed to grow their residential lending by 7.3% and customer deposits by 8.5% in 2019. The report noted that this was down to their increased investment in both people and technology to meet customers’ needs. Read more about these investments over the following pages. In January, MPA held a roundtable discussion with four customer-owned banks: Heritage Bank, Beyond Bank, Teachers Mutual Bank Limited and Bank Australia. We were also joined by two brokers who use mutual banks for their clients’ business: Christopher Lee and David Merison. As brokers such as these struggle with the greater scrutiny that has following the royal commission, customer-owned banks are stepping up to the plate, providing a service that highlights the value of human interaction. With questions around living expenses forcing a heavier workload on brokers, this personal touch can be vital. During the roundtable, which took place at Otto restaurant in Sydney, the group discussed the unique value proposition that customer-owned banks offer, particularly with the lack of shareholders they have to cater for. While other banks may have to worry about driving a profit, customerowned banks work for their customers. Thank you to the representatives of the customer-owned banks who took part in MPA MPA’s ’s roundtable. It is always great to speak to those within these organisations about how they are working with brokers. Thank you also to the brokers who took time out of their day to take part in the discussion. Read more about what they all had to say in the pages ahead.

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11/02/2020 10:26:08 AM

SPECIAL REPORT

CUSTOMER-OWNED BANKS ROUNDTABLE

THE PANELLISTS BANKERS

Fernando Lemos Bank Australia

Darren McLeod Beyond Bank

Mark Middleton Teachers Mutual Bank Limited

Stewart Saunders Heritage Bank

BROKERS

A recent KPMG report showed that customer-owned banks grew their residential lending in the past year. Why do you think they did?

Christopher Lee MFAA head credit adviser, Finsure Finance and Insurance

David Merison Vault Plus Mortgage and Finance Consultancy

The customer-owned banking sector has continued to grow over recent years, particularly as borrowers and brokers look for alternatives to the major and second-tier banks. Released in November, the KPMG Mutuals Industry Review 2019 found that mutual banks, credit unions and building societies had grown their residential lending by 7.3% in the year previously. Taking the lead in answering this first question, Stewart Saunders, head of broker distribution at Heritage Bank, said the royal commission had been a key driver of the increase the mutuals have seen as customers look elsewhere.

“The value proposition that mutual banks provide is getting some more attention,” he said. “We’ve known for a long time that the customer satisfaction that members get through mutual organisations is very high compared to the major banks. I think we’ve struggled to convert that into member growth, but more recently, with it being so front of mind with customers, it’s definitely starting to grow.” Growth in the sector is giving the mutual banks their “time to shine”, said Beyond Bank head of third party Darren McLeod, adding that they had worked hard over the last two years on selling their proposition. Referring to the previous year’s roundtable, when the catchphrase of the day was that the customer-owned banking sector was the industry’s “best-kept secret”, McLeod said,

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SHARE OF BROKER-ORIGINATED LENDING SETTLED WITH EACH LENDER SEGMENT 1.4% 2.2% 5.9% 4.9% 5.9% 6.7% 16.6%

1.8% 2.4% 5.1% 5.9% 4.8%

2.2%

3.1%

3.0%

3.2%

12.7%

14.7%

5.7% 5.5% 7.1% 6.1% 6.7%

8.0% 5.7% 7.2% 6.1% 7.5%

9.4%

10.2%

5.6% 4.0% 7.4% 4.9% 5.7%

13.0%

8.4% 6.7% 9.2%

14.2%

6.3% 11.8%

56.3%

57.0%

55.6%

53.0%

48.3%

45.0%

Jan-Mar 2014

Jan-Mar 2015

Jan-Mar 2016

Jan-Mar 2017

Jan-Mar 2018

Jan-Mar 2019

Credit unions, building societies and mutuals Non-bank lenders Any other type of lender

White label lenders International banks (eg ING Direct, Citi, etc.) Independent regional banks (Suncorp, Bendigo)

Regional banks owned by or aligned to major banks (ie Bankwest, St. George) Major banks (ANZ, CBA, NAB, Westpac) Source: MFAA Industry Intelligence Service Report 8th edition

“I think that secret is finally getting out.” “I don’t think we’re doing anything different,” he added. “We’re doing what we’ve always done, but there’s more customer uptake because the market’s in a place where people are now looking, and they’re willing to try it.” Agreeing that the royal commission had had an effect on consumers heading to the mutual banks, Mark Middleton, head of third party at Teachers Mutual, said there was a growing groundswell. Not only were borrowers looking for alternative options but aggregators were adding more choice to their panels, he said. Offering a different perspective, Middleton said consumers were becoming more aware of responsible lending and social responsibilities and asking about things like climate change. Teachers Mutual is not only carbon neutral

but gives back around 6.8% of its net profits to community grants and other projects. “It’s particularly topical right now, with the bushfires happening around the country, that people will start looking for who is

recognition the sector was receiving, as reflected in its high NPS scores. “From all the mutuals around the table here, clearly when customers are being recommended by brokers to come to us,

“The growth is definitely in the broker channel and the work all of us have been doing in the business” Darren McLeod, Beyond Bank doing things to make a difference, not just for this generation but future generations,” Middleton said. “I think we’ve been actually ahead of the curve; no one’s been really aware of it, but the last 12 months it’s become more prevalent.” Middleton also talked about the wider

they’re voting with their feet,” he said. McLeod agreed that a lot of the growth was coming out of the third party space. “We’ve all been working hard in the broker space over the last couple of years as more brokers use customer-owned banks,” he said. “I think the growth is definitely in the broker

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11/02/2020 10:26:38 AM

SPECIAL REPORT

CUSTOMER-OWNED BANKS ROUNDTABLE who came straight out of the banks and were simply agents for those lenders. “We’ve got to hold ourselves open and come up with some innovative solutions, and that means introducing some lenders they wouldn’t always think of,” he said. Finsure Finance and Insurance broker Christopher Lee said his primary objective was to put the largest amount of money in his client’s pocket rather than the bank’s pocket, and the mutuals offered a cheaper alternative, as well as a more diverse product range. Not just that but Lee simply enjoys dealing with the mutuals more. “They actually listen to you and there’s genuine, open conversation,” he said. “I’m there to work for my clients, and a lot of my clients don’t have a straightforward profile, but the mutual banks are always willing to listen and to see how they can potentially make the deal work. “And you don’t just feel like a number; I know a lot of the staff at the mutual banks, and that gives me the confidence to pass it on to the clients.” channel and the work all of us have been doing in the business. The growth we’re talking about is definitely coming from brokers.” Brokers have also been an important factor for Bank Australia. Senior relationship manager Fernando Lemos said the bank had been bolstering its support around the third party distribution space. He added that it was not only about diversification of products but also diversification of lenders, and this helped brokers cater for a wider client base. “I think brokers are really starting to become aware of what we’re about and what we stand for,” Lemos said. “There’s a marketing edge as well: they can go out there and promote themselves. They’re not just a line to a particular organisation; they can look after certain types of clients.” Agreeing, McLeod added that the extra regulation, such as the caps on interest-only lending, had also had an effect on the sector. “We all had to slow down for the caps,” he

said. “But when it opened up, the brokers who used four lenders were now using a lot more, so it really gave us a chance because we’re in that larger group. So it’s really opened up the market, because it was so confusing in terms of who was doing what –

How are you keeping up with players like fintechs in terms of technology and innovation? Technology has been crucial for a while, but these banks fully understand that it doesn’t stop where it is. Everyone is continuing to

“A lot of my clients don’t have a straightforward profile, but the mutual banks are always willing to listen” Christopher Lee, Finsure Finance and Insurance who’s doing construction, who’s doing interest-only, who’s doing investment – so it’s opened up the market and it gives us a shot at getting the business.” One of two brokers joining the roundtable, David Merison from Vault Plus Mortgage and Finance Consultancy said the demographic of people looking to borrow money wanted choice, rather than relying on those

innovate to make the path faster and simpler for both brokers and customers. However, Saunders cautioned that this was not the most important factor for the mutuals. While he said the customer-owned banks were “fairly on par” with the rest of the lending space, they could offer a much better customer experience than the mobile apps and internet banking.

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11/02/2020 10:33:38 AM

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SPECIAL REPORT

CUSTOMER-OWNED BANKS ROUNDTABLE “Yes, fintechs are looking at experience, but a lot of customers are looking for more than just the fastest decision, the cheapest loan; they’re looking at what we’re doing in corporate and social responsibility and how we engage with communities,” he said. “There’s a lot more that we stand for than just our technology. While we’ve all got a focus on it, we’ve all got a focus on a number of areas as well.” Although that may be the case, McLeod said Beyond Bank had invested in its apps and technology to ensure customers could expect the same experience at a mutual than they would anywhere else. “You don’t want new customers to say, I used to do that with another bank, I can’t do that with Beyond, so we invest a lot of time to make sure our internet banking is right up there,” he said. “I think it’s a combination of having that technology and having that people side. If you get that mix right, if you’re using the technology to get the deals, you can still speak to someone to walk through the deal; it’s about getting that right mix together.” The mutuals know the major banks have more power to drive their technology, but Middleton said they could still be fast followers and were already providing internet banking, mobile apps and all the tools NextGen.Net offered to allow for easier loan processing.

doing it – they wanted to fax,” he said. “They’d fax in reams of paper, and moving from that to a monoline lodgement was a big thing, so it’ll be interesting to see the evolution and how brokers respond to that.” Lemos agreed, saying some brokers loved embracing new technology, while others were

“The people that work for our businesses are working for a bigger purpose. That’s why you see such high customer satisfaction, because our people really care” Stewart Saunders, Heritage Bank He added that there were two different areas of technology to focus on: for the customer’s benefit, and for the broker’s. When it came to introducing new systems, however, there could be resistance, and this had always been the case, Middleton said. “It wasn’t that long ago that electronic submission came through. Brokers resisted

not interested in using it. “They want the ability to say, I want to pick up the phone, rather than plugging it into a system that’s going to position my deal, so it’s a real fine balancing act,” he said. “Electronic lodgement sounds great in theory. I think for your vanilla deals, it’s perfect. But what about the rest? It’s

important to have a human element behind it. This comes back to why we’re seeing an increase in volumes – because they can pick up the phone and speak to any one of us, any of our support staff, any of our credit team.” Saunders said this personal experience was so good because of the values of the people who worked for the company and their attitudes towards their customers. “If we look at why mutuals are exceptional in that personal interaction, it is the people that work for our businesses. The people that work for our businesses are working for a bigger purpose,” Saunders said. “That’s why you see such high customer satisfaction numbers, because our people actually really care about the customers.” Merison said that while it was important for brokers to have those human interactions for deals that were not as simple as vanilla loans, the use of technology was inevitable. “We just need to embrace it because it’s going to happen, so we can’t just put our head in the sand and try to hide from it,” he said.

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SPECIAL REPORT

CUSTOMER-OWNED BANKS ROUNDTABLE

How have non-major players, like the customer-owned banks, been affected by regulatory changes? With the royal commission and changes from APRA and ASIC, brokers have had to adjust to a more difficult lending landscape as the banks have shifted their policies in tune with regulation. But while it seems to be reported that the majors are tightening their policies more than other banks, Middleton said he had not seen a lot of evidence that anything had changed for them; in fact, the mutuals had been treated more harshly than the majors. “I don’t think anything’s really changed for the majors out there about what they can and can’t do,” he explained. “From an APRA and ASIC perspective, we’re just as impacted; we get no favours. We are always working to ensure we deliver to the regulator’s expectations. Regulatory changes such as responsible lending have had an impact on our practices, but the guidance provided by ASIC will help us review our stance on applications from clients.” There was a murmur of agreement around the table, and Saunders added that the biggest frustration was that all the changes the

mutuals had been affected by were caused by the behaviour of the major banks. The customer-owned banks were not called up by the royal commission and none of the findings of the hearings related to them. Saunders said this came down to the way the mutuals were run for their customers, rather than to make profit for shareholders. “The for-profit organisations, they’ve got a fundamental mismatch between whether they are driving value for customers or for shareholders,” Saunders said. “It was found that they were driving profits for their shareholders, so we’ve had to bear that brunt, as Mark was saying, and be subject to the same regulatory scrutiny and changes to practices, but on much smaller budgets. It’s proportionately greater change for us to have to deal with.”

While the royal commission was first on everybody’s lips, McLeod raised the issue of ASIC’s RG 209, which provides updated guidance on responsible lending obligations. While the guidelines kept to ASIC’s principlesbased approach, one new recommendation included brokers introducing a clear written copy of their assessment and decision into their current process. McLeod believes this legislation could be one of the biggest things to happen to the broker industry in the next 12 months. All lenders are digesting the recent update that came out in December and are now working out systems and policies to meet the guidelines and remain competitive. “What we’ll do is make sure we’re doing the right thing by regulators and the customer,” he said.

“Your credit assessment team and policies have been consistent all the way along, which gives me confidence and makes my business look good” David Merison, Vault Plus Mortgage and Finance Consultancy

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11/02/2020 12:31:16 PM

LOAN PORTFOLIO GROWTH (2015-2019) 12% 10% 8%

7.0%

6% 3.8%

4% 2%

1.7%

0% 2015

2016

All ADIs

2017

Major banks

2018

2019

Mutual banks Source: KPMG Mutuals Industry Review 2019

From the broker’s point of view, there have been increased changes and difficulties with policies. But Merison said that at least with the mutuals there was consistency. Addressing the group, he said, “Your credit assessment teams and policies have been consistent all the way along, which gives me confidence and makes my business

to introduce a best interests duty and replace broker commissions with a fee-for-service. The industry banded together at the time, fighting for its commission payments to ensure adequate competition within the industry but also fair opportunity for all. Merison believes that the current model is “exemplary”, making sure that “all classes

“From an APRA and ASIC perspective, we’re just as impacted; we get no favours. We are always working to ensure we deliver to the regulator’s expectations” Mark Middleton, Teachers Mutual Bank look good – while with the major banks, they’re jumping around left, right and centre.”

Post-royal commission, do you think further reforms are needed in the broking industry? Along with the royal commission final report came the recommendations, such as

of society can go to a mortgage broker and get the same level of help”. The fee-for-service would mean that those who were less well off would be less able to receive help to get into a home. “Where there’s enough profit in all of the lenders’ transactions to pay an upfront and whatever the commission might look like going forward – so there’s no out-of-pocket

expenses for the client – it just allows a level playing field for all classes of people, whether they have gone through a divorce or they don’t know a hell of a lot but they still get the same level of advice,” he said. The Combined Industry Forum has played a particularly important role in advocating for mortgage brokers. McLeod praised the group for the good job it had done in the fight for trail commission. “The CIF is a great example of the industry coming together. I think the next two parts obviously are the best interests duty and working together to work that through; and then the commission piece – what’s going to change in terms of trail and upfronts and that sort of stuff,” he said. “We’ve just got to continue to do that selfregulation bit and keep on top of things so we don’t get stuck when the regulation comes out.” Around the table, self-regulation was a common theme. Bank Australia’s Lemos said reforms in any industry should be ongoing, whether it’s the finance industry, the car industry or the real estate industry.

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SPECIAL REPORT

CUSTOMER-OWNED BANKS ROUNDTABLE

“We as an industry should self-regulate ourselves so we get to a point where we get the best outcomes for the consumer that we possibly can,” Lemos said. “Now I don’t know what that means over time, but we need to be doing this ourselves, not having someone else telling us, saying this is what you need to implement as of tomorrow.” From a broker’s point of view, Lee said that while there were certain proposals he disagreed with, he saw regulation as a positive thing. But he added that changes to commission did not make any sense to him, and he would not understand what to charge a customer if a fee-for-service were introduced. Throwing the ball back at the regulators, Lee said, “They need to be educated as well, the people who are conducting these proposals or reforms. They need to be listening to both the banks and the brokers, because there were a lot of points in the royal commission where they just weren’t listening. I’m definitely for always being held accountable and ongoing monitoring, as long as it’s done the right way.”

Brokers, how have you seen your workloads change over the last year? Unsurprisingly, the first thing Lee mentioned was the new vigilance around living expenses, adding that it was not just brokers who were affected by this but the credit assessors, BDMs and banks as well. Brokers have been experiencing wider scrutiny of borrowers’ living expenses, particularly since the royal commission when the banks were called out for relying on the Household Expenditure Measure. Lee said he had always been educated around responsible lending and having thorough conversations with his customers, so not too much had changed for him, but he was finding that there were a lot of additional forms, on top of the fact that banks’ policies and procedures varied. “In that sense you don’t know what you

need to be prepared for until that customer has made their final decision on who they want to go with,” he said. With the increased scrutiny, Lee is fielding questions from the banks even when he explains his clients’ situations, and in spite of the fact that a number of these clients are good with their money and spend less than the banks generally expect. He has even seen some banks go a little

further: “I was exposed to a lender recently that was even Googling descriptions on bank statements,” he said. “That’s something I confess I didn’t do.” Saunders asked Lee if he had noticed an increase in the level of detail expected by all lenders, outside of their minimum document requirements, and Lee said he had. “Sometimes I joke that it’s almost better to over-declare your living expenses to try to

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TOP 10 MUTUAL BANKS BY TOTAL ASSETS, 2019 12% 

CUA

$17.44bn

Newcastle Permanent

$10.83bn

Heritage Bank

$10.09bn

People’s Choice

$8.81bn

Teachers Mutual

$8.04bn

Greater Bank

$7.16bn

Bank Australia

$6.33bn

12% 

Beyond Bank

$6.19bn

6% 

IMB

$6.08bn

P&N

$4.27bn

1%  6% 5%  14%  7%

3%  3% 

Source: KPMG Mutuals Industry Review 2019

“Electronic lodgement sounds great in theory. I think for your vanilla deals, it’s perfect. But what about the rest? It’s important to have a human element behind it” Fernando Lemos, Bank Australia get your loan across the line quicker,” he said. Looking outside Australia, McLeod said he had been to America on a recent study tour and visited a brokerage to find out about its credit processes. When he asked where the living expenses were for their borrowers, they wanted to know why they should need those. “They’ve got so much evidence to prove that people, when they buy their home,

change their spending habits,” he explained. “So they’re relying on years and years of data which proves that people get a home loan, they used to do something and now they don’t. They don’t go out; they want to pay their loan.” Turning again to the workload of brokers, Merison said he had some sympathy for credit assessors who had regulators looking over their shoulders, and he was choosing to

embrace the new way of doing things. “We’ve all got some more work to do. I’m not whinging; just like technology we need to embrace it,” he said. “So that’s OK. I decided to embrace it some time ago. But I kind of went beyond that in my business. I realised that not only do I need to ask for more things but I need to ask better questions, more investigative questions.”

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11/02/2020 12:31:52 PM

FEATURES

REFINANCING

Never a better time to shop around With rates dropping, refinancers are ready to shop around for a better home loan, but itâ&#x20AC;&#x2122;s not all about interest rates. Brokers have a unique opportunity to help these borrowers find the best product to suit their needs â&#x20AC;&#x201C; and MPA asks four industry leaders what they need to keep in mind

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With banks dropping rates, are you seeing more people refinancing? The Reserve Bank of Australia has dropped rates three times in the past year, meaning banks – which had been raising interest rates previously – began to cut back their rates. As this continues, borrowers are being encouraged to take a look at their current home loans to see if they can get a better rate elsewhere. Sarah Willsallen, NSW/ACT state general manager in the mortgage broker distribution team at Westpac, says that with the historic cash rate lows there is strong competition in the market to attract and retain customers. “We are certainly seeing an increase in activity at the moment, for both refinances but also for new purchases as the property market improves,” she adds.

HOMEOWNERS’ CONCERN OVER REFINANCING ‘I’m worried tighter credit policies will mean it’s more difficult to refinance my loan’

32%

net agree 36%

42%

Q3 2019

58% net agree 16%

42%

Q4 2019

58% net agree 16%

47%

Q1 2019

53% net agree 6% Source: ME Bank Quarterly Property Sentiment Report Q1 2020

working on each individual application so we can fully understand the client’s circumstances and objectives and how we can help.” It is not just the lower interest rates that have fuelled home loan refinance activity, says Bluestone’s chief customer officer,

“There is an excellent opportunity for brokers to help customers decide whether refinancing is the best option for their circumstances” Aaron Milburn, Pepper Money Non-bank Pepper Money is also seeing an increase in borrowers looking for better deals. General manager for mortgages and commercial lending Aaron Milburn says there is a huge opportunity for people who want to not only review their rates but also find solutions that are more flexible in order to achieve their goals. This is where lenders like Pepper can shine. “We are seeing an increasing number of people seeking loans from lenders willing to take the time to get to know the client and offer solutions that meet their unique situation,” he says. “At Pepper Money, we specialise in

68%

Q2 2019

James Angus. The market has also seen interest-only loans expiring and changes to serviceability affecting existing home loans. “Home loan customers expect more from their lenders,” Angus says. “Those lenders that can’t offer a competitive rate to their existing customers will soon find themselves on the losing end of the refinance as the act of refinancing becomes a more acceptable means of securing a better deal – so much so that the RBA has taken the bold step of urging home loan customers to shop around to ensure they are getting the best deal.” Mortgage insurance provider Genworth has seen refinancing volumes pick up over

the last 12 months, following a drop in the past decade. Acting CEO Duncan West said this was potentially due to borrowers searching for the best rate they could get. Lenders mortgage insurance can help refinancers just as it can help first home buyers, when their loan-to-value ratio is above 80%. “Brokers play an important role in educating their borrowers on LMI,” he said. “On refinancing a loan, it’s important for the broker to assist the borrower to work out how much they want to borrow and whether doing so makes financial sense given the additional costs involved. “A mortgage broker can save borrowers time, effort and stress, given their access to hundreds of home loan product options with a wide range of lenders and credit providers across Australia. Brokers can show at a glance what rates and fees apply to the loan type you are interested in.”

Should people be refinancing more often? While borrowers are being advised to shop around for better deals on their home loans, some people are urging caution. Grabbing a lower rate now could mean a greater struggle in the future if and when rates begin to rise. But Willsallen says this is why it is

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FEATURES

REFINANCING

GROWTH IN REFINANCES Value of new home loans

% change from previous month

% change year-on-year

All refinanced home loans

7.71%

5.71%

Refinanced owner-occupier loans

8.38%

4.55%

Note: Seasonally adjusted figures.

Source: ABS lending to households and businesses, August 2019, released 10 October 2019

important that brokers reach out to their clients, so they can help them understand the best options for their situation. With borrowers’ circumstances changing so much over time, she believes there should be a regular review cycle in place to ensure their financial arrangements continue to meet their needs. “This is about more than just rate and includes the features and benefits of their home loan arrangements,” Willsallen says. “They might move to a new stage in their career and find that they would benefit from an offset account; they might be planning a family and prefer the certainty of fixed repayments; or they may want to review the competitiveness of their interest rate. “Refinancing is one option available to customers, but there are some complex things to consider, which is why customers benefit from the advice of an experienced expert like their mortgage broker.” Angus agrees that borrowers should be reviewing their loans regularly alongside their brokers to look at whether their existing loans still serve their purpose as well as they can. While the messaging right now is that the low interest rates make it a good time to refinance, he says even those

already on a competitive rate could benefit. “There are many reasons borrowers may choose to refinance their loans, not all of which are rate-driven,” he says. “We see many borrowers refinance their loans to cash out equity for other life goals or consolidate unsecured debt. Other reasons to refinance may include a change in circumstances that means customers would like to access different loan features, like redraw accounts, a line of credit, or interest-only terms.” Echoing some of Willsallen’s points, Milburn agrees that it is not just about refinancing for the best interest rates, adding that Pepper provides a technological tool to

“if you’re not talking to your clients, then someone else is”. “In real life, people’s circumstances change,” he adds. “It is important that brokers are in regular contact with their clients to ensure that they are keeping up with any life events and how they might impact their financing needs.” This comes with a warning to brokers, though, as he urges them to be conscious of the environment the industry is operating in. “Customers are exposed to a large amount of messaging over multiple mediums – be it through Facebook, Google or TV,” Milburn says. “People look to brokers to help

“A mortgage broker can save borrowers time, effort and stress, given their access to hundreds of home loan product options” Duncan West, Genworth help brokers find the right product. Pepper Product Selector allows brokers to identify a specific Pepper Money home loan product and its interest rate and fees for clients in less than two minutes. “With rates and products continuously changing, there is an excellent opportunity for brokers to help customers decide whether refinancing is the best option for their circumstances,” he says. “It is not always about the best rate – it is about understanding what is important to the client, what their objectives are, and finding the right lender that meets those needs.”

How often should brokers be reaching out to past clients to look at their refinancing options? With lenders recommending that borrowers continually revise their home loans, brokers need to be on hand as their ‘trusted advisers’. Milburn says this is important because

them make sense of that information and understand how it might apply to them.” Brokers should be working with their borrowers ahead of any refinancing to better understand their credit position and potentially reduce any debts if that is needed, says West. “Brokers can assist borrowers to save money, even with a loan-to-value ratio of more than 80%, where LMI may give them the opportunity to refinance on improved mortgage terms. Genworth proudly works with lenders to help Australians secure their home loans when they have less than a 20% deposit, sooner than they could otherwise and supporting their financial security.” Angus says the timing for a refinance is “highly personal”, as it depends on the individual customer’s goals as well as circumstances such as market movements. Brokers should understand their customers’ short- and medium-term goals so they know

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FEATURES

REFINANCING

when to check in with them and look at their financial needs. “Generally speaking, it’s a good idea for brokers to conduct an annual rate review with their customers, which is also a great time to check in on evolving circumstances and priorities that may make a refinance appropriate,” he adds. The yearly review is not only appropriate for refinances, which come with additional costs and inconvenience for the customer, but Willsallen says it can enable brokers to revise their customers’ rates or products with the current lender. And this is where the importance of maintaining the brokercustomer relationship comes in. “We consistently get feedback from customers that one of the things they love about their broker is the ongoing relationship they have with them,” Willsallen says.

Are there any risks in refinancing at the moment, for example where borrowers who were considered prime at the time of their mortgage might no longer be? With the banks changing their lending policies over the last two years, many borrowers who were once prime customers now find they are less so. This is not just due to the lenders’ changing appetites, because a borrower’s circumstances can also change at any time, and this can have a serious impact on their ability to borrow. Willsallen says things like career moves, new businesses and higher living expenses can all have an effect, but there are other factors to be taken into consideration, such as technology and data sharing. “Comprehensive credit reporting is also something for customers and brokers to be aware of,” she says. “This provides for greater transparency to a lender of a customer’s current liabilities and their repayment conduct in relation to their eligible consumer credit products. This may mean that late

“Refinancing is one option available to customers, but there are some complex things to consider, which is why customers benefit from the advice of an experienced expert” Sarah Willsallen, Westpac repayments, which can happen from time to time, may be visible to the lender and may impact how the applicant is viewed.” To alleviate some of the challenges brokers may face, Westpac has made a number of changes to what it considers when it assesses a loan, such as the treatment of expenses for investment properties, annualisation of casual income and notional rent. Coupled with the removal of the floor rate, this may mean customers have more opportunities to refinance with Westpac, Willsallen says. This changing landscape provides a great

opportunity for brokers who can navigate through the challenges for their customers. At Pepper Money, the lender uses a cascading credit assessment process to identify the product that best suits a customer’s individual circumstances and needs, Milburn explains. Brokers only need to submit one application to access a broad range of products and policies. “There are a number of factors that impact a customer’s available loan options, which is why a broker’s role in understanding their client’s circumstances, needs and objectives when they seek advice about refinancing is so

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FEATURES

REFINANCING

imperative,” he says. “They are able to look at the whole picture and suggest an appropriate course of action based on those needs and objectives, particularly if their financial situation has changed.”

Do you think rates will continue to drop? What should borrowers prepare for? After three rate cuts in 2019, there has been wide speculation as to how the RBA will move in 2020. Angus says it is “almost a certainty” that rates will continue to fall, thanks to worsening economic conditions and the recent bushfires. But he warns that borrowers should not expect the banks to pass on rate cuts to borrowers, as this is increasingly difficult due to a growing proportion of bank deposits – which are already paying out an interest rate at or close to zero – being used

current home loan: their balance, the interest rate and all benefits of the loan. He adds that borrowers should also request their credit report, obtain a current property value, and carry out some market research on the type of mortgage they need and why, as well as working out the funding they need. “It’s important to work out how much you want to borrow for your refinance and whether doing this will make financial sense for you after the costs involved,” he says. “You will need to borrow enough to pay off your existing loan. If you’re raising cash for renovations or consolidating other debt into your home loan, add this to your total. You may also like to add any fees or charges covered to the loan amount as well. Add up the amounts to reach a total loan figure that you are likely to require. Then divide this number by the approximate value of your house. This will give you an LVR figure.”

“There’s never been a better time for borrowers to shop around for a better home loan, and mortgage brokers can greatly assist” James Angus, Bluestone to fund loans, including home loans. “Therefore, any additional rate cuts will not necessarily reduce big banks’ funding costs, and the closer we get to an RBA cash rate of zero, the bigger the squeeze will be on banks’ net interest margins,” he says. “Borrowers shouldn’t assume that their bank will pass on any future cash rate cuts. There’s never been a better time for borrowers to shop around for a better home loan, and mortgage brokers can greatly assist existing home loan borrowers to hunt out a better deal.” Genworth’s West says there are several factors borrowers need to be aware of when refinancing, including understanding their

How might the best interests duty affect brokers who are helping their customers refinance? The best interests duty, which is set to come into effect on 1 July 2020, will require brokers to act in the best interests of the customer above all else. This means that brokers will need to prove that a refinance is in the customer’s best interests and not a matter of churning. But Milburn says those brokers who are already taking the time to understand their customers’ circumstances and objectives may not have to change their processes. “We see best interests duty as a real positive by lifting the image and profile of

REFINANCERS’ GOALS According to Aussie Home Loans research:

• 3 in 5 Australians who are looking to refinance their home loans intend to buy an investment property in the next four years • 47% of refinancers are planning to renovate their home in the next four years • >9 in 10 refinancers think it’s important to have someone who can simplify the complexity (95%) or consistently help them throughout the process (96%) • 96% of refinancers say having access to home loan experts is important to them the broker industry and ultimately delivering what the vast majority of brokers already do – helping customers in the right way, the first time,” he says. Willsallen agrees that brokers should not need to change too much, but he says they will need to assess how they meet the duty. “As self-employed business owners, brokers need to ensure they are adding value to their customers, including when they are discussing a refinance,” she says. As well as having the appropriate conversations with borrowers about their needs and potential changes to circumstances, Willsallen says there are other factors to think about, in terms of whether or not refinancing is in the customer’s best interests. “There is also the consideration that, if each refinance is a new 30-year loan term for the customer, whilst this may mean that a customer’s monthly repayments reduce, it prolongs the total loan life, meaning that the customer may end up paying more interest overall,” she says.

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BROKER EDUCATION

New paths to better broker education Ongoing education is essential for any broker who’s looking to excel – or to be frank, even keep pace – in an ever-shifting industry. But is the face of modern broker education changing? MPA hears what two thought leaders in the field have to say

IT SEEMS almost cliché to point out that broker education is becoming more of a necessity than ever before. After all, has there ever really been a time in the history of mortgage broking when ongoing education was unnecessary? Perhaps back in the 12th century when the Knights Templar were laying the early foundations of today’s banking system, but even then one must assume that they updated their policies and products from time to time. Nonetheless, the fact remains: ongoing broker education is now more necessary than it has ever been. But how can it best be approached? For Blake Buchanan, aggregation manager at Specialist Finance Group, the ever-changing landscape of regulatory environments, products, pricing and more means that every broker needs to keep on top of things, not only to remain compliant with industry changes but also to ensure they are experts in their craft. “They say the children are our future, and it is no different in our industry,” says

Buchanan. “New-to-industry brokers will sustain this channel, so it’s vital that we get the fundamentals right from the outset. Then we can continually build and improve upon those foundations to ensure exceptional consumer outcomes.” For Ian Rakhit, head of third party at Bankwest, the main reason why broker education is such a focus is twofold. The

to service and support customers. “A broker’s role is a complex one – providing a range of financial products to customers from a multitude of lenders, all of whom have different policies and frequently changing products,” says Rakhit. “Banks must do all they can to support brokers by helping keep them up to date; likewise, brokers must play their part too.”

“Banks must do all they can to support brokers by helping keep them up to date; likewise, brokers must play their part too” Ian Rakhit, Bankwest expectations of customers and prospective homeowners are constantly evolving, so brokers must keep pace with them. Additionally, the needs of brokers themselves are also changing. Lenders must ensure they’re doing their part to help meet these needs so they’re in the best possible position

Building better knowledge bases So, what are the best ways to ensure that brokers are receiving the tools they need to stay up to date? After all, education is not a one-size-fits-all proposition – and any attempts to forge it into one are likely to run into difficulty very quickly.

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“When dealing with people of all different backgrounds, locations and client bases, lenders need to ensure they have multiple vehicles of delivery,” says Buchanan. “That includes – but isn’t limited to – face-toface training, personal development days, webinars, online learning centres, peer-topeer assistance programs and more.” Buchanan also notes that educational program design isn’t just about what’s currently appropriate or required – it’s also about being able to read the market movements to pre-empt change and help teach broker networks about the future of their businesses, customers and the industry. Rakhit points to the PD days and webinar groups run by the industry associations as crucial, as well as the importance of developing internal training systems, such as e-learning. Offering such programs to brokers can be essential for familiarising them with new products, policies and procedures, while also demonstrating the level of support provided. “Over the last two years we’ve prioritised

investment in our broker offering in line with our vision to deliver brilliant customer experiences every day,” says Rakhit. “As is the case in so many areas of life these days, the impact of technology on broker education is huge. Just as we see that customers want flexibility in their options, it’s great to be able to offer brokers a range of methods which they can access to help them upskill.” One of the key drivers of new methods of training and upskilling has also been technology; it’s no longer necessary to send staff off-site and then hope that their training somehow filters back into the wider workforce. Rather, a greater number of employees can be catered for, which also minimises the loss of day-to-day productivity that previous approaches tended to result in It also means clearer communication of the relevant knowledge to more staff, rather than needing to rely on (possibly unreliable) information relayed by other internal staff. “Technology provides a wonderful and ever-evolving connection to our customers and partners,” says Buchanan. “By utilising

ACHIEVING SEAMLESS CUSTOMER SERVICE Thanks to companies like Uber and Amazon, customers are used to smooth and seamless transactions in almost-real time in many areas of their lives. Understandably, they now expect a similar experience in their banking and home buying. “Buying a home is a life-changing moment,” says Ian Rakhit of Bankwest. “Customers want a quick and painless approvals process with tailor-made, personalised options, and they want to feel supported and informed throughout. To deliver this, brokers need to be educated on the latest digital innovations, services and products which are available to support them in best supporting their customers.”

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BROKER EDUCATION

THE FUTURE FACE OF MENTORING

technology, we can bring the experts to you, at a time convenient to you and in a style that maximises your ability to learn. Whether it be videos, web conferencing, surveys, tests, scenario requests or other, we continually look for new methods to educate.”

2020 and beyond

Over the coming years, Blake Buchanan of Specialist Finance Group believes there will be a shift in entry requirements for new brokers coming into the industry. In his opinion, the current mentorship model requires additional governance. “There are some exceptional and reputable mentors out there in the industry,” says Buchanan. “But there are too many that simply sign a bit of paper at the end of two years, and these behaviours do not serve the industry well.” With this in mind, 2019 saw SFG build its mentoring process into SFGconnect. This gives participating mentors digital access to all mentees’ files for sign-off prior to lodgement. “It’s not a total solution to the issue – but it is a great step forward to improved oversight,” says Buchanan.

Rakhit believes the main change in 2020 will be the emphasis on the best interests duty. Born out of the royal commission and due to come into effect on 1 July, Rakhit describes this new development as “undoubtedly a positive step for the industry”. In turn, he’s eager to ensure that this knowledge is transferred more widely throughout the industry. “Documenting customer discussions

education framework – broker requirements have increased; CPD requirements and deal quality will be looked to as a measure throughout 2020 and beyond.” Accordingly, Buchanan sees one of his key focuses as ensuring brokers are effectively educated about the possibilities and benefits inherent in CRM technology. “An excellent CRM can enhance your business and create efficiencies, leaving you more time to do what you do best, which is helping your customers,” he says. “But there’s no point if your brokers don’t know how to use it – so it’s important that we utilise our national training teams and work with our brokers so that they can continually upskill.” Though change is afoot, the future looks

“By utilising technology, we can bring the experts to you, at a time convenient to you and in a style that maximises your ability to learn” Blake Buchanan, Specialist Finance Group and being able to demonstrate that the best interests of the customer were identified, prioritised and delivered will be a central component of our educational aims this year,” says Rakhit. “Additionally, we’re continually pushing to improve first-time accuracy rates to attempt to lessen frustrating delays in the approvals process, which are often caused by simple clerical issues. We’ll continue to listen to and support brokers and work closely with the industry to respond constructively and adapt to the changing landscape.” Buchanan notes that continuing education will remain vital for industry professionals. “In recent years there has been increased scrutiny of broker education and the

bright for the business as a whole. Given the increasing complexity of loans and the borrowing process, brokers might need to do more than ever before to keep up to speed – but they’re far more necessary than ever before too. “Brokers do a fantastic job of helping people find the right home loan for their needs and also in supporting Bankwest customers once they’ve taken out a loan with us,” says Rakhit. “In terms of the changes we face this year and into the future, I’ve seen the industry adapt to changes in the past and I’m very confident it can continue to provide the services that many customers value so highly.”

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TECHNOLOGY

Removing friction As loan applications get more complicated for mortgage brokers, MPA talks to NextGen.Net about what the company is doing to help remove the hurdles SINCE THE royal commission began, the biggest bugbears for mortgage brokers have been the increased turnaround times and extra scrutiny of borrowers’ living expenses, but as technology grows and develops these problems should be lessening. Going into 2020, NextGen.Net knows “there is still a lot of work to do”. Last year, the technology group focused on the compliance space as the industry saw changes to responsible lending standards. Designed around “removing friction from the lending process”, NextGen.Net’s initiatives included integrating the valuation process into the application, the e-signing of documents, and a new interface for the supporting documents upload. Chief customer officer Tony Carn says there have also been developments “under the cover”, like an API service available to broker groups that enables them to do an assessment with limited data to find the maximum loan amount and available products. For lenders, NextGen.Net provides benchmarking reports so they can manage their consistency, turnaround times and conversion rates, which helps them identify pain points for areas of improvement.

“We’ve assisted a number of them with better tools to assess loans, verify supporting documents and speed up their time to approval significantly. Ultimately, it ensures that better loan updates are being provided to brokers and their customers as well,” Carn says.

“Brokers operate in a highly competitive but also very regulated market, and technology can make that easier and a lot safer,” Carn adds. “So brokers, they want to focus on the things that make them money and drive great customer outcomes. And we want to

“With the rapid introduction of new technology comes the requirement to invest in training and how to get the most out of it” Tony Carn, NextGen.Net Improving productivity Working hard on improving turnaround times for brokers, Carn adds that NextGen.Net is focusing on getting the quality right at the point of sale, ensuring the data required is provided; that it aligns with the lender’s credit policy; and that they have all the right supporting documents. “I think there’s a lot of friction that can still be taken out of that process,” he says. But “smart brokers” are already using technology better to drive greater productivity.

continue providing leadership to manage the rapid pace of change that they’re seeing – and it is a rapid pace of change – and to make that application process easier.” To continue helping brokers overcome the challenges, Carn says one other thing he wants to focus on is education and training. “With the rapid introduction of new technology comes the requirement to invest in training and how to get the most out of it,” he adds. One of the changes brokers will benefit

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Sponsored by

to retail investors, particularly those who enjoyed dealing with their respective legal practices when investing their money. Equally, the borrowers who were good candidates for these loans enjoyed the simplicity of the interest-only commercial loans, and it certainly was in demand. Nothing much has changed in that regard.

MPA: What challenges have you faced and how did you overcome them? DK: Starting a new fund wasn’t without its

As the ’90s rolled on, I found my niche in procuring commercial loans for customers who were not quite accommodated by the major banks. Bear in mind that there was no such thing as securitisation, white labelling, aggregator panels, trail commissions, clawbacks, etc. I focused on the world of non-bank lending, which back then was commonly referred to as ‘private lending’. This was predominantly the domain of law firms that ran contributory mortgage practices. Over time, with the introduction of new legislation around AFSLs and management investment schemes, the private lending landscape changed and contributory legal practices sold their books, morphed into managed funds, or simply shut up shop.

MPA: What is the story behind Equity-One and how has it developed? DK: Despite the constant changes, it was clear to me that the world of non-bank

challenges. We often talk about ‘start-ups’ nowadays, and it seems to roll off the tongue with ease, as if to ‘start up’ is a light, effortless event. It is not. Starting a new fund was a challenge. There were significant hurdles to overcome, such as the regulatory requirements, legal costs, systems implementation, and the usual run-of-the-mill aspects of any business that is starting up. Equity-One, however, was very soon in demand, from both borrowers and investors. Our growth has been organic and built on our core values, which have not changed since inception; that is, being relevant to both investors and borrowers and achieving great outcomes for our clients. Challenges in our business can present themselves in various ways. There are the old pillar risks, such as property market risk and borrower default risk; however, as the lending landscape evolves, so too do the risks.

“In 1990, having someone visit your home to talk about a loan was unheard of. It was almost as exciting as having a pizza delivered for the first time” lending was here to stay, for a while at least, and I established Equity-One, which effectively emulated the contributory-style legal practice of days of old. This appealed

Whilst these traditional risks remain, newer (and equally lethal) risks have emerged, which include compliance obligations and the challenge of new, nimble participants.

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EXPERT SPOTLIGHT

These risks are somewhat more elusive and seem to be constantly changing. This is the way it is for all participants, though. And if you are planning on being here to stay, then you need to be adequately prepared to take on and manage these risks. That’s the price of being in business today.

MPA: How have things changed in the market since Equity-One’s inception? DK: As the ’90s came and went, we entered a new era in which we saw the emergence of large players in the non-conforming lending space. Many of these lenders are

made faster. Expectations for decisions were naturally set to a higher bar than I was used to in Australia. I realised that we would soon follow this style of doing business; that is, people want to hear from you, and they want to hear from you fast. This is now not a global phenomenon but rather a global norm. Business, in the finance world, is done fast. And we now have all the digital tools to do just that. Impressive, huh? But despite the rapidly changing environment, our core values still hold true. We are very proud of the old-school nature of how we serve our clients. Whilst

“Whilst implementing nifty digitisation, we nevertheless do not forget that simple, straight conversations with people are key to good business” still with us and have become some of the trusted brands in the lending landscape. Others, however, have not. We have seen the landscape change in many ways, such as how brokers are remunerated, new ‘efficiencies’ such as aggregation panels, and let us not forget the ever-growing world of compliance obligations. All of this, I believe, has been for the better, with choices for borrowers continually expanding. This is a good thing, too. Whilst I was the MD of Equity-One and focused on its growth, I spent some time doing business in New York. Doing business in America was certainly an education. One of the things that stood out for me, right from the outset, was how fast New Yorkers wanted to communicate. To clarify, not in terms of the speed of their communication per se, but in the speed of the replies they expected. Conversations, as I saw it, were of a higher ‘tempo’. Decisions needed to be

implementing nifty digitisation, which has quickly become the norm in business today, we nevertheless do not forget that simple, straight conversations with people are key to good business, and good outcomes. We do, after all, deal with humans.

MPA: What do you expect to see in the year ahead? DK: I believe the competition will increase. Non-bank lending is a large market in Australia, and despite the majors’ efforts to accommodate the demand, many borrowers are still left unserviced. This presents opportunities for new players to find their place in the food chain without necessarily worrying about scale. So we will continue to see the market mature. Once we reach that point, I suspect we will see a consolidation. This may not play out in 2020 but is inevitable in the medium term. Compliance obligations will also be a major focus for

EQUITY-ONE IN NUMBERS

More than

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Offers

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Typically offers up to

65-75% LVR 100% investor funded

organisations. We may see new obligations around capital adequacy and perhaps a fresh look at the definitions of ‘wholesale/ sophisticated’ investors. One thing is certain, and that is change. The challenge for commercial lenders is to continue being relevant to their customers, and, quite simply, offer products that enable good outcomes. Isn’t it nice that a little bit of the ’90s is still with us?

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MANAGEMENT

Inspiring ambiverts in the workplace Most of us aren’t purely introverted or extroverted, so reaching all employees requires a more nuanced approach, writes Molly Moseley

ARE YOU AN extrovert or introvert? For some people the answer is clear, but for many it’s not so black and white. You’ve probably heard of the Myers-Briggs test. Since the 1940s, this assessment has helped us peer into different personality types. This, and many other personality tests, tends to polarise introversion and extroversion, making them seem mutually exclusive. If you’ve never felt like you fit squarely into one category, you’re not alone. Many experts now believe there’s a spectrum between extroversion and introversion, and most people are somewhere in the middle. Ultimately, where you land is about where you get your energy: from a group of people or from solitude – or sometimes both. Enter ambiversion, the in-between category that fits most people best. For example, you might enjoy pitching to clients and may be looking forward to an upcoming presentation. However, it’s also exhausting to be around large groups of people, so afterwards you head home to recharge rather than go out for happy hour with the team. This scenario demonstrates the traits of both an extrovert and introvert.

Because everyone falls into their own unique place on the continuum, managers might struggle to find the best ways to inspire their teams. How can you possibly manage everyone in order to bring out

individuals and the group as a whole to thrive. When a team knows its strengths and weaknesses, it can be very empowering. Managers can then adapt their style to fit the group they’re leading. For example, if

If you’ve never felt like you fit squarely into one category, you’re not alone. Many experts now believe there’s a spectrum between extroversion and introversion, and most people are somewhere in the middle their very best at work when everyone is so different? It might seem impossible, but a few smart strategies can help.

1. Assess your team The first step is to understand your employees’ personality types and assess their strengths and weaknesses. Talk with your team. Give them a personality test if you must. Be honest and create a meaningful assessment that will help both

someone tends to be quiet during meetings, it doesn’t necessarily mean they don’t have ideas they want to share. A good manager will encourage engagement but also offer additional ways for people to speak up and contribute thoughts, such as at a one-on-one meeting or via email.

2. Take a closer look at your environment Another aspect that smart managers

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11/02/2020 9:18:34 AM

Mortgage Professional Australia (MPA) is the leading business magazine for the mortgage and finance industry.

• Profiles and case studies of successful brokerages • Interviews with industry leaders • Special reports and surveys • In-depth features on specialist lending • Business strategy content

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FEATURES

MANAGEMENT

consider is the workplace environment. Many modern workplaces have moved to open office designs with the goal of encouraging collaboration. This appears to be custom-made for the extrovert who craves interaction with others. The problem is that those who tend more towards introversion can be overwhelmed and distracted by this environment. The solution? Small design changes can create private spaces for when people need them. You could create a quiet corner with plants or partitions for privacy. Some offices will go so far as to incorporate quiet workspaces that can be accessed throughout the day. These are the places

people can go to when they need to focus and donâ&#x20AC;&#x2122;t want to be interrupted.

3. Design a flexible workflow Finally, rethinking the flow of the workday can encourage all personality types to put forward their very best. Perhaps you could leave the morning open for productivity and schedule meetings right after lunch. This leaves room in the day for introverts to breathe and extroverts to socialise, and a little bit of both for everyone in between. Getting continuous feedback is key. Ask people how they work best. Enquire into possible improvements to boost productivity,

employee engagement and job satisfaction. When you keep the conversation open, youâ&#x20AC;&#x2122;ll be able to create a positive workplace for all personalities. Molly Moseley is a marketing strategist and brand evangelist with a record of achievement in conceptualising new ideas, designing processes and programs, and overseeing tactical execution to deliver on corporate goals. She serves as part of the cross-functional leadership team at LinkUp in developing, managing and positioning products that capture new market share, and expand existing B2B and B2C customer relationships. For more information, visit linkup.com.

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11/02/2020 9:19:53 AM

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The Real Life Alternative

11/02/2020 9:20:04 AM

FEATURES

PRODUCTIVITY

How to work smarter, not harder Feeling constantly overwhelmed by your to-do list? Carson Tate offers six ways to work smarter and take back control

I BLINK and the day is over. I’m constantly behind, trying to catch up and keep up. I purchased a new pair of pants, and by the time I get around to having them hemmed, they will probably be out of style.

back in the driver’s seat of your life? Work smarter, not harder. Here’s how.

Batch or group similar tasks Batching or grouping similar tasks increases

Take a hard, critical look at your projects and ask yourself if each one is still relevant, directly tied to your organisation’s strategic goals, and gives you a significant return on your time investment Does this sound familiar? In today’s overstretched, overscheduled world, we feel like we’re constantly reacting and not really in control of our days. So how can you take back control and put yourself

your efficiency without any extra effort on your part. For example, make all of your phone calls at one time, process your email at one time, or review project proposals from vendors all at the same time. Switching between disparate

tasks is highly inefficient. Work on the same type of project or task and complete more work in less time.

Work in vacation mode Have you ever noticed what happens before a vacation? Your inbox is magically cleaned out, projects are wrapped up, and your desk is cleared. I call this ‘the vacation phenomenon’. A vacation is a hard deadline. On Saturday afternoon, you’re going to be on a sandy beach, holding a drink with an umbrella in it (at least this is my idea of a vacation!). As a result, your work must be completed before you leave the office.

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Stop fighting nature Our brains are hardwired to function in very specific ways. No matter how much you try or wish for your brain to function differently, it will not. There is a finite limit to how much information can be held in the mind and manipulated at the same time. Don’t ask your brain to remember the 15 items you need at the grocery store, your schedule for next week and your ideas for your new project at work. It’s not wired to function this way. Use a task list. It’s ultimately more efficient, and it enables your brain to do what it does best – think about things not of things.

Make technology work for you, not against you

Consider working in vacation mode, even if you’re not going on a vacation, by creating hard stops to your workday. For example, schedule a fun activity after work that has a hard start time – a movie, a play or a sporting event. The looming deadline will force you to be more efficient and focused throughout your workday.

Create a ‘stop doing’ list As your responsibilities continue to expand at work, you keep adding projects to your to-do list. However, you never take anything off the list. Take a hard, critical look at your projects

and ask yourself if each one is still relevant, directly tied to your organisation’s strategic goals, and gives you a significant return on your time investment. There are probably a few projects lurking on your list that need to be moved to the ‘stop doing’ list. No one is going to miss them.

Decide what is good enough Do you know what ‘good enough’ is for each of the projects on your list? This is good enough for the organisation and good enough for you. Overthinking, over-editing and over-tweaking wastes valuable time and is not necessary. Do good work and then stop.

Today’s technology is powerful – very powerful. However, we often abdicate our power to technology. We let it guide and direct us. It pings, dings or rings, and we jump. Turn off the sounds on all of your technology tools so you can focus and complete your work. In addition, leverage all of the technology tools available to you in your email program by writing rules, colour-coding incoming emails and auto-filing messages. Take back control and make your technology do all of the heavy lifting. What are you going to do today to put yourself back in the driver’s seat of your life? Carson Tate serves as a consultant and coach to executives at Fortune 500 companies, including AbbVie, Deloitte, EY, FedEx and Wells Fargo. She is the author of Work Simply: Embracing the Power of Your Personal Productivity Style, and her views have been included in publications such as Bloomberg Businessweek, Fast Company, Forbes, the Harvard Business Review blog, the New York Times, Working Mother and more. For more information, visit workingsimply.com.

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FEATURES

LEADERSHIP

Why optimistic realists make the best leaders Brian de Haaff explains why effective leadership is all about finding a balance between idealism and practicality

I ONCE worked for a guy who always had a smile on his face. He was a friend to everyone and always thought it was a beautiful day. But he wasn’t fully respected by his peers because he never prioritised work that had the best chance of being successful. Instead, he wasted a lot of time and money by blindly assuming everything would work out. He often turned out to be wrong. He only looked ahead at sunshine. I also once worked for a woman who was so mired in the dysfunction of organisational reality that she never pressed for what was ambitious and right. What was new and exciting could never be pursued because it had never been done before. The weight of the organisation and its plodding pace crushed her. She had no hope. So she only looked behind at clouds. Both leaders had meaningful skills and were well intentioned, but both were limited in their success by their single-focus world view.

The most successful leaders function with a healthy dose of forward-thinking optimism and down-to-earth realism. They look forward and behind. In fact, one study found that people with an ‘optimistic realist’ personality type were often happier and more successful. That’s because these pragmatic minds knew how to combine the positive outlook of an

finding a way forward. In fact, I believe that being an optimistic realist will do more than help you move forward – it will make you a great leader. Here are four reasons why.

1. You know the power of a plan Leaders are the ones setting the

Optimistic realists know that you can be transparent about the issues at hand while also being the encouraging force that gets your team back on track optimist with the sharp-eyed view of a realist. Although the two leaders I worked with were uniquely single-minded, most of us are capable of seeing both sides of a situation and

course and adjusting the sails. When your team hits rough waters, you don’t expect that they’ll magically turn things around. And you don’t waste time grumbling about what they

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did wrong. Instead, you identify clear steps to tackle the problem and move forward together.

2. You’re transparent with your team One of the biggest mistakes you can make is to shelter your team from looming problems. Optimistic realists know that you can be transparent about the issues at hand while also being the encouraging force that gets your team back on track. That is because transparency leads to trust. Your honesty builds a better work environment.

3. You understand your limitations Optimistic realists know that they

can’t do it all, but they also know that the team around them can help them accomplish so much more. Your greatest resources as a leader are the people you work with every day. Be honest with them that you need help and remain positive that they will help you come up with the solution.

4. You sense when it’s time to reset Times of crisis are opportunities to reflect on the big picture. But as a leader it’s on you to make the final call when it’s time to push the ‘reset’ button. Always go back to your goals and ask yourself the tough questions: Are we still on track? Have we lost sight of our vision?

Great teams build great companies. So the next time a crisis hits, reflect on your own strengths and weaknesses, then rally and pull from the people around you. When your team sees you as an optimistic realist, they will likely adopt the attitude for themselves. You will encourage a workplace of critical thinkers who know there’s a solution to every problem and work tirelessly until they find it. Brian de Haaff is the co-founder and CEO of Aha! and the author of Lovability. His two previous companies were acquired by well-known public corporations. De Haaff writes and speaks about product and company growth and the adventure of living a meaningful life. For more information, visit aha.io.

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11/02/2020 9:24:52 AM

PEOPLE

BROKERAGE INSIGHT

Redefining broking excellence Based out of North Melbourne, The Financiers Group demonstrates the benefits of having a team of brokers who provide exceptional customer service. MPA talks to co-founder Chris Huynh THE DRIVE for excellence in the world of broking is an admirable pursuit, but where does it begin? For Chris Huynh, the answer is relatively simple: excellence begins with customer service. It was the desire to achieve this high level of service that led him and his business partner, Xianjun (Joe) Zhou, to start The Financiers Group (TFG) in 2015. “The Financiers Group was founded on the principle of delivering – and continuously developing – an elite level of customer service to its clients,” says Huynh. “As naive as it sounds, our initial business model was to ‘Help as many clients as we can, and do it well’.” Huynh and Zhou both originally came

from a banking background, having worked as relationship managers at one of Australia’s most prominent banks. This instilled in them an appreciation of the importance of customer service but also left them dissatisfied, and

“We’ve invested heavily in ways to refine our internal processes and ensure we remain agile” Chris Huynh, The Financiers Group aware that more could be done for their customers. Huynh explains that banks usually only apply their highest level of customer service to their top-tier clients. TFG sought to

INNOVATION AS THE NEW NORM Today, the world is moving more quickly than ever before, says Chris Huynh, co-founder of The Financial Group. The next generation to enter the mortgage market will likely want similar outcomes to their forebears, but the means by which such a vision is realised may be completely different. “There are constantly new ways of doing things – and if not embraced, it could potentially spell the end of a business or even an entire industry,” says Huynh. “At the moment, I believe that fintech is to the mortgage market what digital cameras were to Kodak.” Huynh believes that smart brokerages will therefore be researching and investing in fintech for the foreseeable future. “I think we need to embrace the change it’s causing in order to move with the times,” says Huynh.

subvert this standard, bringing this high level of customer care to the masses in the process. This approach has helped the business flourish from its North Melbourne base. As 2020 kicks off, the TFG team comprises

brokers who bring their own independent flair to the business. “Our organisation is made up of several brokers who have diverse experience and strengths, and who move in different social and professional circles,” says Huynh. “What our brokers share is a commitment to developing their knowledge base and expertise so they can assist clients irrespective of their demographic.” As a result, TFG can assist a broad customer base, from first home buyers to medical professionals, investors, property developers, business owners, high-net-worth clients and a variety of complex financial structures.

Market in motion Five years on since TFG began operations, its vision of customer service remains in place.

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Chris Huynh

Joe Zhou

FAST FACTS Company: The Financiers Group

Founders: Chris Huynh and Xianjun (Joe) Zhou

Location: North Melbourne, Vic

Year founded: 2015

Services offered: Home loans, investment properties, commercial property

Number of employees: 10

Yet the practical execution of this approach must necessarily shift over time as the industry itself evolves. “We’ve seen significant changes across the industry since we started – products, lending policies, regulation, increased scrutiny,” says Huynh. “For the most part we feel these

applications were taking much longer to file. “We needed to assess our processes carefully,” he says. “We needed to document and understand exactly what we were doing, how we were doing it, and – if required – where we could improve. Having a clearly defined process was a stepping stone to enable us to be

“What our brokers share is a commitment to developing their knowledge base and expertise so they can assist clients irrespective of their demographic” Chris Huynh, The Financiers Group changes have made the industry better, but they have meant that we’ve needed to make changes to the way we do things day-to day. We’ve invested heavily in ways to refine our internal processes and ensure we remain agile.” Agility, after all, is the willingness to adapt in an ever-changing market. One example Huynh gives is loan applications. Due to the variety of changes across the industry, and the additional scrutiny placed on TFG by lenders,

in a position to adapt to anything the industry threw our way.” Huynh is full of optimism for the future and believes it is firms like TFG that will adapt best to future changes ahead. “The changes we’ve already seen in the industry have forced broking firms to adapt in order to keep up,” says Huynh. “Ultimately, making those changes paves the way for an overall increase in quality across the industry.”

Focusing on the future Looking forward, Huynh believes that further innovation and reinvention are on the cards for TFG. A broker’s work, after all, is not just about “completing” a loan but putting a client in the best possible financial position – both now and as the industry shifts. That’s a task that never truly ends. “We’ve always aimed to reinvent ourselves and improve the business, but until now this has been something that’s mainly been applied to our internal processes,” says Huynh. “That’s set a good foundation for us, but we have goals beyond that, too.” Accordingly, the next 12–18 months will be about looking for innovative ways to build the business, while staying true to the core values that built the brand in the first place. The first cab off the ranks is establishing an effective digital presence that helps bring TFG’s message to an even wider audience across Australia, though there are sure to be other surprises along the way. “Exciting times are ahead,” says Huynh.

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PEOPLE

OTHER LIFE

TELL US WHAT YOU GET UP TO Email rebecca.pike@keymedia.com

2000

Year Morison started playing baseball

Number of years he played for a local summer league

Age when he joined the Manly Warringah State Cup side

STEPPING UP TO THE PLATE Smartmove mortgage and finance adviser Tom Morison says playing baseball helps you learn how to thrive in business “Hitting a home run is pretty special. It is the tip of the iceberg of the behind-the-scenes preparations coming to fruition"

HAVING AN American dad, Tom Morison grew up with baseball as a highly favoured summer sport. He became a regular member of his local league. From his teenage years until well into his early 20s, Morison played for the Manly Seasiders at a local level. He also competed in the NSW State Cup with the Manly Warringah side against teams from Cronulla, Penrith and the Central Coast, to name a few. “For me, baseball combines an individual’s unique skill and talent, and that in turn contributes towards the wider team’s success,” says Smartmove’s mortgage and finance adviser. “If each of your players possesses the same unique skill and talent, your team may not be as prosperous as those that are diverse in their abilities. It’s not always about the players who can hit the ball the farthest, throw the hardest pitch or run the fastest around the bases.” He says the principle applies to brokers, especially in today’s constantly changing lending environment, because in order to thrive they need a team that can meet the various needs of customers. As one of the senior members of his baseball crew and a mentor of new players, Morison says this role is “forever” helpful in developing his leadership and teamwork skills. He sees it as important to remain open to new techniques and feedback from his team about him. While Morison plays in the local Northern Beaches league, he has not given up the idea of returning to a statelevel tournament when the right time comes.

CMY

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