Mortgage Professional Australia 20.06 by Key Media

MPAMAGAZINE.COM.AU ISSUE 20.06

AGGREGATORS GO VIRTUAL The annual panel in conversation about the broker industry

TOP 10 BROKERAGES Meet the groups overcoming hurdles to become the best

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ALT-DOC LOANS Non-banks discuss the crucial tool in a broker’s arsenal

KATHY CUMMINGS MPA talks to BOQ’s head of broker about her new role

2/06/2020 1:42:16 PM

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JUNE 2020

CONNECT WITH US

CONTENTS

Adapting to a new way of working

04 Statistics

Borrowers feeling uncertain

06 Head to head

FEATURES

10 Opinion

08 News analysis

The positive side of the BID deferral Adding value to client relationships

FEATURES Prospa is supporting brokers with new technology and product suites

AGGREGATORS GO VIRTUAL

Eight representatives gather virtually to talk about how they are supporting brokers and overcoming challenges

Brokers changing business practices

40 Supporting brokers

SPECIAL REPORT

Off the back of more than 20 years’ experience in the broking industry, the new head of broker at Bank of Queensland shares her learnings

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02 Editorial

Brokers are turning more to these products to assist their clients

KATHY CUMMINGS

twitter.com/MPA_Australia

UPFRONT

ALT-DOC LOANS

BIG INTERVIEW

Got a story or suggestion, or just want to find out some more information?

44 Digital solutions

Smartbank 86 400 is taking a unique approach for its brokers and borrowers

FEATURES

FINDING OPPORTUNITIES

NextGen.Net’s Tony Carn on pushing forward in a pandemic

46 Backing third party

ME Bank has made changes to support its broker community

PEOPLE 62 Career path

Furthering fundraising at Heritage

64 Other life

Cycling across continents

50 FEATURES

TOP 10 BROKERAGES

See who made it into this year’s ranking of Australia’s best brokerages

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3/06/2020 10:11:09 AM

UPFRONT

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

A time to adapt and grow

he broking industry is usually a very sociable one, what with PD days, conferences, coffee meetings and networking events, not to mention the awards nights we were all so looking forward to. With social distancing restrictions, these last couple of months have therefore been a little strange. At first I almost enjoyed having no pressure to be anywhere, but now I am missing seeing you all and am particularly disappointed that we cannot be together in person to celebrate the achievements of industry players at the MFAA awards. Focusing on the positive, however, it has been incredible to see how people have adapted to this new way of working. In my conversations with aggregators and lenders, they have all praised the speed at which brokers have picked up new tools and systems and moved their businesses to their homes. Digital tools and systems have been fast-tracked by those aggregators and lenders, which has been a really positive sign of how committed they are to the broker market and to helping brokers help their borrowers.

EDITORIAL

SALES & MARKETING

Editor Rebecca Pike

National Sales Manager Claire Tan

Journalists Tom Goodwin, Kate McIntyre Contributor Matthew Johnson 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

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tel: +61 2 8311 5831 • fax: +61 2 8437 4753 subscriptions@keymedia.com.au

ADVERTISING ENQUIRIES claire.tan@keymedia.com

It has been incredible to see how people have adapted to this new way of working You will see over the following pages that we are all adapting to a more virtual way of working. MPA’s annual aggregator panel was very different this year, in that we could not meet in person. I held a Zoom call with eight aggregators, and while I’m sure they are now well accustomed to holding virtual meetings, I must admit that I was less so. Video calls are taking place more and more often, but I found that leading an interview in this way was possibly more nerve-wracking than interviewing them live and in person. I’d like to thank my interviewees for being patient and accommodating as I learn to do things differently! We also highlight Australia’s Top 10 Brokerages in this month’s issue, and while they cannot celebrate this achievement with their teams right now, I want to congratulate them all for their success over the past 12 months. Even as restrictions begin to lift, it seems we’ll be continuing to adapt for a little longer and possibly change things for the industry forever. Well done for your hard work so far. I hope you all continue to stay safe. Rebecca Pike, editor, MPA

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

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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2/06/2020 9:00:02 AM

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2/06/2020 9:00:54 AM

UPFRONT

STATISTICS

An uncertain road ahead

FINANCIAL TIMELINE OF COVID-19 CRISIS By 16 May banks across Australia had approved 703,419 loan deferrals, of which almost 430,000 were mortgages and more than 205,000 were business loans. The total value of the loans deferred was $211bn. It was not all grim news, however. Since the crisis started there have also been more than 77,000 new business loans approved.

Many Aussies expect COVID-19’s negative impact on their household expenses to be long-term WHILE THINGS have been changing fast and frequently over the last couple of months, several surveys and reports have kept track of the sentiments of Australian households. Around a third of Aussies were negatively affected financially by COVID-19 by mid-April, according to ABS and ME Bank reports. While only a third are currently facing the reality of a lower income, future sentiment is more negative, with around 44% expecting the COVID-19 crisis to have a negative effect on their household finances long-term, says ME’s COVID-19 Financial Sentiment Snapshot, April 2020.

31%

of Aussies said their household finances had worsened

Of those who said their incomes had either stayed the same or increased, a promising 47% of respondents said they were saving more than before the pandemic. A slightly smaller 34% of those whose incomes had been affected said they were saving more. “Many households tend to put money aside as soon as they feel financially uncertain,” said Matthew Read, ME’s general manager communications. “One saving grace of staying at home is that we’re spending less on activities such as going out to dinner or taking holidays. For some, the lockdown is forcing us to save.”

10%

are drawing down savings or term deposits

said there were unable to pay bills on time

are reducing home loan repayments Source: ABS Household Impacts of COVID-19 Survey

ONE THIRD FINANCIALLY IMPACTED

Nearly a third of Aussies said their finances had worsened from mid-March to mid-April 2020 due to COVID-19. People under 65 years of age were most affected. Change to household finances due to COVID-19, by age

TWO THIRDS HAVE SEEN CHANGES TO JOBS By midway through April, many Australians had seen their working hours reduced or had been stood down from their jobs altogether. Have you experienced any of the following employment changes as a result of the COVID-19 crisis?

100%

25%

Work hours reduced

80%

18%

Been stood down

Remained the same

70%

Remained the same

Increased work hours

60%

No work offered

50%

25%

16% 16%

Working from home

40%

10%

Pay reduced but same hours

30%

Worsened

Made redundant

20% Improved

Improved

18 to 64 years

Source: ABS Household Impacts of COVID-19 Survey

11% 32%

No changes to employment

65 years and over

Some other change

10%

68%

Some change to employment

90%

70 Source: Roy Morgan

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National NSW 04-05_Statistics_SUBBED_V2.indd 4

83%

84%

VIC

88%

QLD

80%

75%

82%

TAS

77%

ACT

83%

77%

2/06/2020 12:52:28 PM

First assistance offered to small businesses

February

Government announces first stimulus package

March

March Mortgage relief announced

Banks support JobKeeper

Business relief for landlords and renters

April

March

April

Credit scores secured

SME loan guarantees begin

April

100,000 loan deferrals in one week bring total deferrals to 643,000

May

Source: Ausbanking.org.au

ECONOMIC UNCERTAINTY A TOP CONCERN

HOUSEHOLDS CUTTING SPENDING

You said you’re feeling negative about your finances. Why is this?

You said your income had decreased. What have you done to manage this change?

According to the ME survey, 44% of Aussies expect COVID-19 to have a negative effect on their household’s finances in the long term. Uncertainty around the economy

63%

Unable to save money and get ahead

40%

My investments and/or super have been negatively impacted

38%

Spending more on essential items

35%

I’m feeling insecure about my job

29%

I have debts

26%

Source: ME Bank COVID-19 Financial Sentiment Snapshot, April 2020

13%

Sought assistance from family or friends, eg loans or free accommodation

Other

19%

Saved more to create an emergency savings buffer

I have closed my business or am about to

24%

Drafted a personal budget

17%

I’ve lost my job

29%

Sought assistance from the government, eg benefits

20%

I’ve had to take wage cut/my income has been reduced

72%

Cut out unnecessary expenses

23%

Unable to achieve my financial goals, eg buy a home, take a holiday

Of those whose incomes had been affected by the pandemic, 34% were managing to save. Most of those on a decreased income were cutting unnecessary expenses.

Switched or shopped around service providers, eg power, gas, internet, etc.

11%

Sought assistance from my bank, eg paused home loan or credit card repayments

Switched or shopped financial products, eg home loan, credit cards, savings accounts

8% 4%

Other

Source: ME Bank COVID-19 Financial Sentiment Snapshot, April 2020

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2/06/2020 12:52:39 PM

UPFRONT

HEAD TO HEAD

How have you adapted to change amid COVID-19? Brokers are having to adjust to new technology and virtual meetings to keep their businesses on top of changes

Tony Imbruglia

Kelly Cameron

“Thinking I was going to have a lot of time on my hands (which it turns out I don’t), I wanted to completely re-engineer my business processes during lockdown. My website has been rewritten; I wanted visitors to be able to contact me easily, so I added an online booking system, a Zoom link and a login link to my client portals. The booking system checks my availability and integrates with my Outlook account. Outlook has some great features that I have implemented, like sending client emails directly to my CRM. I have also subscribed to a service that records and transcribes phone calls, which I upload to my client notes, and I’m using DocuSign to deliver various forms. These technologies have streamlined my business and efficiencies. I now feel more in control of my time.”

“Since COVID-19 hit we have bought laptops for all staff at Get Real Finance and learned how to Zoom, transfer calls and all work remotely. We talk our clients through loan docs, and we only do face-to face sign-ups when required. We have flexible working arrangements for staff who are homeschooling. We renovated the office – repainting, recarpeting and fixing our cabling. We also hired out-of-work clients to scan, name and file 3,800 old files, so that we are 100% electronic in readiness to move to cloud-based storage, as we want to offshore our processing soon. And to spread some love, we hired an out-of-work chef to make and deliver 170 handmade food care packs to clients in financial hardship.”

Director My Mortgage Professionals

Director Get Real Finance

Vishal Gupta

Director Unique Finance Services “We have always operated in an online tools and cloud-based environment, so changing to offsite working was somewhat risk-free. Once the lockdown was imposed, we put in place our ‘non-face-to-face operations’ mode and ceased to have clients coming to our office. We also implemented a daily virtual touch-base with the team to ensure we maintained productivity, engagement and morale. The overload of COVID-19 updates on lender policy changes was overwhelming, but we adapted to a new way of doing business, as most of our processes were taking longer to complete than usual – like ID verification, additional questions asked to verify clients’ circumstances due to COVID-19, and extra time taken to update, inform and educate clients on the market and changes to our processes.”

PREPARING FOR A POST-COVID FUTURE Now is the time to look after your mental wellbeing and review your business, says PLAN Australia CEO Anja Pannek. Despite the challenges of COVID-19, brokers can work to future-proof their businesses by maintaining a strong connection with customers and reflecting on their processes and strategies. While technology has long been an important part of running a brokerage, Pannek says it is even more integral now. “Many of these tools have been available for years, but brokers are embracing them now more than ever before,” she says. “My advice to brokers is to continue to embrace technology and look for ways to leverage the systems available to continue to build a more efficient and streamlined business.”

www.mpamagazine.com.au

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2/06/2020 12:53:13 PM

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2/06/2020 9:05:03 AM

UPFRONT

NEWS ANALYSIS

BID deferral a positive message The COVID-19 pandemic has resulted in the deferral of the best interests duty, but this just shows that the hard work brokers do to support borrowers is recognised THE BROKING INDUSTRY was meant to be getting ready for the best interests duty to come into force in just a few weeks’ time. Thanks to the coronavirus pandemic, ASIC has deferred the introduction of the duty by six months to help mortgage brokers deal with the impact of COVID-19. The announcement came after the government said it would defer the royal commission commitments. The duty will now be enforced on 1 January 2021, allowing the industry to “focus on immediate priorities and the needs of their customers at this difficult time”. ASIC was yet to release its final guidance on the BID after it allowed late submissions to its consultation due to the virus. The regulator says it will work towards releasing this in mid-2020 so it can be finalised as soon as possible. Industry welcomes deferral While the deferral means brokers have to wait a little longer to understand how the industry will be affected by the duty, PLAN Australia CEO Anja Pannek said the delay would go some way towards alleviating the pressure that comes with a change in regulation. “We continue to see the BID as a positive milestone for our mortgage broking industry that will deliver a heightened customer experience and a pledge that brokers will always act

in the best interest of their clients,” she said. “We remain focused on supporting our brokers so they can continue to build their businesses and their value proposition around the customer.” Even with the additional six months, the industry is still planning to move forward with making any changes it was working on. Loan Market has continued to roll out its process,

BID-ready process, but we welcome the opportunity to do more coaching and training with our brokers rather than meet a deadline that was always very ambitious. “I have no doubt that the vast majority of

“I have no doubt that the vast majority of brokers are operating in the best interest of their customers already” Sam White, Loan Market The Loan Market Way, which is designed to meet the regulations and save time. “We have approached BID implementation understanding that it is not just about compliance; it is about great customer experience,” said executive chairman Sam White. “Our approach has been not just to add additional compliance forms to our process but rather to look at improving the customer service experience and equipping our brokers with industry-leading time-saving tech. “As such, we will continue to roll out our

brokers are operating in the best interest of their customers already, and I believe no one needs to change their DNA to comply with this new law. “What brokers do need to do is to translate what’s currently in their heads or on notepads into a file that enables anybody to see that the broker has complied with both the spirit and the letter of this new law.” According to Connective executive director Mark Haron, the deferral came with a positive message around the pivotal role brokers play.

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2/06/2020 9:06:16 AM

HOW BANKS ARE HELPING CUSTOMERS

703,419

429,676

Loans deferred

Mortgages deferred

205,787

$211bn

Business loans deferred

Value of all loans deferred

$1.3bn SME Loan Guarantee total approved loans

$7bn

Increase to existing loans

77,905

$86bn

New business loans

Value of new business lending

Source: Australian Banking Association; data correct at 16 May 2020

“They’ve literally noted, and the regulators have all said this directly, that they appreciate what mortgage brokers have been doing in terms of helping their community and helping their customers,” he said.

standard, even before the royal commission’s final report made the suggestion, removing things such as volume-based bonus commissions in a self-regulatory environment. “Likewise, to the changes to renumeration

“It’s not just a physical shift of fact collecting or recording a bit more information; there’s also a mental shift” Mark Haron, Connective What are the reforms likely to look like? While the industry is already making substantial progress towards preparing for the BID, Haron said this reprieve would allow brokers further time to absorb the details of the regulatory guidance while continuing to help clients through the pandemic. Speaking from a Connective point of view, Haron said mortgage brokers were in a good position to meet the BID requirements. He added that the Combined Industry Forum had already begun working towards such a

around net-of-offset or utilisation payments in terms of the upfronts, the industry has moved and adopted that in a self-regulatory environment, so there’s going to be no shock,” Haron said. There will, however, likely be a requirement for brokers to document how they meet their customers’ best interests when making recommendations, so they may have to look at how to adapt their systems. While there are aspects of the duty that need further clarification, it is likely brokers

will need to show customers and regulators the different options considered and explain how their recommendation meets the client’s best interests, while also disclosing the details of any conflicts that may exist. This is the result of shadow-shopping exercises conducted by ASIC last year, in which it was found that brokers weren’t always presenting an overview of the various loans considered before making recommendations to clients. “There’s a little bit of ambiguity in respect to how far a broker needs to go in terms of reviewing different lenders and different products to satisfy that they’ve researched across a range of different lenders to meet that customer’s best interest,” said Haron. He said there were three main components at the core of the legislation: mortgage brokers must act in the best interests of their customers; when there is a conflict of interest the broker must put the customer’s interests first; and the ban on conflicted remuneration. “It’s not just a physical shift of fact collecting or recording a bit more information; there’s also a mental shift in terms of adopting the principles,” Haron added. “Most mortgage brokers are already there, but we’ve got to make sure the whole of the industry goes down that path and we don’t leave anyone behind.”

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2/06/2020 9:06:39 AM

UPFRONT

OPINION

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

Enhancing business value

As brokers battle to help borrowers through rapidly changing credit conditions, it’s vital to find new ways to add value to their client relationships, writes Matthew Johnson WITH COVID-19 causing economic chaos and tightened lending, the time is ripe for brokers to implement changes to protect against the uncertainty and plan for the next stage in their business.

Provide a path forward In times of upheaval and uncertainty, we all look for someone to provide us with a sense of calm confidence and a path to move forward along. While many brokers are experiencing a sudden shock to their own businesses, we have the privileged position of being able to help provide our clients with a clear plan for their finances and to set minds at ease in a stressful situation. This is usually the case with clients but is amplified at times such as this. The first and most crucial piece of advice is to add value to your relationship with all clients. You can do this by thinking about the skills and knowledge that you have and are passionate about, and how these could be used to offer your clients different products or services that would benefit them. Problem-solving with clients is another essential way to add value, as your clients typically need to be presented with a funding solution, not roadblocks. In researching solutions, be imaginative with the possibilities, explore all options and seek partnerships where you lack the capability.

Diversify revenue streams This brings me to the importance of diversifying your current offering to protect your business when external shocks or regulation changes are set to impact your market. It also

creates more income streams. Think here about your clients’ requirements and offer more useful services to help retain those clients who might otherwise go elsewhere. With mortgage brokers facing tough economic conditions and continued growth in regulatory oversight with the best interests duty regulation due to come into place,

Providing clients with all the information and services they need now can give them confidence and help you retain them for future deals, cementing your position as a trusted adviser.

Stay relevant Finally, networking with industry colleagues greatly assists you in keeping your finger on the pulse so you know what is happening in the lending market and stay relevant. This is more important than ever now with so much change in lender risk settings. Aggregators are a great resource and can help you stay at the forefront of product and industry trends along with regulatory changes as they often know what is happening behind the scenes. Another effective way of staying ahead of the curve is by leveraging first-class technology options across your business. Leading customer relationship management systems allow brokers to manage and access customer information 24/7; engage with external clients

In researching solutions, be imaginative with the possibilities; explore all options and seek partnerships where you lack the capability the key is to act now to make your income streams more secure. You can do so by forming partnerships with other service providers who add real value by being experts and trusted professionals in their fields, such as financial planners, accountants or lawyers. Partnerships, whether big or small, can build momentum and new leads for your own business, as well as the other business that you link up with, as they expand your reach to previously inaccessible audiences, allowing you to combine resources to effectively reach your business goals and open up revenue streams without putting in all the effort yourself. In order for the partnership to be effective, it’s crucial that your businesses can work together and produce complementary products. That’s why collaborations between residential and commercial mortgage brokers work so well – they are perfectly complementary yet are very different businesses.

and stakeholders with transparency and personalised conversations; and automate processes, allowing brokers to focus on identifying leads, closing more deals and growing their businesses. Remote working and video conferencing have also suddenly become critical capabilities for brokers. Thinking forward to a postCOVID-19 lockdown world, leveraging these skills and technology solutions will be key for brokers to be more flexible in the way they engage with their clients, partners and staff. We have all been forced to embrace these notions, but continuing to leverage them in the future will help secure a successful and strong future for your business.

Matthew Johnson is the managing director at Marketplace Finance.

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2/06/2020 9:11:33 AM

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2/06/2020 9:11:42 AM

PEOPLE

BIG INTERVIEW

KATHY CUMMINGS: BREATHING LIFE INTO BROKING Bank of Queensland’s new head of broker has seen the industry grow from strength to strength and is now encouraging brokers to broaden their spread of business and think regional

WITH MORE than 20 years’ experience in the industry, Kathy Cummings has become a well-known name, and she has learnt a thing or two as well. Having left Commonwealth Bank in 2015 after establishing its mortgage broking business, Cummings joined Bank of Queensland in December in the new role of general manager, broker. She says this involves “breathing life” into the broker proposition, which has so far included working to ensure the right BDM support is available and to build stronger partnerships with aggregators, among other things. The bank has also built a new portal for brokers, providing them with more tools and creating smoother processes. Cummings says BOQ is working hard to reinvigorate its broker channel because it knows customers choose brokers and increasingly so. “Brokers satisfy the desire for choice and independence in customers,” she says.

“They can provide a fabulous service, and we recognise that.” Bringing such broad experience to her new position, Cummings believes that while some aspects of the mortgage industry will continue to evolve, it’s a question of ensuring it can keep

A growing and professional industry Looking at the changes the industry has experienced over the past 20 years, Cummings says it has gone from a “cottage industry” to one that’s much more professional, with stronger regulation and a real duty of care.

“It’s more important now that brokers understand they have a duty of care and responsibility for whatever they’re advising or educating customers on” satisifying clients with the quality of its customer service. Perhaps particularly important in the current environment are some of her key learnings from her experience: she says it’s vital to embrace change, make a decision and go with it, and that “the importance of relationships is never-ending”.

She praises the industry associations that have educated and encouraged brokers to recognise the need for professionalism. “They were ready to adapt to a regulatory environment which was more rigorous and understanding that good brokers have their customers’ welfares at heart,” she says.

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2/06/2020 12:54:12 PM

PROFILE Name: Kathy Cummings Company: General manager, broker Title: Bank of Queensland Years in the industry: 20 plus Career highlight: “When I was given the lifetime achievement award by the MFAA. That was certainly a lovely acknowledgement of my time and investment in this industry.” Career lowlight: “I’ve been fortunate throughout my career to work with incredible teams who share my passion for the industry and really believe in its potential. I wouldn’t say there has been a lowlight, just lessons along the way.”

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2/06/2020 12:54:18 PM

PEOPLE

BIG INTERVIEW

“It’s more important now that brokers understand they have a duty of care and responsibility for whatever they’re advising or educating customers on.” Technology has also been a huge player and has become even more important over the last two decades. Cummings says brokers are embracing technology, which was much more difficult 15 years ago. “They’re far more open to change and doing things smarter and quicker,” she says. “It’s still the same thing; they want to know the deal’s going to be approved and they want to take the customers off the market, but now we’re doing it faster and more effectively, which creates a better experience for the customer.” With increasing digital innovation and regulation in the industry, Cummings says it will be “survival of the fittest”. The regulatory environment is here to stay, she says, and

BOQ’S BROKER PORTAL As part of Bank of Queensland’s efforts to forge stronger relationships with the third party channel, it is introducing a new broker portal. The secure portal will enable brokers to access credit policy, servicing calculators and accreditation training. As part of its ongoing efforts to make doing business with BOQ as easy as possible, the bank is digitising its onboarding, accreditation process and communications with brokers. The portal will also have pricing requests and loan status feeds and is designed to create efficiencies in the back office, which will give brokers faster service with fewer telephone follow-ups.

ensured its processes are streamlined and has committed to relief packages and continuing broker trail payments. Going beyond that though, Cummings is taking a more personal approach than simply

“Now is an opportunity for brokers to spread their business and make sure they’re involving the regional banks’ propositions” brokers must embrace it and ensure that their businesses comply with the regulatory regime. Customers will continue to choose brokers though, Cummings says. “Customers are always going to choose independence; it’s so easy to use a broker. Customers want to know they’ve got a mortgage, and they want someone to tell them it’s OK. It’s the biggest thing they’ll buy in their life. Even second and third borrowers still want someone there holding their hand.”

Support for brokers While the homebuying market may be suffering at the hands of the coronavirus pandemic, Cummings says brokers are still active in areas like refinancing. The bank has

holding webinars or sending out updates. One initiative she has introduced is virtual lunches, where she orders food to be sent to five or six brokers and they have lunch over a video call. “That’s giving me the ability to touch some of our brokers and hear from them what the issues are and how we can help them,” she explains. “Not being able to do face-to-face, we have had to change our operating rhythm, and the team have been great. “This is one of the ways we are helping them through the isolation at the moment. They need to meet each other and send questions in; we’re trying to emulate the same environment as we would in normal sessions.” Cummings recognises that brokers –

much like many of the bank’s clients – are small business people who need support to continue their work. Her message to brokers at this time is that BOQ is there to help. “We’re here to support you in any way we can, so reach out to us and we’ll provide that support,” she says. The world may not know yet when it will go back to normal, but the industry can at least adjust to what we do know now. Cummings says this is the time to consider what brokers are offering their clients and look further afield than the mainstream banks for solutions. “I think one of the things that’s quite clear now is that they have to be very cautious in not putting all their business in one place,” she says. “Now is an opportunity for brokers to spread their business and make sure they’re involving the regional banks’ propositions. I have gone from running a big business to a smaller business, but it’s one that’s got very strong customer value. “It’s a good opportunity for brokers to spread their business and embrace some new lenders that they may not have in the past.” “And I look forward to catching up with many of them when we’re able to,” Cummings says.

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2/06/2020 2:47:52 PM

Donkey or cash cow? This isn’t just any donkey. This is a Serbian donkey that produces the most expensive cheese in the world – pule – which sells for $1200 a kilogram. The cost comes from the considerable time and resources needed to make it. A female Serbian donkey produces about two litres of milk a day, and it takes about 25 litres of milk to produce one kilogram of pule. The cost also comes from its rarity – there’s only one pule-producing farm on the planet. How would you know this donkey is a moneymaker without the appropriate insights? It’s not unlike making decisions in the mortgage broking market. At Choice Aggregation, we help brokers face the future with confidence. Our software’s data insights helps our members proactively respond to opportunities that can enhance their business’ value.

Choice. Make the right one. choiceaggregationservices.com.au

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SPECIAL REPORT

AGGREGATORS ROUNDTABLE 2020

2020

AGGREGATORS ROUNDTABLE Eight aggregators took part in a virtual roundtable to discuss industry issues like the best interests duty, how they were using technology, and the need for diversification. Much of the talk focused on how the aggregators have been helping brokers through the coronavirus pandemic

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THIS YEAR’S Aggregators Roundtable looked a little different to previous events, but the industry’s top aggregators were still able to get together to discuss what they had been doing for brokers. Taking place over a Zoom call, it was no surprise that much of the conversation revolved around the pandemic. Aggregators have been working hard for the last few months as the industry has had to shift the way it does things to bring forward new innovations and increase the support and education it offers brokers. Over an hour and a half, the discussion focused on how the aggregators were preparing their systems to help brokers, and gave some insight into the webinars and marketing tools they were offering. Their plans for face-to-face development days and other events this year have obviously had to change, so they talked about what they were doing instead to ensure they were still in front of brokers. It was not all about COVID-19, though. The group also talked about issues like the best interests duty, which has been postponed from its original implementation date of 1 July. The aggregators are still working behind the scenes to finalise what the duty will look like

and to ensure that the industry is ready when it does eventually kick off. The aggregators joining the virtual session were AFG, Choice, Connective, FAST, outsource financial, PLAN Australia, Specialist Finance Group and Liberty Network Services. Usually when this roundtable is livestreamed MPA invites brokers to send in questions during the discussion. Although we were not able to do this in the virtual session, we still wanted to encourage broker questions. So, as part of a recent survey and in other marketing we invited brokers to send in questions ahead of time. We received more than a hundred questions, and while we could not get to all of them, we passed on as many as possible and have provided the aggregators’ answers in the boxouts on the following pages. MPA would like to thank all the aggregators for taking part in the roundtable this year and for being so patient with the new format, as well as all the brokers who submitted questions. Keep reading to find out what the aggregators are doing for you – and we look forward to being on your screens again soon!

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SPECIAL REPORT

AGGREGATORS ROUNDTABLE 2020 THE PANELLISTS

Blake Buchanan Head of aggregation, Specialist Finance Group

Mark Haron Executive director, Connective

Stephen Moore CEO, Choice Aggregation Services

Brendan O’Donnell Managing director, Liberty Network Services

Anja Pannek CEO, PLAN Australia

Tanya Sale CEO, outsource financial

What are you doing at the moment to support brokers? The current environment is one of high uncertainty across many areas, from health to the economy, the property market and the business landscape. For brokers, this presents challenges for their businesses, but also opportunities. Many Australians are looking to adjust their mortgage repayments and defer other loan repayments or are searching for loan solutions for their businesses. With the number and pace of changes leaving many borrowers confused, brokers are in a unique position to help. As the COVID-19 crisis is creating a heightened level of activity for many brokers, aggregators are there to support them. Brendan Wright, CEO of FAST, said there were a number of important things to be done to support brokers, but the aggregator was putting a particular focus on communication.

“There’s so much coming at brokers and business owners at the moment, it’s around communication: being consistent, crisp and clear about what brokers need to be aware of so they can continue to run their businesses, engage with their customers and then meet the needs of their customers, whether they are business owners themselves or they invest in a residential property,” Wright said. Brokers will be looking to their aggregators more than ever for support at this time. Choice Aggregation Services CEO Stephen Moore said it was “the moment of truth for the relationships aggregators have with their brokers”. He agreed that communication was important, particularly to filter through all the changes coming from lenders and the government, as well as to confirm that trail was being paid. Choice is also focusing on broker wellness, offering confidential counselling support and partnering with R U OK?

“We have dropped a whole heap of solutions, updates, capability and functionality into our platform so that brokers at FAST can deliver to their clients” Brendan Wright, FAST

Chris Slater Head of sales and distribution, AFG

Brendan Wright CEO, FAST

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2/06/2020 12:57:49 PM

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SPECIAL REPORT

AGGREGATORS ROUNDTABLE 2020 MARKET SHARE HELD BY MORTGAGE BROKERS Market share of home loans settled by brokers, 2018/19 59.7%

59.1% 56.8%

55.3%

55.8%

54.9%

Apr–Jun 2019

Jul–Sep 2019

53.9%

Jan–Mar 2018

Apr–Jun 2018

Jul–Sep 2018

Oct–Dec 2018

Jan–Mar 2019

Source: MFAA Quarterly Survey

“Communication is more critical now than it’s ever been, and the challenge is to ensure that whatever we provide has perspective and relevance” Stephen Moore, Choice Aggregation Services

Moore added that it was also crucial to ensure brokers were prepared for what the next period might look like, and that included helping them be “digital ready” with things like digital document collection, digital ID verification and DocuSign. “We shouldn’t assume that all brokers have already embedded those in their businesses,” he said. “It’s not only critical for the current period; there will be enormous efficiency gains ongoing and well into the future from embedding those digital tools in your business. “If there’s any good coming out of this, embedding those great digital tools will be really valuable.” Recognising that aggregators needed to be strong in themselves to support brokers, Specialist Finance Group reviewed its business to ensure that staff could be kept on at the same rates and efficiencies when working from home, said head of aggregation Blake Buchanan. SFG began holding daily webinars on its digital systems, as well as a weekly COVID series “which catered for the things that were most important to brokers and their business”. SFG also brought in counselling sessions to support the wellbeing of the team as well as their clients. “Those sessions were about your own wellness, working out what the signals of distress are within yourself and giving tips and tools on how to deal with that as a business person,” Buchanan said. “Our philosophy on this has been hightouch, great information and really quick turnaround time, with little to no impact to our aggregation business.” Behind every broker are customers who are being impacted by COVID-19, and AFG wanted to focus on those people and help brokers help those borrowers, said head of sales and distribution Chris Slater. He said the aggregator had got in early to create an information site for brokers and offer on-the-ground support from its partnership managers. The aggregator has also had to redesign its own strategy, having been prepared for

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a whole face-to-face program for this year. But in a sign of how well the industry is adapting to change, Slater said AFG saw almost 10,000 brokers attend its sessions within the fi rst two months. “It was about keeping them safe, saving them time and making sure that we had everything in one place to ensure they were best placed to help their customers and win more customers,” he said. One of the challenges for aggregators at the moment is how to provide information and support in a unique way, and outsource fi nancial has managed that very well. CEO Tanya Sale said outsource financial was trying to “do things a little diff erently”. The aggregator has launched a new virtual learning festival made up of numerous components, such as education on its software platform iOutsource, a virtual coff ee cluster called ‘Bring Your Own Cuppa’, and a lockdown learning program for kids. “We really wanted to support our members and off e r t hem o pportunities t o increase their skill sets during these times

of isolation. So we did it on two fronts: one on the educational piece and then another on the personal piece,” Sale explained. “For us at outsource we look at our members as business partners and want to ensure that they know we are there to support them.” Preparing for a difficult few months ahead, Anja Pannek, CEO of PLAN Australia, said all aggregators were working hard to support brokers and their customers, but that the economy was not going to be in a great shape for a long time. “The reason I want to highlight that is it’s really important that brokers think very carefully about who they partner with,” Pannek said. Like all aggregators, PLAN has been keeping brokers up to date and assisting customers with their financial positions, but Pannek warned that it would be “a long road to recovery”. “This isn’t a matter of ‘we’re going to snap out of this in three months or six months’. I think we’d like to see that, but we won’t,” she said.

“I think technology is going to start enabling a lot more diversification, and my view is we need to get out in front of it” Chris Slater, AFG

BROKER QUESTION

Why is it so difficult to switch between aggregators?

Blake Buchanan: It is not difficult if all affairs are in order. Having much experience in this space, there is minimal down time and arguably less work than what you would require from a client for a home loan approval. The only ones that could make it tricky are the aggregators that you are departing from, and this is generally due to contract clauses that you signed when joining. My advice is to make sure you have read and understand the terms and conditions of the aggregator prior to joining. There is a lot the industry could do to assist here by standardising the process and release requirements to shore up any uncertainties around separation letters. An industryrecognised arbitrary review board would also assist if there are disputes between the parties. Mark Haron: We’ve set up our onboarding process to make it as easy as possible for brokers to join Connective. Our onboarding team provide support with documentation and set-up, including an overview of all the services available. Our IT team make sure transitioning data across is easy and stress-free, and our broker support managers provide a tailored learning program to set up their business and get them up to speed with Mercury (our CRM). Our philosophy has always been to retain our members by providing excellent service, but we understand it can be challenging for brokers to get out of contracts with other aggregators; that’s why we make it as easy as possible from our end.

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SPECIAL REPORT

AGGREGATORS ROUNDTABLE 2020 Is this the time to diversify, and what are you doing to support brokers? Diversification is a topic pushed frequently in the broker industry, but the coronavirus pandemic has really highlighted the need for brokers to help business owners. While some brokers may be playing cautiously at the moment, Wright said now was not only the time to diversify products and services but to be deliberate around forming a diversification strategy. “Delivering a diverse culture and diverse products and services for a broker business just makes sense; it always has and even more so now,” he said. “Even if you’re unsure about where you need to go as a business owner, ask the questions, be curious, talk to your aggregator about where you can go next and what makes sense in relation to the capability that’s within your business right now.” FAST launched its Business Lending Index last year, which provides quarterly business insights. It has shown that not only are businesses coming to brokers for assistance, but it’s all sizes of businesses. To help brokers diversify, the aggregator has built an education platform for those looking to move into different financial services and has partnered with the Commercial and Asset Finance Brokers Association. “It’s fundamental and critical that the platform that we provide to the brokers can enable them to meet the broad needs of their clients,” Wright said. “We have dropped a whole heap of solutions, updates, capability and functionality into our platform so that brokers at FAST can deliver to their clients across mortgages, business lending and asset finance.” Connective executive director Mark Haron said it had been the right time for brokers to diversify “forever”. It had already been happening without prompting, he said, calling out figures for brokers offering insurance on top of mortgage solutions. Connective partners with ALI Group, and in March the aggregator saw a 230% increase in policies sold since February, as well as a

20% increase in Allianz policies for house and contents insurance. “I think brokers are already starting to embrace the opportunities that are presented to them, and it’s also coming off the back of brokers communicating with customers a little bit more around the current environment,” Haron said. The Liberty Group has always helped lead the way in encouraging diversification, which is why Liberty Network Services refers to brokers as Liberty advisers rather than mortgage brokers. Brendan O’Donnell, managing director at LNS, said he also believed the opportunity to diversify had been around forever, and there was no reason broker market share of commercial loans wouldn’t reach the heights that their share of the residential market was at now. “I think that journey is well on its way,” O’Donnell said. “Equally in terms of business finance, commercial motor finance, etc., we’ve seen advisers embrace that in a fantastic way over time. What that’s done is diversified their income streams, which is of extreme value to them.

BROKER QUESTION

Why not make commissions uniform once and for all?

Chris Slater: We have worked closely with the Combined Industry Forum and relevant government bodies to make this part of what we do transparent and open for everyone to see. A one-sizefits-all solution isn’t always the answer. The market for the supply of mortgage aggregation services to brokers is competitive – it is characterised by fluid market shares and dynamic competition between aggregators. AFG brokers are independent business operators. They are attracted to a meaningful value proposition across a range of measures and how they feed into the way they choose to operate their businesses. The payment model is one component of that dynamic.

“BID will give customers in the longer term a lot more confidence in dealing with the mortgage broker” Mark Haron, Connective

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SPECIAL REPORT

AGGREGATORS ROUNDTABLE 2020 BROKER QUESTION

Do you think we will ever rid the industry of clawbacks?

Tanya Sale: No, I don’t. Clawbacks are here to stay. What I believe will happen and is happening... an example would be a situation where a client had suffered a personal misfortune – and that could relate to illness, marriage breakdown and the house had to be sold, employment loss, etc. – and this has been no fault of the broker, there should be a process in place where the lender is approached and the clawback is reviewed on a case-by-case basis. What I have seen is the lenders are open to any legitimate case, and in these cases they have reversed the clawback.

“The way we’ve seen our members adapt and shift over a very short period of time, moving to digital means, I think it’s a clear running start” Anja Pannek, PLAN Australia

“Let’s not kid ourselves. Over the next three to six months we’re going to see a challenging time around volume. I think a bit like technology and digital this gives us a fantastic opportunity as an industry to take this disruption and use it to our benefit.” Looking at how it could use technology to help brokers with diversification, AFG has developed a commercial and asset finance platform that’s separate to the aggregator’s residential platform. Slater said brokers should know what their customers needed before they came to them for help, and technology would help with that. “Every single residential mortgage broker has got to be able to use that platform and get a commercial and asset finance accreditation,” he said. “Twenty-five per cent of customers that sit in our brokers’ databases are actually SMEs, and they have commercial and asset finance

needs. We’re finding right at the moment that those customers need help more than anybody else in the marketplace. “I think technology is going to start enabling a lot more diversification, and my view is we need to get out in front of it.”

Technology is more important now than it has ever been before, thanks to social distancing measures. What are you doing to ensure that you offer the best technology to your brokers? Talk about digital innovation and technology is nothing new, but it has ramped up in the past few months as face-to-face meetings have not been possible. Innovation and products that may have been introduced over several months or years have been fasttracked within weeks. Moore said technology was not just important for the current crisis but would continue to be needed as businesses become more sophisticated and markets more complex. It is not a matter of choosing either face-to-face interactions or digital tools, however; they should work together. “Equally fundamental is not only how those tools are used but how data is then stored,” he said. “We certainly believe the future for broker businesses is combining great digital tools with high-quality face-toface customer interactions.” Choice has done a lot of work with its CRM system Podium and in helping brokers get the most out of it. One of its functions is My Finance Communities, which enables a broker to interact directly with the customer, who can then forward on documentation via the same tool. Everything is stored in the customer’s records, and the data is then pre-populated into the required documents. “It’s not only a great user-friendly way to interact with customers but an efficient way to operate as well,” Moore said. With more people heading online, many are finding their connections slow and frustrating. To combat this for brokers,

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BROKER QUESTION

“Communication is very important, and we should not categorise that importance for just business; it’s about people as well”

Do aggregators have a view on the number of brokers that may leave the industry as result of COVID-19? And what would be your advice for brokers considering exiting the industry?

Blake Buchanan, Specialist Finance Group

Connective wanted to make sure its systems were ready to run as fast as possible even under increased pressure. Haron said technology had been a core part of Connective’s off e ring since it began operations in 2003. The aggregator has its own proprietary system, so it can respond to broker feedback by building new features and making changes. “It’s been a signifi cant reason why mortgage brokers have chosen to use Connective,” he said, “because of our technology and the capacity that enables them to look after their customers, manage their CRM more eff e ctively, a nd s tay i n c ontact w ith t heir customers too, during and post-settlement.” Sale said that as outsource fi nancial was an independently owned aggregator it was important to partner with an independent software provider like Salestrekker. “The system already had so many features that were helpful, such as the client portal, e-signatures and integration of third party applications,” she said. “But as non-face-toface interviews became the norm in this pandemic, it enabled us to rapidly respond. Even over the last two years, it has brought out new tools we didn’t even know we needed, like client interview mode and video technology.”

Following Sale’s mention of being independently owned, the conversation flowed away from technology as the aggregators began discussing what that meant for the current environment. Pannek said that while it was great to have that conversation, there was another level to the discussion right now. Pointing to the GFC, she said everyone on the call had already seen where the current situation could go. “I think lenders in Australia have absolutely come to the fore and been the backbone and the buffer, if you think about partners that we work with,” she said. “But there’s another side that we saw through the GFC, and it’s going to be bumpy for some lenders as well. I think we’ve got a role to play in understanding and working with our lenders through risk, because the cost of funds may look very different, and that’s got customer consequences on the other side.”

How important is communication for you right now? As the panellists had already pointed out, frequent policy changes have added a layer of confusion for both brokers and borrowers, meaning communication has had to be increased and methods changed.

Brendan Wright: What we’re seeing is a continued momentum in the shift of bankers moving into finance broking, and that hasn’t slowed down even though we’re in very interesting and challenging times. I see the number of brokers actually growing, and there’s high appetite from consumers and business owners for someone who understands debt and how to get them access to funds. Anja Pannek: There’s no denying the shock of the royal commission and the significant uncertainty caused as a result of that. A lot of people ask the question around whether or not they should be in this industry, but the fact of the matter is we’ve proven through our value proposition to customers the strength of the industry. The outlook for this industry is positive, and there is opportunity.

Liberty’s approach to communication had been about “consistency and frequency”, said O’Donnell, who explained that as a boutique aggregator LNS had the benefit of being able to get in touch with each and every one of its advisers. “Ironically, we found that brokers at large are a lot more susceptible to engaging in these times, whereas normally it’s very difficult to get hold of them because they’re all extremely busy,” O’Donnell said.

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SPECIAL REPORT

AGGREGATORS ROUNDTABLE 2020

BROKER QUESTION

How are you supporting new-toindustry brokers at this time?

Brendan O’Donnell: We have a comprehensive A-FIT program with an initial 12-month training, coaching and mentoring framework broken down into four parts. It has proved very effective, with a high success and retention rate over the past four years. We are very fortunate our model is focused on diversification from the outset, and this helps advisers diversify their income streams.

“Of course, while they are very busy we’re in a good position to be able to engage and have meaningful discussions with our businesses.” As far back as in mid-March, outsource hosted a compulsory webinar to pre-empt the lockdown and discuss with lenders the types of things they needed to start thinking about with the aggregator’s members. Sale said this culminated in an information page on its members’ website, to which updates were added as they came out. In addition to the weekly updates and virtual events already mentioned, the aggregator has a Facebook page on which brokers can discuss scenarios. “What has been really encouraging is that everybody wants to help each other,” Sale said. “With the variety of things we’re doing, it’s making it easier for our members to keep up to date with the ever-changing landscape and lender policies. In turn, our members are able to keep their clients informed.” Choice is providing frequent daily updates, as well as digital tools to analyse lender portfolios for a customer’s individual needs. Moore said things like this were important because of the difficulty in keeping up with changes. “Communication is more critical now

“We really wanted to support our members and offer them an opportunity to increase their skill sets during these times of isolation” Tanya Sale, outsource financial

than it’s ever been, and I think the challenge is to ensure that whatever we provide has perspective and relevance,” he said. Buchanan added that communication had “entered a different level of importance” for many in the industry, and he himself had been “enlightened”. “I think communication is very important and we should not categorise that importance for just business; it’s about people as well,” he said. “It’s about care in our business, more caring for our people, more caring for their circumstances, being more empathetic and taking more time in listening to their challenges, not just within work but in their social lives and personal lives.” Wright added that it was not only important to communicate but to be consistent and have a positive approach in removing the complexity. “We’re in a very interesting environment and a very challenging one,” Wright said. “Brokers are concerned about themselves, their families and their clients, so being consistent and communicating what they need to know in a positive way, showing progress and providing positive feedback along the way through whatever communication channel they’re using is an approach

we’re taking so that brokers continue to understand that we will get through this.”

How do you think the best interests duty will affect the broking industry? The best interests duty was set to be enforced from 1 July this year, but due to the pandemic it has been deferred by six months. Brokers are understandably anxious about this, but aggregators are well prepared, and the panellists believed the duty would only enhance the broker offering. Calling it a “once in a decade” regulation, Pannek said it would enable brokers to sit in front of their customers and tell them they legally had to act in their best interests, which wouldn’t be the case for the lender if they went direct. “We at PLAN are very positive about the outlook for brokers and the broker channel,” she said, adding that broker market share would only increase. “The way we’ve seen our members adapt and shift over a very short period of time, moving to digital means, I think it’s a clear running start, and also the advantages of the depth of relationships that brokers already have with their customers places them in a really good stead.”

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SPECIAL REPORT

AGGREGATORS ROUNDTABLE 2020

BROKER QUESTION What is the mortgage broking industry outlook for the next five to 10 years?

Stephen Moore: While we are experiencing short-term disruptions, the outlook for the broking industry is very positive. On the back of the best interests duty, we will see broker market share accelerate. My message for brokers is: ready your business for future growth. That means an ongoing focus on business efficiency, quality and, most importantly, continuing to provide great customer experiences.

Recognising that the best interests duty might cause anxiety for brokers, Slater said this was something the industry needed to work through together. He echoed Pannek’s sentiment that the duty would add value to the broker proposition, in that it was not something a lender had to abide by. “Some brokers are showing signs that they are very anxious about it,” Slater said. “I think that’s natural, but we need to focus on the opportunity collectively. There’s not much point in having 5,000 mortgage brokers doing the right thing and 12,000 mortgage brokers doing the wrong thing. “This is a great opportunity to grow market share, and it is a great differentiator to say BID only applies to mortgage broking. It’s not a responsibility on a lender. It’s only on brokers.” O’Donnell said brokers had already demonstrated over many years that they did the right thing by their customers.

“The good thing about BID is it’s incremental. So you’ll see a circa 20% change in the way we do things that’s going to give us an 80% benefit in the marketplace” Brendan O’Donnell, Liberty Network Services

“The good thing about BID is it’s incremental,” he said. “So you’ll see a circa 20% change in the way we do things that’s going to give us an 80% benefit in the marketplace, and that will result in increased market share. “No different to NCCP and post-GFC, we’re in a really strong position to navigate the industry to that 70% of market share we’d all love to see, which makes us stronger versus the banks.” Looking at previous examples of how regulatory changes had affected the industry, Haron said that after the implementation of the NCCP and licensing for mortgage brokers there had been a significant shift and growth. They enabled borrowers to have more confidence in mortgage brokers, while making brokers more conscientious about what they were doing. “I believe, like Anja, that BID will just take us up another notch. It will give customers in the longer term a lot more confidence in dealing with the mortgage broker,” he said. Haron added that it would also help get rid of “rogue brokers” who continued to be a challenge. “With stricter and stronger laws there’s probably better opportunity for us to make sure that only the best and well-intended brokers operate in our industry,” he said. Buchanan warned that guidelines for BID had not yet been finalised, but the industry had a good idea of where they were going. As for what they would mean for a broker’s business, he recommended brokers should be focusing on a few things, particularly documentation. “Note the reasons why you’re doing things and why it is in the client’s best interest,” Buchanan said. “By and large brokers are overwhelmingly already operating in the best interests of their clients. The final guidelines from ASIC will confirm that whilst there may be some changes to broker processes, there will be no changes to their intentions, which is to give amazing service and the most appropriate products to their customers”.

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2/06/2020 10:31:53 AM

FEATURES

ALT-DOC LOANS

An addition to your arsenal As brokers look for more solutions to help their struggling borrowers, three non-bank lenders discuss why alt-doc lending is becoming an increasingly important option and how they are helping brokers embrace it

RESIMAC’S TAKE What do you offer your borrowers? Daniel Carde, Resimac: “We offer borrowers access to a flexible range of lending solutions designed to suit a wide range of needs and circumstances, including alt-doc loans. In the alt-doc category, we also provide a range of options for income verification, including an accountant’s verification, business activity statements or business bank statements.”

DEMAND FOR alt-doc loans had been steadily growing prior to the COVID-19 pandemic in both residential and commercial lending, but Thinktank’s Peter Vala, general manager partnerships and distribution, says there has been a marked increase in interest due to the economic instability of the last few months. “We’re expecting this trend to remain in the foreseeable future,” he says. With the pandemic changing the way Australians live and work, Vala says business owners and individuals are more stretched for time than ever, and he believes alt-doc lending is the answer. “This is particularly important for SME businesses who have been severely impacted by COVID-19 but remain the heartbeat of the economy,” he says. “With Australians known for their entrepreneurialism and taking on challenges like we are facing now, we can only see the demand for alt-doc loans continuing to be solid, if not growing further.” Liberty’s national sales manager, John Mohnacheff, agrees that the demand for specialist loans is high and will only get higher as the economy continues to evolve. “In these past few months, our way of working has evolved faster than we could have anticipated – and it may continue to do so before the dust completely settles,” he says. “While we can only guess what the future will look like, specialist loans will continue to play an integral role in the Australian lending landscape.” COVID-19 has had a notable impact on the banking and finance sector, along with many other industries, and sparked significant changes, Mohnacheff adds. Some lenders have had to change their own practices while the impact is still being felt. “In Australia, most lenders have revised their assessment criteria, at least until a certain level of normalcy returns,” he says. “While some specialist lenders have

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stopped lending altogether, Liberty remains committed to supporting business partners and customers with much-needed prime and specialist lending solutions.” Fellow non-bank lender Resimac has also seen an increase in alt-doc lending over the past 12 months, to borrowers from a broad industry background. The lender has more than 10 years’ experience in alt-doc lending, and general manager of third party distribution Daniel Carde says it continues to find innovative solutions to meet evolving circumstances. Carde says we can expect to see continual shifts in employment patterns and the way people are working. The self-employed sector

“The self-employed sector is a growing sector, and it is important they have access to suitable lending products” Daniel Carde, Resimac

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FEATURES

ALT-DOC LOANS

is one in particular that continues to grow and would benefit from such lending. “Alt-doc lending is a valuable addition to our product suite, as it enables us to cater to a broader range of borrower types and to fulfil a greater number of Australians’ lending needs,” he says. “The self-employed sector is a growing sector, and it is important they have access to suitable lending products.”

An alternative solution for many

“We have continued to support customers requiring specialty solutions, and we will continue to find new ways to support financial inclusion” John Mohnacheff, Liberty

Borrowers may be seeking alt-doc loans for a number of reasons. They are a fast and easy alternative, particularly if a borrower’s financial structure is too complex, timeconsuming or expensive to manage for a full-doc application, says Vala. While borrowers may have to pay a little more, they are often happy to do so to make the process faster or for the greater flexibility of product choice if their financials or tax returns are not up to date. Contrary to what might be expected, Vala says that, for a lender, alt-doc applications provide the benefit of being faster to process internally. “It’s in no way surprising we’re experiencing a strong demand for this type of product within the broker channel and amongst clients,” he says. “Our range of products are designed to service and support a broad

LIBERTY’S TAKE What do you offer your borrowers? John Mohnacheff, Liberty: “We consider all aspects of the customer’s circumstances to find the right solution for their needs, whatever they may be. We know how important it can be to assess applications within certain time frames, and our free-thinking approach allows us to meet tight deadlines without compromising on our lending principles and values. “From the initial application stage to the final repayment, we’re proud to provide an excellent customer service experience. Our entire customer service team is based right here in Australia, and our service specialists are always on hand to help customers with any questions or queries about their account.”

cross-section of the market. Alt-doc loans offer this element of diversification and are now seen as an established loan type with proven performance over time.” With a market of millions in Australia, not all borrowers are alike, Mohnacheff says, which means there are many reasons why someone might require a specialist loan, such as irregular income patterns or a complicated credit history. In offering alt-doc loan solutions, Liberty sticks by its mission statement “to help people get financial”. Mohnacheff says the non-bank has long recognised that many who do not fit traditional lending parameters are still creditworthy. “We have continued to support customers requiring specialty solutions, and we will continue to find new ways to support financial inclusion,” he says. Liberty recently became the first non-bank lender to sign up to the Financial Inclusion Action Plan program, which aims to improve financial inclusion, wellbeing and resilience in Australia. “We know that there is often more to a customer’s story than first meets the eye,” Mohnacheff adds. “This is why we invest the time to fully understand their current circumstances and find out more about their future plans. By looking at the whole picture and assessing each application case by case, we’re able to support a wider range of borrowers to achieve their financial goals.” Self-employed Australians and business owners are really doing it tough right now, but even outside of the pandemic selfemployed people can have more complex financial positions. In lieu of two years’ tax returns, Resimac accepts a declaration from the self-employed borrower with respect to their income, which is supported by either an accountant’s verification, business activity statements or business bank statements.

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“Alt-doc loans are an important loan product for self-employed borrowers as they allow applicants to provide alternative documents to the usual financial statements required by most lenders at a time when those financial statements are either not up to date or not representative of the current trading results of the business,” says Carde.

Increasing opportunities for brokers Realising the need for solutions for their self-employed and SME-owner customers, brokers have been the driving force behind the increase in specialist loans over the last few months. Thinktank works closely

with brokers – who it relies on heavily as a distribution channel – to ensure they can maximise all of the benefits of alt-doc lending, supporting them with everything from accreditation, training and skills development to prospecting and mentoring. While the lender makes sure brokers understand how Thinktank assesses its alt-doc loans, Vala says the documentation is far easier and faster to put together and manage with the lender than they might expect. “Alt-doc loans are an attractive solution for brokers to offer over more complex products,” he says. “The products themselves and

pricing relative to full-doc have significantly improved in recent years to offer greater confidence for the broker in conversation with clients.” Vala adds that alt-doc loans are a great way for brokers to broaden their service offering and satisfy a wider range of client needs. “As well as increasing revenue opportunities by writing more loans, alt-docs can allow brokers to expand into new markets, such as the self-employed and investors, who are heavy users of this type of loan,” he says. Different lenders approach alt-doc lending in different ways, Vala says. For

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FEATURES

ALT-DOC LOANS

THINKTANK’S TAKE What do you offer your borrowers? Peter Vala, Thinktank: “We offer borrowers peace of mind. Peace of mind through no ongoing fees or charges, no annual reviews, no property revaluation requirements, and a deep understanding of commercial property deal structuring and self-employed/SME lending generally. “We offer hassle-free, set-and-forget loans, which is exactly what the majority of our borrowers say they are after. Just like a home loan, as long as scheduled payments are met, we leave our borrowers alone. If a borrower has a request, we are very quick to act, whether that’s partial release of a security, a discharge or a new purchase. It’s all about providing flexible, responsive solutions.”

Thinktank it is about “clearing the way” and providing further options. For example, an alt-doc borrower can later be converted to full-doc when their full financials become available to meet full-doc requirements. This provides a better rate of interest for the borrower without the need to refinance. “And a better result for the broker and their client relationship,” Vala adds. Resimac has taken a different approach to helping alt-doc borrowers progress to the benefits of a full-doc loan. The non-bank’s alt-doc products have the same features as a full-doc loan, including offset and redraw, but some of them also offer a ‘rate step-down’ for a customer’s satisfactory loan conduct. This sees the interest rate reduce by 0.25% per year for two years where the borrower makes all their repayments on time. Carde says brokers are increasingly embracing the alt-doc solution, thanks to the size of the market segment and the range of lending options on offer. “There are approximately two million self-employed people in Australia and most of these will have some type of financing need,” he says. With the continued shift in the way we work, which Carde expects to see, he says

brokers have a great opportunity here. “As employment patterns continue to shift, offering alt-doc loans enables brokers to take advantage of these shifts to build a sustainable business from diverse sources of revenue,” he says. “Offering alt-doc loans enables a broker to build their business by helping a wider range of Australians with their lending needs.” In working with brokers to do just that, Carde says Resimac is committed to listening to feedback from the channel and developing new ways to help them. “We’re also committed to supporting brokers to enable them to meet their responsible lending obligations,” he adds. Brokers can use Resimac’s QuickQuote tool, which helps them make an initial serviceability assessment of the borrower and a security location check. It also provides training sessions for both large and small broker groups, as well as guides and checklists on its BrokerZone to help brokers when they are submitting an application. Liberty runs a training program to help build brokers’ confidence, understanding that specialist lending can seem more complex. The non-bank also offers direct access to its underwriting teams “who can provide solutions to even the most complex scenarios”, Mohnacheff says.

“As well as increasing revenue opportunities from writing more loans, alt-docs can allow brokers to expand into new markets” Peter Vala, Thinktank “This is something that not all lenders can offer, but we see the value in working with brokers as true partners and providing the support they need, as and when they need it,” he says. Mohnacheff believes that specialist lending is something every broker needs in their arsenal if they want to provide a comprehensive and diverse service. “For customers, perhaps the greatest benefit of working with a broker is that they can offer a level of choice that lenders alone simply can’t match,” he says. “With this in mind, it is essential that brokers are able to support them with a range of solutions that can be tailored to their individual circumstances.”

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FEATURES

EXPERT SPOTLIGHT

Pushing forward in a pandemic The world has changed, and the mortgage market isnâ&#x20AC;&#x2122;t immune. But what shape will the future take? Tony Carn, chief customer officer at NextGen.Net, talks to MPA about tech advances and finding opportunity in adversity

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MPA: What do you see as the biggest challenges facing brokers at the moment? Tony Carn: Well, the main challenge is obviously the COVID-19 pandemic. Nobody wants to get infected, and no one’s quite sure what the new normal will be. Work environments have had to be radically overhauled, and a lot of people around the country are working remotely as a result. Face-to-face meetings and getting on the road to meet with clients isn’t really happening either. There’s a lot of flow-on effect from that, too.

Economic growth has slowed – it’s probably going to be negative for Australia this year – and unemployment is high. Longer-term, there’s the risk of recession, and that brings worries about how long it could last. It’s likely to put pressure on the housing market, as well as household income and day-to-day expenditure. Credit policies will probably tighten, too. Now there’s still opportunity to provide aid as brokers through all of this. It’ll be a challenge, granted, but I think brokers are well positioned and will have an even more important role in helping clients secure loans

go away entirely – at least not until virtual honeymoons become the norm!

MPA: What sort of future tech innovations would you want to see in order to make the whole loan process smoother for everyone? TC: I have a lot of thoughts around what I’d like to see, but I’ll try to keep it outside of the realm of science fiction and within how I think it’s likely to change in the next few years. First of all, giving or sending other people money is already pretty easy at the moment. There are a huge number of tools

“I’m a firm believer that you should never waste a crisis; change brings a lot of opportunities and the chance to implement long-term strategic initiatives versus short-term survival tactics” Tony Carn, NextGen.Net moving forward. The broker slice of the pie will grow; it’s more of a question as to how big that pie might be.

MPA: How do you think technology has changed the way brokers work? Do you think it’s made it easier to transition during the pandemic? TC: Look, there’s no question that technology has not only made it easier but in fact has made it possible. Brokers are often working solo anyway, and video conferencing has obviously been a boon for everyone. The current situation has also proved the value of these tech tools, remote working and flexible working arrangements. You can improve your productivity, you’ve got reduced travel time, and there’s still accountability around the work being done. That said, while virtual tools are useful, I don’t think face-to-face is ever going to

to carry out transactions like that. But actually receiving that money – or even asking for it – is still a trickier process, particularly when you’re talking about the sorts of sums involved in a mortgage loan. Part of this is to do with identity verification procedures. Government departments have been more forward in utilising tools like e-signatures or electronic document verification than the banking sector. There are a few reasons for that, but I suspect part of it is that banks are reluctant to be the first. Banks don’t want to invest heavily in a system, then discover it’s woefully outmoded or obsolete within a few years. There’s also a real risk of creating a patchwork of lender processes rather than having something standardised. That’s not optimum from either a lender or consumer perspective, and it can have a real impact on both the image and viability of the business.

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FEATURES

EXPERT SPOTLIGHT

Looking ahead, I think lenders are going to need to coordinate at some level and provide a baseline for this kind of thing. Obviously each lender will have its own quirks, but there needs to be a better vision of best practice. How do you do that? Well, open banking will likely play a big role in it. But even before that becomes mainstream, I think the COVID pandemic will likely cause a lot of lenders and brokers alike to look for better ways – particularly now that we have to, really. I’m a firm believer that you should never waste a crisis; change brings a lot of opportunities and the chance to implement long-term strategic initiatives versus short-term survival tactics.

MPA: How do you think the industry will continue to evolve in the next six to 12 months, particularly in light of the pandemic? TC: We’ve already seen a shift. If you look at the loans market at the moment, refinance activity is growing. Given the

“We need to have clearly defined processes around managing customers through their loan variations” Tony Carn, NextGen.Net uncertainty around the current situation, people are looking to rearrange their finances and try for more favourable interest rates. Purchasing will probably drop off more too, given the way so many people’s incomes have been affected. One thing I think brokers need to keep in mind is the importance of managing their clients prudently. There’s only a handful of lenders that empower brokers with the technology to manage their clients throughout the life of the loan, and I think as an industry we need to standardise

the approach. The way we live and work is changing, and we need to have clearly defined processes around managing customers through their loan variations. At a wider level, brokers need to be looking closely at their business continuity and disaster recovery plans. The COVID-19 pandemic can serve as a bit of a dress rehearsal for possible future issues – you need to look at where your weak points have been during this period and how you can correct them into the future.

ABOUT NEXTGEN.NET NextGen.Net is Australia’s leading technology provider to the lending industry, which focuses on delivering quality products and services to a range of banks, non-bank lenders and brokers. Its mission is to make lending easy through the delivery of state-of-the-art software solutions, from point-of-sale electronic application lodgement, assessment and processing through to settlement. NextGen.Net’s objective is to provide smarter solutions for now and what comes next – delivering best-in-class Software as a Service (SaaS) and leading the market in quality management and processing efficiencies.

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FEATURES

SME LENDING

Keeping businesses’ doors open With SMEs across the country struggling through the coronavirus pandemic, Prospa is front and centre in supporting brokers as they work to assist small business customers AS RESTRICTIONS across many parts of the country are being pulled back, businesses are increasingly looking at ways they can open their doors once they are allowed to do so. While the financial damage has meant that some SMEs have already made the difficult decision to close their businesses for good, the government and lenders are working together to ensure that as many as possible can remain operational or return to work. “We have got to remember that small businesses employ nearly 50% of Australia’s private sector workforce, so it’s very important they have access to capital and the right support to continue operating,” says Beau Bertoli, co-founder and chief revenue officer at Prospa. Prospa is one of the participants in the government’s Coronavirus SME Guarantee Scheme, which was designed to keep businesses’ doors open and more people employed by enabling small business lenders to continue funding them in an uncertain environment.

Bertoli believes the inclusion of fintechs like Prospa in the scheme has shown that the government recognises the role that alternative lenders play in providing competition and supporting SMEs in running their businesses. “It’s what the small business community needs,” Bertoli says.

Innovation and finance Research conducted by RFi Group and the Centre for International Economics has shown that $1bn in Prospa lending to small businesses contributes $4bn to GDP and supports 57,000 FTE jobs. Remembering the excited response of the industry on the day Prospa’s participation

“We’ve been talking about diversification for many years, but this is a moment to think about the delivery of those products. This is a virtual world” Beau Bertoli, Prospa “They want to be able to get quick answers and flexible products to innovate their businesses in this very bizarre and subdued economic climate that we’re in. It shows credibility and belief in what Prospa and the non-bank community are doing.”

in the SME scheme was announced, the fintech’s head of partnerships, Alex Brgudac, says it was “a vote of confidence”. Brokers have always been a big part of the lender’s distribution channel, and Prospa has been quick to roll out new

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ABOUT THE SME GUARANTEE SCHEME The government’s Coronavirus SME Guarantee Scheme will provide eligible lenders with a guarantee for loans that fit the following criteria:

SMEs, including sole traders, must have a turnover of up to $50m to apply for the scheme. The maximum loan size is $250,000 per borrower. products as well as educate brokers. “As a fintech we’re agile and that allows us to respond really quickly,” Brgudac says. Prospa’s products backed by the government’s scheme have been dubbed Back to Business, to help businesses do exactly what the name suggests. They offer an initial sixmonth no-repayment period and terms of up to three years, with no asset security required. The products include a Back to Business Loan and Back to Business Line of Credit. Loan applications can be handled online and over the phone, with Prospa aiming to deliver responses within 24 hours. Bertoli says the scheme was an important step for the government because it allowed them to take on more risk, meaning they could help businesses that would have been viable if it were not for the COVID-19 market. “I would be encouraging brokers to think whether business owners are seeing light at the end of the tunnel; many are,” he says. “Business owners have taken the opportunity to think about their cost structures. Even though a business owner may have reduced

their revenue during this period, we’re also seeing that business owners have reduced their costs. Business owners are very savvy and competent at running their businesses, and we want to provide them with working capital as they’re getting back to business.”

Stepping up to support SMEs After the royal commission’s final report was released last year, there was a greater push for mortgage brokers to diversify their income streams, and industry figures show that there was indeed an increase in the number of mortgage brokers writing commercial loans. Now, as we move into a new environment and there is this real need for additional support of small businesses, brokers again have an opportunity to step up. Brgudac says it’s not only borrowers who need help with their mortgages, or businesses that are struggling; there are also businesses that are now more under the pump to meet demand than they were before the pandemic. “Those that are supporting anything to

The loan term is up to three years, with an initial six-month no-repayment period. The finance will be unsecured, meaning borrowers will not have to provide an asset as security for the loan. do with essential services need access to working capital because they need stock and staff,” he explains. “There are areas of opportunity, and at the end of the day brokers need to find solutions.” Going beyond diversifying into new markets, Bertoli adds that now is the time to embrace online lending, and brokers are quickly realising that they can deliver a great, if not better, service by doing so.

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FEATURES

SME LENDING

“We’ve got to take the positive out of what’s an awful moment,” he says. “Business owners don’t get out of bed every morning and think about complacency. They have got to find a way to move forward. “In the finance broking community, we have been talking about diversification for many years, but this is a moment to think about the delivery of those products. This is a virtual world; years of digital adoption have happened in a few weeks. I really hope it’s changed the way finance brokers think about their business and opportunities.” Brgudac says the industry has already started adapting to the new ways of working, and that the number of brokers attending digital industry events and education sessions has been incredible to see. “That really highlights to me that brokers as small business owners are looking forward, embracing opportunities to be innovative and future-proof their business models,” he says.

A NEW ROLE FOR BEAU Prospa co-founder Beau Bertoli has moved to a new position within the company of chief revenue officer. Bertoli will be focused on driving the delivery of new products and Prospa’s market strategy to support growth. Prospa has provided more than $1.4bn in funding to nearly 27,000 customers since it was co-founded by Bertoli and CEO Greg Moshal eight years ago. Bertoli’s experience as co-founder of Prospa – as well as in running two other start-up businesses previously – means he understands the challenges of small business owners getting access to capital. “When I think about the opportunities that I’ve had to miss out on over the years of running different businesses, more often than not it was a lack of access to capital that prohibited us from taking advantage of those opportunities, investing in the business and delivering growth outcomes,” Bertoli explains. “So, as Prospa was born we were trying to change that experience with small business owners and really make it simple for them to find and access capital to run and grow their businesses.”

Keeping your finger on the pulse With stark differences between businesses in various industries, SME owners are coming to Prospa for different types of support. Some need help with paying wages and overheads, some need to buy more

industries, because businesses are being impacted very differently,” Brgudac says. “Some businesses are being forced to close, some are operating but under very strict conditions, and some are booming.

“We’re really excited about these new products because in a lot of cases it’s the difference between make or break for some small business owners” Alex Brugdac, Prospa stock after getting rid of everything when the restrictions began, and others have continued to thrive throughout the crisis. “It’s important that brokers keep a finger on the pulse of what’s happening in various

It’s about understanding what’s happening out there but also localising that and communicating with their customers. “Communication is critical because no one small business is the same, so it’s

important to understand the nuances and specific pain points so that together we can provide the right solutions for that small business.” As brokers look to help their customers, whatever stage of diversification they are at, Brgudac says they are encouraged to speak to Prospa’s BDM team, whether they want to run through different scenarios, seek support or provide feedback. Brgudac suggests that brokers come to Prospa with any insights or questions they have around the government-supported Back to Business products. “We’re really excited about these new products because in a lot of cases it’s the difference between make or break for some small business owners. “It goes to the core of who Prospa is and why we exist, and brokers play a critical part in that,” Brgudac says.

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FEATURES

SMARTBANKS

A digital upgrade for broking Digital banking is already commonplace – but what’s the next step for both banks and brokers? MPA talks to Melissa Christy of 86 400 about the smartbank’s approach

JUST A few decades ago, the idea of online banking was something out of a science fiction novel – a dream rendered unlikely by the lack of supporting technology and concerns around security. But in 2020 it’s become commonplace. So, what’s the next step? How will digital banking evolve in the next decade and beyond? For Melissa Christy, lending product lead at 86 400, these are the considerations that drive her day-to-day role. Given that 86 400 is the first to be dubbed a smartbank, there’s pressure to look at new ways of doing things in the digital banking space and simultaneously streamlining processes. In practical terms, Christy sees the primary benefits of smart banking as enabling smoother processes, making identity verification easier, and reducing client-to-broker-to-lender friction. All of which are admirable goals at any time, but Christy believes they have taken on a new level of importance in recent months, in no small part due to the COVID-19 pandemic.

“There’s more need than ever for the ability to transact in a way that doesn’t involve direct contact with other people, and having

may expand in the future, Christy notes that this has been a specific choice. “We think brokers are the best way for consumers to find lenders and products,” says Christy. “It’s not just about presenting customers with a variety of rates and then hoping for the best. We recognise that brokers have a much more complex task ahead of them, particularly given the new best interest considerations that are coming into effect.” Accordingly, Christy stresses that 86 400 is heavily invested in providing brokers with the toolsets they need to thrive in an upgraded digital environment. While it’s long been necessary for brokers to keep up to date with the tech side of the business, Christy believes it’s now more crucial than ever that they do so, in order to distinguish themselves from competitors. “We spend time working with brokers to ensure they’re up to speed with our processes,” says Christy. “You can be certified entirely online, but we tend to prefer to go more in-depth – Zoom calls, webinars, demonstrations and so on. We’ve got four

“We haven’t slowed down with our roadmap. It’s pretty much business as usual” Melissa Christy, 86 400 a structure in place to enable that is crucial,” says Christy. Fortunately, it’s been a successful approach so far. Operating from her home office, Christy says the impact on the lender’s day-today operations has been fairly minimal. “We all just picked up our laptops and went home,” says Christy. “All of us are staying connected with Slack and Zoom, so we can tackle issues as they arise pretty easily. We haven’t slowed down with our roadmap. It’s pretty much business as usual.” At present, 86 400’s products are offered entirely through brokers. Although distribution

BDMs around the country at the moment, and that’s likely to expand into the future too.” Though there’s much to be optimistic about, Christy is still pragmatic about the challenges currently facing brokers. She cautions that it’s still too early to know what the full impact on the property market will be. “Certainly you’ve got some factors that don’t paint a promising picture – there’ve been income cuts across the country and refinance activity is at an all-time high,” she says. “But if interest rates continue to stay low, there are certainly going to be buyers who will want to take advantage of that.”

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ABOUT 86 400

“It’s not just about presenting customers with a variety of rates and then hoping for the best” Melissa Christy, 86 400 However, she does believe it will force lenders to change their approach to dealing with both brokers and clients. If they haven’t invested in online processes effectively up to this point, then they’re going to need to do so – and swiftly. Christy points to online shopping as a precedent-setting example. “Online shopping is totally normalised now, but just a few years ago it was still viewed with a certain measure of suspicion,” she says. “It helped set a standard for other activities too. People are more confident that they can do other things online securely, and in many cases are asking why they can’t do more.”

Though Christy believes larger players in the market will gradually adopt similar approaches, she thinks it will take time; it’s a significant pivot to make, and not everyone is equally equipped to do so. “We’re in the position we are because we built the company from the ground up to be like this,” she says. “Certainly it’s an adaptation others can make, but it presents logistical difficulties. The more existing employees and processes that are involved, the more challenging it becomes to pivot. It’s an advantage that we’ve got on our side.”

86 400 is Australia’s first smartbank, built for smartphones. A bank that shows customers what’s actually going on with their money so they feel in control every second of every day. All eighty-six four hundred of them. Led by CEO Robert Bell and chaired by Anthony Thomson, 86 400 became a licensed ADI in July 2019 and launched in September 2019. 86 400 enables customers to connect all their accounts (from over 100 financial institutions) in one place, giving them their full financial picture. It uses smart technology to surface the most relevant information about spending, savings and bills so customers can plan forward, as well as look backwards. Australians can open an 86 400 account in just 120 seconds, giving them great rates, no monthly fees, plus instant access to Apple Pay and Google Pay. Visit www.86400.com.au for more information.

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FEATURES

BROKER SUPPORT

Backing the broker community ME Bank has been making changes to support brokers in a tough economic environment without face-to-face meetings GETTING USED to a new way of working can take some time, particularly in the midst of a global pandemic. As most people have had to work from home over the last few months, everyone has had to adapt. For a predominantly face-to-face industry like mortgage broking, this has meant huge changes to their normal working life. Brokers are not only working from their living rooms but having to forgo the many in-person meetings that would normally adorn their weeks.

like everybody else, brokers are increasing their communication with and education of customers. “One of the things I have been impressed with is how brokers and aggregators have put their hands up to say they want to play a key role in helping impacted customers,” Patterson says. “Customers have got a lot of questions around what they should be doing in the current situation. Brokers have been really

“The one thing I would like to reinforce is, as a bank we are absolutely 100% committed to our broker community” Mat Patterson, ME Bank ME Bank’s head of broker distribution, Mat Patterson, says one of the biggest challenges for anyone moving to a workfrom-home environment is maintaining productivity. As well as making sure they are set up for working remotely, potentially homeschooling, and navigating virtual calls

good at saying yes, we want to help triage our customers and play a leading role in doing that.”

Digital innovation to help brokers Patterson says that in the early stages of the COVID-19 crisis no one really knew what the

lockdown rules were going to look like and what access brokers would have to customers. Once this became clearer, ME “jumped on the VOI piece pretty quickly”. The bank allowed brokers to do interviews via video calls but wanted to ensure its processes did not deviate from what brokers were used to. “We wanted to keep the current process as much as possible without introducing new systems or processes,” Patterson explains. “Allowing brokers to complete VOI requirements over a screen without needing third party vendors was important. That was a good thing we got out the door pretty quickly.” While brokers are “busier than ever”, what they are busy with isn’t necessarily generating any revenue, Patterson says. He believes brokers need to find a balance between continuing to seek out revenue-generating opportunities and being there to answer questions from existing customers. Enabling brokers to reach out to new

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Sponsored by

IMPROVING COMPLIANCE ME Bank is making a number of changes and working with NextGen.Net to upgrade its systems. This month, the bank has launched the Compliance tab as well as the Supporting Documents function in ApplyOnline. Patterson says having these capabilities in ApplyOnline is a really good push forward, adding that responsible lending and compliance should never be used as a competitive advantage. “I think standardisation when it comes to compliance and responsible lending is a good thing because it helps brokers be more consistent in their approach,” says Mat Patterson, head of broker distribution at ME. “Responsible lending is a massive rework for us at the moment. If we just standardise that in line with the industry so brokers know it’s something they’re familiar with, that should result in a more consistent and faster turnaround time.”

Making changes for the broker

and existing clients alike, ME has launched a social media subscription service called ShareME. Every month subscribed brokers receive an email with five articles they can share on their own social media accounts: one article around financial literacy and the others on lead management. “It’s based around our four core market segments, which are first home buyers, refinances, investors and upgraders,” Patterson says. “It allows brokers to get really professionally curated content out to their customer base as a productive way to keep that contact there.” So far, ME has seen the click-through and share rates go beyond what it would normally expect from a marketing campaign. “I’m really pleased we can leverage our content to hopefully add some value to brokers during a time when their traditional sales opportunities might be unavailable,” Patterson says.

For ME, assisting brokers goes beyond providing digital tools and support. In line with the remuneration reform developed via the Combined Industry Forum, which requires the value of upfront commissions to be linked to the amount drawn down by borrowers instead of the loan amount, ME has changed its commission model. Instead of looking at a customer’s drawndown funds 12 months after settlement, the

“If a broker does a transaction for the customer, the initial drawdown happens and then there might be additional funds, whether it be for home improvements or for investment purposes or additional purchases,” he says. “If that happens within two months after settlement, having to wait 12 months for that to be drawn down isn’t ideal from a broker’s perspective.” The changes ME has made are part of its wider commitment to the broker industry,

“Brokers have been really good at saying yes, we want to help triage our customers and play a leading role in doing that” Mat Patterson, ME Bank bank will also look at the account balance at six months and enable upfront payments to be made on additional funds drawn down. Patterson says the new model will provide a more flexible commission model and aligns with what brokers tell the bank about how its lending policies meet customer objectives.

which the bank also recently highlighted in a television advert. Patterson says brokers should rest assured that, as a brand, ME is out there representing them. “The one thing I would like to reinforce is, as a bank we are absolutely 100% committed to our broker community,” he says.

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FEATURES

CUSTOMER SERVICE

How to be proactive, not reactive Growing your business means evolving beyond merely reacting to what your competition is doing, writes Darrell Hardidge

IF YOU look at high-performing businesses, you will notice that they actively plan into the future. They’re always clear on what they want. And their strategic plan is clearly documented. Every successful company is proactive in their thinking, and they don’t leave anything to chance. Most importantly, they don’t assume they know; they seek assurance from their customers to ensure they are on track. They can assess how accurately they are predicting the future, and this is always linked to their current business metrics. However, many businesses fail to develop a strategic plan. They are mostly reactive to what’s happening today, this week, etc., and focus more on their competition. Number-one companies follow the mantra “obsess over your customers, not over your competitors”. They proactively look at how to keep adding value for their customers and how to ensure they give their customers

a brilliant service experience. They focus on team training and mentoring to ensure their team can always deliver high standards of customer service. By contrast, most companies in reactive mode continually focus on what their competitors are doing and end up in a price war,

Trying to control and outwit your competitors is a risky and expensive game.

Lead your market If you focus on doing everything you can to be proactive in the way you deliver service excellence, you will automatically be ahead

The only thing you can control in a competitive market is what you do internally to ensure you deliver service excellence trying to outdo each other to win customers. The problem with this reactive approach is that it’s challenging to stay focused on your own game because you keep getting trapped in someone else’s. The only thing you can control in a competitive market is what you do internally to ensure you deliver service excellence.

of your competition. Most are too busy focusing on what everyone else is doing, rather than being strategic in what they’re doing themselves. One key reason is that they don’t have any quality data on what’s going on in their business. At best, they have a vague opinion. As W. Edwards Deming said, “Without data,

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you’re just another person with an opinion”, and we all know what that’s worth.

Knowledge is power Being strategically proactive ensures that you have a game plan and measurement to show whether you’re on track. With the correct KPIs, you can measure how well you’re fulfilling your prediction. There’s a metric that we call the ‘one number theory.’ It’s at the centre of measuring everything that’s going on in your business. A very accurate customer experience measurement provides a clear reflection from an independent market perspective – that is, the true voice of your customer. When you can measure critical areas such as the sales process, the implementation and onboarding process, account management, delivery processes, operations (including things like accounts receivable), companywide communication, and knowledge from

the independent perspective of your market, you’ll have a very accurate assessment of how well you’re performing. When you have this information and you keep driving it towards the optimal 10/10 result, you can keep designing in a proactive manner that ensures you’re staying ahead of the game and fulfilling and exceeding customer expectations. If you don’t, then you’ll continue to chase everybody else. It’s like driving with your eyes on the rearview mirror. You can only see where you’ve been, and you don’t know where you’re going. It’s extraordinary to think that most companies operate this way. Business growth is directly linked to the customer experience.

Proactivity pays off A proactive approach to the customer experience ensures there is a plan and a commitment to growing revenue, based on increasing the value that you offer to your customers.

The more value you provide, the more they’ll spend and the higher margin you’ll receive because they’re happy to pay for quality – but most importantly, they’ll refer their friends and colleagues. If you obsess over your customers and not your competitors and put in place very accurate KPIs to understand what your customers value about doing business with you, you’ll be in a powerful position. If you don’t do this, and instead you just wait and see what happens in the challenging economy ahead, it’s potentially a recipe for disaster. Darrell Hardidge is a customer experience strategy expert and the CEO of customer research company Saguity, which specialises in driving revenue growth from customer appreciation. He is also the author of The Client Revolution and The 10 Commandments of Client Appreciation. To find out more, visit saguity.com.

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SPECIAL REPORT

2020 TOP 10 BROKERAGES

TOP 10 BROKERAGES 2020

In a 12-month period that saw the fallout from the royal commission, several interest rate cuts and the beginnings of a global pandemic, these brokerages have proven worthy of being named the countryâ&#x20AC;&#x2122;s best

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TWELVE MONTHS AGO the mortgage broking industry was talking about the threat of having trail commission removed, explaining to the population and regulators why it was necessary. Now, the COVID-19 crisis has made it clearer than ever why brokers are paid trail commission. Brokers have spent extra time assisting customers with repayment deferrals, pausing mortgages, answering questions and helping businesses with their cash flow – all of which take up time and resources but do not earn a broker money. Instead, the broker community is focusing on providing the best customer experience it can and helping borrowers stay on their feet. This year’s Top 10 Brokerages all speak of a focus on the customer. Brokerages are striving to build strong relationships through better technology, easier processes, diversified solutions and greater communication. As one brokerage head said, now is not the time for selling; now is the time for support. In recent years, MPA’s Top 10 Brokerages have been made up of two separate lists: one Top 10 for franchises and another for independents. Last year, these were merged to include both in the same listing, and it produced an almost even split. In 2020, however, the independents have come out on top, with no franchises making it into the Top 10. The closest a franchise came to making this list was in 19th place. In fact, the brokerages’ total settlements for the last 12-month period were considerably higher than in the 2019 list, with none falling below the $300m mark. The average written this year was more than $650m, compared to last year’s $291m. With new brokerages featuring in the list and an increase in the number of submissions received, brokerages seemed to feel more confident about entering this year. Thanks to the royal commission, brokerages have focused more heavily on their processes and customer relationships, which, alongside widening customer sentiment, could have played some part in this growth in the settlement figures. The last few months have brought on new challenges as many businesses have fought to stay open and borrowers have lost their jobs. But these brokerages are navigating the environment as best they can, and as one brokerage put it, “challenges also provide opportunities”. It will be interesting to see what next year’s figures show as brokers seek out those opportunities. Read on to find out which brokerages made the 2020 list and how they are adapting and growing amid the uncertainty. Thank you to everyone who submitted an application this year and to our Top 10 Brokerages for giving us their time.

A MESSAGE FROM OUR SPONSOR We are honoured to sponsor MPA’s Top 10 Brokerages report for 2020. We know customers value the service that brokers provide, which is why we are committed to supporting the industry. I want to take this opportunity to thank all of our broker partners for their ongoing support and commitment to getting the best customer outcomes. As Australia’s largest lender we are incredibly proud to provide a marketleading customer value proposition based on delivering a better value offering for customers, supporting them through the homebuying journey and offering them simplicity, consistency and accessibility. We have focused on providing brokers with support, expertise and convenience through a dedicated team of relationship managers and our Broker Support Hub. We’re investing in technology through our CommBroker website, our online support hub for our broker partners where they can access CommVal, Application Status Tracker, policy, tools and calculators, all designed to help them deliver the best customer outcomes. Congratulations to the brokerages that have achieved this Top 10 status – your hard work, dedication and customer focus has brought you to the pinnacle of your industry. Enjoy the accolades and all that this achievement brings to your business.

Adam Croucher

General manager, third party banking

HOW WERE THE WINNERS SELECTED? We asked broker groups to submit their top franchises and aggregators to submit their top independents, and we encouraged brokerages to send in their own submissions. We ranked them on a combination of three areas: total loan book size, total settlements over a 12-month period, and conversion rate. Each brokerage was given a ranking in each of those areas, and the ranks were then combined to produce a final tally.

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FEATURES

2020 TOP 10 BROKERAGES

GREEN FINANCE GROUP

Focusing on the ‘here and now’ is helping this team through difficult times

Total loan book

$962,584,434 Total settlements 1 March 2019–29 February 2020

$337,333,821

Number of loan writers

CELEBRATING ITS 10th anniversary, BrisbaneAvg annual volume/broker

$56,222,303 Conversion rate

95%

based brokerage Green Finance Group has just expanded into a new multi-level office and shopfront. Director Daniel Green says he’s really proud of the trajectory the group has been on. The team includes commercial, equipment and residential finance professionals. The commercial brokers specialise in one or more core commercial

CLARITY HOME LOANS

This brokerage is keeping its finger on the pulse of the market

Total loan book

$1,454,000,000 Total settlements 1 March 2019–29 February 2020

$456,313,456

Number of loan writers

Avg annual volume/broker

$45,631,345 Conversion rate

74% 52

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industries, including hospitality, childcare, accommodation, management rights, property development, and medical and aged care. “I still love what I do and particularly enjoy working with a dedicated team and so many inspiring business owners; it’s quite the privilege in many ways,” says Green, who aggregates under Loan Market. Relationships are key to building on the brokerage’s success, he says. Rather than thinking of deals and transactions, Green sees clients as business partners, which explains why much of his business comes through word-of-mouth referrals. While Green is seeing businesses in his specialty areas of hospitality and childcare hurting at the moment, he has been increasingly proactive in educating clients and ensuring they are prepared for increased paperwork and longer lead times. Focusing on the “here and now”, he says he is concentrating on working with existing clients and helping them manage expenses and keep their businesses viable.

WHILE THE coronavirus pandemic has “not had a devastating impact” on loan volumes at Clarity Home Loans, its effects have still been felt. In order to keep reacting to the constantly changing environment, the brokerage is working on building its team engagement to ensure it has its finger on

the pulse of the market, lenders and sentiment. Owner-managers Mark and Kristy Edlund run the brokerage with around 14 staff. Kristy says half the team have been with the group for more than seven years, which has given them a great depth of knowledge in the industry and a platform for bringing on new brokers and training them up. “Our business is made up of a great mix of ages, backgrounds and experience levels within the industry. It’s a hard-working, focused team that I am proud to be a part of,” she says. Clarity has been operating for around 14 years, and Kristy says its success over the past 12 months has been down to clear goals for all staff; “focusing relentlessly” on the culture; and a stream of leads coming into the business. Featuring in the Top 10 is “a great feeling for the team”, she says. “After an incredibly difficult 12 months following the royal commission, it’s great for them to achieve some recognition and to step back and reflect on everything they have worked so hard for.”

You can count on CommBank. Value, flexibility and support so we can help you and your customers achieve the best outcomes. • Australian based end-to-end application processing and call centres. • Dedicated assessment teams ensure fast and consistent refinance decisioning. • $2,000 Cashback when your customers switch their eligible home loan to CommBank. Apply by 3 August 2020 and fund by 9 October 2020. Minimum refinance amount $250,000¹. • Our lowest 1, 2 and 3 Year Fixed Rates with a Wealth Package for Owner Occupied home loans. Principal and Interest repayments, with no establishment fee or monthly loan service fees. Minimum package lending balance of $150,000². • Complimentary Home Loan Compassionate Care protection for eligible Owner Occupied home loans. We’ll support your customers by paying home loan repayments for around 12 months, if the customer, their spouse or dependant passes away or is medically certified with a terminal illness³. • Your customers can manage their home loan and banking needs 24/7 with our CommBank app and NetBank. With helpful insights and tools at their fingertips, they can stay up to date and informed.

Visit commbroker.com.au for more information and the latest updates

Things you should know: ¹Owner Occupied interest only loans are eligible if funded on or from 7 April 2020. Customers must refinance their home loan from another financial institution. New loans and top-ups are not included in the minimum refinance amount. Bridging loans and the refinancing of an existing Commonwealth Bank or Bankwest home loan are ineligible for this offer. ²An annual package fee, currently $395, applies. ³Age and loan eligibility requirements and other limitations and exclusions apply. Refer to the full terms and conditions in the Home Loan Compassionate Care Information Booklet available at commbank.com.au/compassionatecare. Applications for finance are subject to the Bank’s normal credit approval. Approval criteria, fees, charges, terms and conditions apply. Commonwealth Bank of Australia ABN 48 123 123 124 Australian credit licence 234945.

FEATURES

2020 TOP 10 BROKERAGES

ACCEPTANCE FINANCE

Founded on mutually beneficial relationships between brokers, referrers and clients

Total loan book

$1,341,000,000 Total settlements 1 March 2019–29 February 2020

$369,500,000

Number of loan writers

Avg annual volume/broker

$17,595,238 Conversion rate

90.3%

ACCEPTANCE FINANCE says culture is the corner stone of its business. Being authentic and working with like-minded people is what has helped the brokerage grow, says head of operations Jonathan Cornish. A diversified business, it offers solutions ranging from home loans to commercial loans, vehicle and equipment finance and SMSF lending. “Our business is founded on the building of mutually beneficial relationships between brokers, referrers and clients,” Cornish says. “Our team have similar principals around work-life balance,

ethics and their purpose, which complements our business strategy.” Over the past year, the brokerage has focused on servicing clients and on what it could directly control during the uncertainty surrounding the royal commission. Now it is working through the likely impacts of COVID-19 and how it can mitigate them. “We are working ... to ensure we can stay together whilst riding out the current uncertainty and expanding our network so that when the environment improves we are in a position to thrive,” says Cornish.

SMARTMOVE PROFESSIONAL

A diverse team embracing change to provide great customer service

Total loan book

$2,202,621,921 Total settlements 1 March 2019–29 February 2020

$603,471,554

Number of loan writers

Avg annual volume/broker

$37,716,972 Conversion rate

60.7% 54

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SINCE ITS success in the Australian Mortgage Awards last year, Smartmove has continued its focus on building lifelong relationships with customers and has secured itself a spot in this year’s Top 10. With two offices in metro Sydney and an operations centre in Manila, the brokerage relies on word-ofmouth referrals off the back of the great customer experience provided by its team. Over the last 12 months, Smartmove has focused on productivity and lifting its standards of compliance and quality of submissions, says CEO Darren Little. As the industry prepares for the best interests duty, the

brokerage is also well placed to adapt to the changes. “We are actually looking forward to BID and the opportunity it provides brokers,” he says. Even in the COVID-19 environment, Little says the brokerage has been able to pivot and adapt well to dealing with customers remotely, embracing technology and working from home. “The great thing about having a diverse team who have embraced the recent change is that it has enabled us to continue to provide great service to our customers during this time when a lot of them have been in real need of trusted advice.”

16 OCTOBER 2020 â&#x20AC;˘ SYDNEY

CALL FOR NOMINATIONS Nominations are now open for the 18th annual Australian Mortgage Awards, the nationâ&#x20AC;&#x2122;s premier independent awards recognising the leading brokers, brokerages, aggregators, lenders, BDMs and more. Are you, or your business, one of them? Visit australianmortgageawards.com.au to

NOMINATE NOW

Nominations close on 26 June

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SPECIAL REPORT

2020 TOP 10 BROKERAGES

MY LOCAL BROKER

A mix of high-tech and high-touch is the winning recipe for this brokerage

Total loan book

$1,800,000,000 Total settlements 1 March 2019–29 February 2020

$950,000,000

Number of loan writers

150

Avg annual volume/broker

$6,333,333 Conversion rate

50%

MY LOCAL BROKER prides itself on being “hightouch and high-tech”, as well as offering a local brand with national reach. Fully tech-enabled, the group can take its clients right the way through the loan process completely online. Scott McTeare, CEO of My Local Broker, says the biggest difference the brokerage has made in the last

12 months is in really listening to the client in terms of what services they need. “A lot of times most businesses will build something they think people will want. We have gone to the other extreme and ask people what they want, and we build things around what they need,” he says. The biggest challenge the brokerage is facing at the moment is dealing with service levels, particularly if clients want to go to a major bank that McTeare says is not geared up for the COVID-19 environment. To navigate the market, he is placing a big focus on the technology piece to ensure the customer journey is as efficient as possible without having to see the client in person. But he says it’s not just about making sales right now; it’s about keeping in contact with your customers. “Communication at this point in time is more important than anything,” he says. “Doing the right thing will out-trump profit. Sales will come in the future from supporting your current clients.”

LOAN GALLERY FINANCE

The key to success is a strong team motivated by shared values

Total loan book

$2,273,818,337 Total settlements 1 March 2019–29 February 2020

$607,626,219

Number of loan writers

Avg annual volume/broker

$17,360,749 Conversion rate

78% 56

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FOR LOAN GALLERY FINANCE, the last 18 years in business have not been without mistakes, but the team’s hard work has led them to where they are today. Guided by the Greek phrase philotimo, meaning “doing the right thing, automatically, every time”, the brokerage has employed some of the best brokers in the industry. “At the heart of every successful business is a group of motivated people that share common values,” says Steve Matsoukas, director. Matsoukas says the brokerage has developed its unique value proposition over time and splits its

brokers into two distinct groups: those who selfgenerate their clients and those who are dependent on leads. This has defined a clear career path for brokers, who may join the business as part of the second group and then make their way into the first. During the COVID-19 crisis, the brokerage has assisted clients with suspending their home loan repayments; ensured referrers were safe; and helped brokers understand the changing landscape. “Once all of this was dealt with, we swung our gaze to the mental and emotional wellbeing of our entire team,” says Matsoukas.

KEYLEND A clearly defined strategy and a strong team culture have helped this brokerage reach the Top 10

Total loan book

$2,951,219,418

Total settlements 1 March 2019–29 February 2020

$608,852,947

MORE THAN just a team, Keylend is a family, says

Number of loan writers

Avg annual volume per broker

$8,118,039

Conversion rate

79%

CEO Chris Burns. This attitude goes some way towards explaining the brokerage’s low attrition rate. With a strong culture that prioritises finding the best possible outcomes for clients, Keylend’s brokers work together rather than in competition. Burns says he is humbled and honoured that the brokerage is featured in this year’s Top 10. “Especially from a South Australian perspective, it’s great to stand on the national stage amongst the country’s best,” he says. In business for the past 21 years, the brokerage has remained successful by staying ahead of the game. For instance, the average age of its brokers five years ago was 51, but it embarked on a strategy to lower the age to expand its potential. “A lot of our local competitors have kept the same business model since inception, but markets change, people change, behaviours change, so the mindset to keep everything the same has proven to be commercial suicide,” he says. On top of its defined strategy and adaptability, Burns says Keylend’s success over the past 12 months can be attributed to its broker staff. “We have 23 different cultures within the business, which creates great value and choice for our customers,” he adds. “We work as a team and are very careful when recruiting to ensure they fit into our culture.”

While Burns admits it has been a challenge to adjust to the new environment, he believes Keylend has come out of it “stronger and smarter than ever”. A number of changes were made early on in the COVID-19 crisis in order to maintain metrics like profitability and the business’s balance sheet. It also discovered new ways to interact with clients. Looking outside of the pandemic, the best interests duty is another challenge Keylend is preparing for. Burns says it is a great idea in theory, but he questions what the reality will look like. “How will it limit the mindset of the elder brokers who have witnessed dramatic change over the past few years? It is most definitely a step in the right direction, but lenders and brokers need to be united in its delivery,” he says. In developing a strategy, Burns says brokerages should be looking at their competitors and learning from them. “Some are highly successful. Why? They have a strategy, direction and the means to execute. They also have contingency plans when things go wrong,” he says. “Some are treading water waiting for a way out. Why? No strategy or direction of execution plans.” His last piece of advice to other brokerages is to “invest in your culture”. “Your people are your most important asset,” Burns says.

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SPECIAL REPORT

2020 TOP 10 BROKERAGES

SHORE FINANCIAL This brokeragehas Diversification hasproved adapted toits bestrategy a vehicleand of success continues forto this focus on brokerage bringing in and newits talent principal

Total loan book

$32,023,332,020 $563,393,522

Total settlements 1 March 2019–29 2018–28 February 2020 2019

$1,066,524,760 $201,072,346

Number of loan writers

20 5

Avg annual volume per broker

$53,326,238 $40,214,469

Conversion rate

95% 42%

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ONE OF only three brokerages to have made it back into the Top 10 Brokerages list for a second year running, and the only one to move up in the rankings, Shore Financial settled the highest value of loans of all the brokerages. Despite having only been in business for seven years, it also has the second-highest total loan book value. CEO Theo Chambers says the brokerage's growth and success have been down to a continuing change in direction and strategy, now with a heavier focus on online. Rather than relying on the majority of its business coming through referral partners, Shore Financial has shifted to encouraging business through its online shop. “Now only 30% is referred by agents and the rest is a combination of word of mouth from raving fans and a result of our marketing initiatives, some measured and tracked by generating leads and some purely brand awareness,” Chambers says. Facing the same challenges as the rest of the industry following the royal commission last year, with lower morale and a tough property market, Chambers says it was optimism that gave the team the strength and momentum to ride it out. The group used its periods of lower volumes to hone its support team and infrastructure to ensure it was ready to handle the extra capacity when things picked up again, which they did after APRA dropped the assessment rates and the RBA cut interest rates.

In the current environment, the brokerage is focusing on improving the capacity and efficiency of its broker team, while also improving resources for both new and existing brokers. Its dedicated training officers, ongoing mentor support and detailed induction program all aim to bring novices into the industry. “We hired four brokers recently, all of which have been our best new starters to date, with stronger results than ever before, and this is due to the resources and support they now have,” Chambers says. He says the whole team is built upon culture and relationships. Based in one North Sydney office, every team member is driven by “success and teamwork”. “We have been really lucky in growing our team via an attraction model that is underpinned by these values. It has promoted a very cohesive environment with stream lined beliefs and approach to operation,” he says. Chambers’ advice to other brokerages is to identify their strengths and weaknesses and then operate within those boundaries. “Finding your marketplaces and why you succeed in those marketplaces is imperative to growth,” he says. “A lot of brokerages spread their efforts too broadly and try taking on as much as they possibly can when they would be far better off narrowing their efforts to a specific area where they have proven their success already.”

“Finding your marketplaces and why you succeed in those marketplaces is imperative to growth”

3 2

THE AUSTRALIAN LENDING AND INVESTMENT CENTRE The importance of getting back to basics and helping customers is front of mind consistent, and also provides an advantage when it comes to recruitment. “We are able to recruit a broad spectrum of people from different backgrounds to learn the mortgage broking industry as we are not solely reliant on a single person to process a file from end to end,” says Fosnaugh. He explains that the brokerage has worked hard over the past 14 months to introduce new technology

Total loan book

$2,652,441,923 $563,393,522

“As a small business, having a well-defined customer niche has proven to be really important”

Total settlements 1 March 2019–29 2018–28 February 2020 2019

$201,072,346 $683,443,701

Number of loan writers

12 5

OVER THE past year the team at The Australian

Avg annual volume per broker

$40,214,469 $56,953,641

Conversion rate

87.7% 95%

Lending and Investment Centre (ALIC) has worked on “refining the basics” and staying close to its clients. During a year of royal commission fallout, changing property market sentiment, dropping cash rates and the coronavirus, the brokerage has also stuck to its model of focusing on risk-tolerant clients looking to build wealth through property. Of making it into this year’s Top 10, managing director Nate Fosnaugh says, “The biggest reward we get is from helping clients achieve their financial aspirations, but there are certainly a number of great operators across the industry, and it always feels good to be recognised amongst them.” Established nine years ago, ALIC strives to ensure that its brokers have as much time freed up as possible to spend with their clients. Having multiple people working on an individual client’s application means that the brokerage’s processes are clear and

to streamline its end-to-end process; expand its offshore team; and improve the look, feel and consistency of all its correspondence with clients. ALIC has also rolled out ALICBlue, an asset finance business based on customers’ requests for support in that area. One of the bigger challenges the brokerage is facing right now is the amount of time required to manage its existing customers as the business grows. While Fosnaugh admits that the model is not for everyone, he says ALIC is always looking for great brokers who are willing to put the effort in. When it comes to navigating challenges like the current crisis or complex lending environments, he says the brokerage strikes a balance. “We work hard not to get distracted by the various things that are coming at us every day, but at the same time remain flexible,” Fosnaugh says. For other brokerages looking to grow, he says no one can know everything, so it is important to have partners who can help you and your clients. “It is a bit of a leap of faith,” he says, “but as a small business, having a well-defined customer niche has proven to be really important.”

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FEATURES

2020 TOP 10 BROKERAGES

1ST STREET Prioritising customer service rather than the value of loans has placed this brokerage at the top

TOWERING ABOVE the rest in terms of total

Total loan book

$5,807,097,500

Total settlements 1 March 2019–29 February 2020

$892,542,128

Number of loan writers

Avg annual volume per broker

$74,378,510

Conversion rate

99%

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loan book size, and with the highest average value of settlements per broker, 1st Street is “honoured” to be this year’s top brokerage, says managing director Jeremy Fisher. “Having worked in this amazing industry for over 18 years, we feel incredibly proud to be recognised for our achievements amongst many other worthy candidates,” he says. Beginning as a one-man band in Sydney’s Rose Bay, the brokerage now consists of a team of 20 spread out across NSW, Queensland and Victoria. With a focus on a high level of customer service, 1st Street has a high retention rate, and the majority of its new business comes from existing client referrals and business partnerships. Knowing that a diversified business was important in ensuring that as many of its clients’ financial needs as possible could be met in-house, the brokerage expanded its services to include commercial lending, asset finance and financial planning. It is this focus on the client that Fisher believes is the secret to 1st Street’s success. “Our focus has never been on the size of the loan book,” he says. “Each and every broker consistently ensures that our clients have a smooth, educational and positive experience. As a result, our satisfied clients are our best referrers. Based on this model, our business will continue to grow as the number of clients we deal with year-on-year increases.” On top of its hefty loan book size, 1st Street also had the highest conversion rate this year, at 99%. Fisher says this is thanks to ensuring that the brokers who join its team are experienced, knowledgeable and client-focused. Having a number of veteran brokers on staff means

the team is well equipped to work on a range of deals, from the most simple to the most complex. “As a result of the extensive experience the team has, our loan submissions to lenders are of the highest standard each and every time,” Fisher says. He puts these impressive results over the past 12 months down to a change in direction and a refined focus last year. The brokerage altered its processes to take a consistent approach to customer dealings from start to finish. 1st Street has also shifted its attention to focusing on existing clients; Fisher says they are the most valuable asset of the business. “We recognise that our biggest source of business comes from existing clients, and therefore we have invested our time and efforts into this space,” he says. 1st Street was prepared for the COVID-19 environment, having invested substantial time two years ago in enabling the team to work remotely from its interstate office locations. Wanting to maintain the high level of communication that working in an office encouraged, they began daily Zoom meetings at which brokers could openly discuss deals or ask questions. Fisher says it has accepted that new business will be down on last year. But 1st Street’s brokers have adapted to make sure they are available at all times, as many clients need extra time spent on maintenance of their loans, whether that involves a mortgage pause, an interest rate review or refinancing. The brokerage has also increased its communication with clients regarding updates and changes, using video messaging to address commonly asked questions. “In a time that has been quite stressful for many clients, our brokers have made sure they go above and beyond to make sure clients feel secure and well informed,” Fisher says.

“Each and every broker consistently ensures that our clients have a smooth, educational and positive experience. As a result, our satisfied clients are our best referrers”

Jeremy Fisher, director of MPA's Top Brokerage, 1st Street

PEOPLE

CAREER PATH

A POSITIVE IMPACT Heritage Bank’s latest recruit, Paul Olds, is set to help the bank further its fundraising efforts

Paul Olds began studying for a Bachelor of Teaching straight out of school and finished in 1993, but his education didn’t stop there. Five years BEGINS DECADE later he started his MBA at QUT, which he finished after studying OF LEARNING part-time in 2004. He says teaching for a few years meant he was comfortable leading the conversation in front of a room of people. “I think teaching is a great degree as you study how different people learn. You can transfer that understanding to so many facets of business, including leadership, marketing, training and personal development.”

1993

2012

SUPPORTS AN IMPORTANT CAUSE Olds took a sabbatical from the law firm to set up his consulting business, Humankind, and began working as a consultant with MND and Me Foundation, which supports people with motor neurone disease. “The best thing about this was spending quality time working with one of my great friends and a very special person, Scott Sullivan. Scott had motor neurone disease and was developing the beginnings of a foundation that would make such a positive impact on the lives of so many people.”

2020

DRIVES PASSION PROJECTS FORWARD This year, Olds has taken on the role of executive officer at Heritage Bank Charitable Foundation. He says his focus will be on building a community of enthusiastic supporters and channelling their efforts into high-quality projects that align with the key objectives of the foundation.

“Helping people is in their DNA. I will be driving this passion forward into projects that will create long-lasting positive impacts in the communities we support” 62

2003

FOCUSES ON BUSINESS GROWTH After meeting the principals of Cleary Hoare in 2001, Olds didn’t start working at the law firm until April 2003. He explains that he took on an “extremely broad role” in which he worked to manage and grow the business, allowing the principals to focus on the firm’s clients. “I was honoured that the principals asked me to join them in having equity when the Legal Profession Act changed, allowing non-solicitors to own equity in legal firms.”

2014

JOINS THE DOTS BETWEEN COMMUNITIES After Sullivan passed away, the MND and Me Foundation board asked Olds to join as CEO. For the first three years he was the only employee doing the administration, fundraising, client support, lobbying, service development and compliance. By the end of his tenure, it was a team of three. “I think my biggest contribution was working hard to develop a network of different but linked communities who all wanted to support families impacted by MND.”

2020 and beyond BUILDS ENGAGEMENT

In his new position, Olds’ key focus is to get positive engagement right from the start with the bank’s staff and members as well as the communities Heritage supports. His goal is to encourage greater collaboration and partnerships between those who work with the foundation and share the bank’s passion for helping people.

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PEOPLE

OTHER LIFE

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

“Once I beca me busy with mortgage broking a nd children, I concentrated on cycling a nd have never stopped”

300–650

Number of kilometres Peter Gwynne rides per week

Number of months he trains for the Australia National Championships

225.8

Number of kilometres Gwynne rode in his first triathlon

A CYCLING CHAMPION Freedom, magical places to ride and the people he rides with are what broker Peter Gwynne loves about cycling AFTER BECOMING a mortgage broker, Peter Gwynne stepped back from the triathlon competitions he was taking part in and concentrated on cycling instead. Having won gold at the Cycling Australia Masters Road National Championships in 2019 – and not for the first time – he is now preparing to represent the country at the world championships in Canada. To keep up his incredible achievements, he rides between 300km and 650km each week, depending on what he is training for.

Gwynne says he has raced and competed at a high level for a number of years and sees the national championships as the “pinnacle” event, which he tries to race every year. He spends about six months preparing for the race and competes in other races leading up to the championships. But he doesn’t want to stop there: he aims to compete in the 6 Hour World Time Trial Championship in California at some point in the future.

For Gwynne, cycling is a passion that is as much about his head as it is about the fitness. “I find it a great stress relief, and when I am fit and motivated on the bike this transfers across to business,” he says. “If I look at my business, so much is tied to the cycling community, from clients to referral sources. It is a tightknit community. I feel my ethos and work ethic in sport give people confidence in my ability in the finance world.”

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Weâ&#x20AC;&#x2122;re supporting brokers through uncertain times. Always have, always will.

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