CELEBRATING 20 YEARS
MPAMAGAZINE.COM.AU ISSUE 21.11
REBUILDING TRUST Australia’s four major banks meet to discuss the third party channel SME LENDING Time to help businesses move forward
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BROKING TECHNOLOGY New tools and systems to benefit the broker
GERALD FOLEY Celebrating 20 years of broker partnerships
19/10/2021 9:01:59 am
Go far. Go together. Running a business can often feel like navigating the ocean without a map, a compass or a sail. To succeed you don’t just need intelligence and hard work, you need the right support and the right tools. With AFG you have a tried and tested partner by your side. One who can provide you with confidence, support, and the tools you need to grow your business, your dream and your future.
afgonline.com.au ACN: 066 385 822 | Australian Credit Licence: 389087
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NOVEMBER 2021
CONNECT WITH US
CONTENTS 28
Got a story or suggestion, or just want to find out some more information? twitter.com/MPAMagazineAU facebook.com/Mortgage ProfessionalAU
UPFRONT 02 Editorial
SMEs’ struggle for financing opens a pathway for brokers
04 Statistics
The pandemic continues to impact borrowers, but far fewer than in the first wave last year FEATURES
14 FEATURES
MAJOR BANKS ROUNDTABLE The big four meet virtually for MPA's 2021 roundtable discussion, putting the focus on turnaround times, competition and their dedication to the broker channel
LENDING A HAND TO SMES
As businesses come out of a long lockdown, lenders say the opportunities are there for brokers to help them move forward
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nMB’s managing director is celebrating two decades of supporting brokers through a boutique aggregation business
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With Aussies increasingly borrowing more than they earn, APRA has had to step in
08 Opinion
Diversification from commercial into residential has helped Thinktank navigate the challenges of COVID-19
FEATURES 49 Leadership
Leading by example has a bigger impact than lecturing others to change – and conscious leadership does that well
51 Productivity
BIG INTERVIEW
GERALD FOLEY
06 News analysis
FEATURES
Hacks to help you get more done in less time are not as effective as getting to the root of the problem
Since COVID-19 forced the transition to online, broker groups have been refining their digital offering
PEOPLE
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Despite starting out as a small-town brokerage, Regional Finance Solutions has now spread its wings
BENEFITS OF BROKER TECH
FEATURES
A NEW WORLD OF TALENT
With a hybrid working model set to become the way of the future, what steps should businesses take to ensure they can attract top talent?
54 Brokerage insight
56 Other life
An ankle injury in his youth didn’t stop this broker’s passion for the sport he now teaches young players
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UPFRONT
EDITOR’S LETTER
Businesses need a helping hand
W
ith restrictions in NSW and Victoria finally easing after months of lockdown, there is hope at last for businesses that are opening their doors. Even those businesses that were able to stay open during the lockdowns had to rethink, and many have suffered as a result of fewer people on the streets. As Australia takes steps towards a return to ‘normal’, businesses will be looking at how they can achieve growth after such a difficult period. It might not be that easy, though. Judo Bank recently released research showing that while 46% of SMEs define themselves as being in a growth phase at the moment, only 50% of businesses that applied for finance in the last six months were successful. The need for brokers to help businesses with finance is clear. With an understanding of multiple lenders and products, brokers can source the right solutions to allow businesses to move forward. In an exclusive interview with MPA online, Liberty’s national sales manager, Sof Tsialtas, pointed out that borrowers needed assistance from brokers not just because of their knowledge of products but because of their ability to understand and communicate the complete picture of a business.
Helping businesses with finance would not only benefit broker businesses but also the wider Australian economy “[Brokers] have an important role to play in helping lenders understand the funding purpose. Providing a lender with the full story and packaging information significantly benefits the SME, especially when standard documentation is not available,” he said. There is a real economic impact of businesses not being able to access funding. According to the Judo research, almost one in three SMEs that were refused a loan were prevented from employing new staff. On average, this was three full-time employees that businesses could not take on. It’s often said that ‘SMEs are the backbone of the Australian economy’. If diversifying into small business lending is not something brokers have considered before, now might be the time. Helping businesses with finance would not only benefit broker businesses but also the wider Australian economy as consumers begin spending money again.
www.mpamagazine.com.au NOVEMBER 2021 EDITORIAL
SALES & MARKETING
Editor Rebecca Pike
Publisher Claire Tan
Contributors Per Amundsen, Colin D. Ellis, Nikki Fogden-Moore, Amantha Imber Production Editor Roslyn Meredith
ART & PRODUCTION Designer Cess Rodriguez Customer Success Manager Andi Zbojniewicz
CORPORATE Chief Executive Officer Mike Shipley Chief Operating Officer George Walmsley Managing Director Justin Kennedy Chief Information Officer Colin Chan Human Resources Manager Julia Bookallil
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UPFRONT
STATISTICS EXPECTATIONS OF ONLINE BANKING
52%
of Australians are willing to answer up to 20 questions when applying online for a mortgage
THE ONGOING IMPACT OF LOCKDOWNS Hardship assistance almost tripled in the month to 5 September as lockdowns and restrictions continue to impact Australian borrowers. More than 30,000 customers have now deferred their business and home loans as a result of the latest outbreak; however, this is way below the peak in 2020 when more than a million borrowers deferred loans.
NT
216 4 29 WA
2,224 42 221 SA
1,880 53 695 Other* HARDSHIP APPROVALS
61%
DEFERRED BUSINESS LOANS
of consumers expect greater rigour when it comes to digital mortgage applications
1,770 27 463
DEFERRED HOME LOANS
*Customers whose locations had not yet been categorised according to state by the time the data was collected and reported
OVER A QUARTER DELAY HOMEBUYING
22%
say financial institutions ask too many questions
Of the 42% of Australians who have delayed a financial decision due to the pandemic, 27% have delayed buying a property, the second-highest proportion behind a third who delayed paying bills.
HAVE COVID-19 AND THE LOCKDOWNS THIS YEAR MADE YOU DELAY FINANCIAL DECISIONS? Yes
42%
30%
want to apply for mortgages digitally
Source: FICO 2021 Digital Banking Survey
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No
58%
Note: Based on survey of 1,036 Australians aged 18+
Source: Canstar
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HARDSHIP AND DEFERRED LOANS BY STATE/TERRITORY DURING LATEST COVID-19 OUTBREAK
QLD
5,946 209 1,553
LOANS OUTSTANDING 8 JULY–5 SEPTEMBER 2021 NSW
32,445 2,618 18,721
ACT
876 53 349
A survey in WA has shown that people are dialling back on their savings for travel, and instead saving for a future home or renovations. This trend was seen across all age groups.
WHAT WEST AUSTRALIANS ARE SAVING FOR – OVERALL GOAL DISTRIBUTION August 2021
August 2020
TAS
24.7% 16.7% 15.1%
Emergency fund Family
+1.6%
14.2% 12.8%
+1.4%
9.8% 9.3%
Something else
472 26 46
-6.0%
18.7%
Big purchase
57,020 3,642 27,112
+0.5%
7.3% 7.0%
+0.3%
5.2% 5.2%
0.0%
Source: Australian Banking Association (figures from CBA, ANZ, NAB, Bendigo)
THE MOVE TO NEW LENDERS
+2.9%
25.9%
Home
TOTAL
Year-on-year change 28.0%
Just saving Travel
VIC
11,191 610 5,035
SWITCH OF FOCUS FOR SAVERS
Source: Bankwest
RATE RISES COULD HURT
The value of external refinancing hit another high in July as mortgage holders look for better home loan rates. The numbers have more than doubled in two years.
One in 20 Aussies say they would need financial assistance if their home loan rate increased out of cycle. More than half would try to negotiate.
INCREASE IN VALUE OF HOME LOAN REFINANCES OVER LAST TWO YEARS
WHAT WOULD YOU DO IF YOUR CURRENT HOME LOAN INTEREST RATE INCREASED OUT OF CYCLE? I would try to negotiate a lower rate with my current lender
Value of external refinancing in July 2021
Monthly change
Year-on-year change
Change from 2 years ago
53% I would refinance to another lender
25% Nothing
$17.22 bn
6%
60%
102%
(highest ever)
(up $978m)
(up $6.45bn)
(up $8.71bn)
18% I would be pushed into financial hardship and require assistance
5% 0
Source: ABS Lending Indicators, July 2021
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20
30
40
50
60 Source: Finder
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UPFRONT
NEWS ANALYSIS
APRA curbs: Who loses? As more borrowers take out high debt-to-income loans, regulators are stepping in to cool the housing market – but many in the industry are warning of unintended consequences THERE ARE fears that some borrowers may be locked out of the housing market as a result of APRA’s recent changes to the minimum interest rate buffer. The regulator stepped in in response to rising house prices and high levels of borrower debt. Banks are now expected to assess a borrower’s ability to service a loan from 3% above the loan product rate, up from 2.5%. House prices have risen more than 18% over the last year, with some cities and regional areas seeing even larger jumps. Part of the reason for this price growth has been record-low interest rates, which are making larger loans more affordable. Twenty-two per cent of new home buyers are now borrowing more than six times their income, up from 16% of buyers a year ago. In making the announcement, APRA chair Wayne Byres said the action had been taken to ensure that banks were lending to borrowers who could afford the level of debt they were taking on, “both today and into the future”. Byres said it was expected that housing credit growth would run ahead of household income growth in the period ahead, and while the economy was expected to bounce back as lockdowns were lifted across the country, the balance of risks warranted stronger serviceability standards. APRA expects that the increased loan serviceability buffer will reduce maximum borrowing capacity for the typical borrower by around 5%.
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In its analysis, ratecity.com.au said a household that under the old rules could borrow a maximum of $500,000 would see their borrowing capacity fall to $475,000 – a drop of $25,000. Research director Sally Tindall said many borrowers didn’t borrow at full capacity, but anyone planning to do so would need to reassess their budget. “These new changes will clip the wings of people borrowing at their capacity,” she said. Although the changes were designed to protect people from taking on risky levels of debt, she warned they would hurt first home buyers who typically had smaller incomes and deposits.
country. The interest rate buffer increase has been implemented nationwide, but Ward said the need to cool the housing bubble was a “capital city issue”. In fact, Ward said housing affordability
“This change will be a hard pill for some borrowers to swallow; however, it will ultimately protect them from overstretching themselves” Sally Tindall, ratecity.com.au “This change will be a hard pill for some borrowers to swallow; however, it will ultimately protect them from overstretching themselves, and that’s a good thing.” Accusing APRA of completely disregarding regional Australia, Cairns mortgage broker Roger Ward said the change could spell disaster for regional economies around the
was very good in places like Cairns, where you could still buy a property for $400,000, which meant that single-income families could enter the market. “With all the concerns the Reserve Bank and APRA have about market velocity and housing affordability, this simply does not apply to most of regional Australia,” he said.
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HOW MUCH LESS WILL AUSTRALIANS BE ABLE TO BORROW? Current borrowing capacity
5% less borrowing capacity
Difference
$500,000
$475,000
$25,000
$600,000
$570,000
$30,000
$750,000
$712,500
$37,500
$1,000,000
$950,000
$50,000
Source: ratecity.com.au
Regional Australia has done it tough over the past 18 months. Thanks to COVID-19, tourism in places like Cairns has really suffered. With record-low tourism numbers, Ward is seeing businesses in severe distress
boom in Sydney and Melbourne,” he said. “In this case, higher deposit requirements and higher interest rates were used to curb the hyper-stimulated investor market. This, too, was applied nationally and suppressed
“If APRA had been serious they could have applied this [criteria] on a postcode basis, and then we could concentrate on problem suburbs” Roger Ward, Cairns Mortgage Brokers as they rely on local visitors to survive. The construction industry is managing to slightly offset the economic suffering, but Ward believes APRA’s changes will impact that also. He has seen this happen before and knows the consequences all too well. “Macroprudential reforms have been used before, most famously in the previous investor
investor activity throughout regional Australia which had nothing to do with the capital city investor boom. “Places like Port Douglas, where almost 50% of housing stock is owned by investors, suffered from this policy, and the irony was that this area needed policy support, not oppression, at the time.”
Ward said APRA could use a postcodebased lending policy to prevent the banks from applying the criteria to regional areas, and thus assist with regional recovery. “If APRA had been serious, they could have applied this on a postcode basis, and then we could concentrate on problem suburbs,” he said. “Then you could leave the other postcodes out of it and allow them to continue the recovery from the devastation of COVID.” As a mortgage broker who assists women who are recovering from financially abusive relationships, Ward fears that single-parent families and those on low-to-moderate incomes will be the most affected. “When you’re a woman recovering from a broken relationship, 99% of the time you have still got the kids and you’re trying to do this on a single income, and for those women the servicing has gone up by another half a per cent,” he said. “It’s the ones at the bottom end that are going to be locked out.”
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UPFRONT
LENDER PERSPECTIVE
Weathering the storm Diversification was key to commercial property lender Thinktank’s success in navigating COVID-19, writes director Per Amundsen WHEN THINKTANK, a specialist commercial and residential property lender, recently closed its first residential mortgage-backed securities (RMBS) issue for $500m, it validated a strategy of diversifying from small commercial loans into the residential debt market. In a COVID-19 environment, this diversification has allowed the company to weather the pandemic’s economic impact, to the extent that in the 12 months to 30 June 2021 it settled more than $1bn in loans for the first time – a 33% increase on the previous financial year and an important milestone. Back in 2006, when Thinktank opened its doors, residential debt was not on the radar. Instead, small commercial loans of up to $3m (although most transactions were much smaller) for the self-employed, professionals and small-to-medium-sized employers were the focus. The founding leadership believed there was a niche here for a conservative lender that understood this market better than the major banks and could deliver better loan products and faster turnaround times. So it proved. When Thinktank closed its sixth and largest commercial mortgagebacked securities (CMBS) transaction of $600m in October last year, this took its total rated bonds issued to $2bn. As with the other issues, it met with keen institutional demand in domestic (77%) and overseas (23%) markets and confirmed the company’s reputation as a prominent capital markets issuer in the commercial property asset class.
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But obviously these self-employed clients, professionals and SMEs also want residential finance, and Thinktank, via its deep and trusted network of mortgage brokers and aggregators, is well positioned to provide this as an adjacent product. By 2018, residential loans had steadily grown to comprise between 10% and 15% of its book. However, COVID has seen that percentage of loans grow to about 50% today. Two factors
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more than compensating for the temporary decline in commercial lending. Although the commercial property market has generally been recovering well since the initial shock of COVID-19 (retail remains a weak spot, while some individual market segments such as industrial have remained solid throughout), it still lags behind demand for residential finance. It was in this environment that Thinktank launched its first RMBS in August 2021. Institutional support for this RMBS issue was strong, with the transaction launched at $400m but growing to $500m due to keen demand. This reflects the ongoing strength and stable performance of the Australian securitisation market. The nature of losses seen overseas in the wake of the GFC simply didn’t happen in Australia. In the case of Thinktank, investors have not experienced a single loss from its six CMBS transactions of more than $2bn issued to date. Thinktank is looking at two or three new securitisation transactions in 2022, poten-
Self-employed clients, professionals and SMEs also want residential finance, and Thinktank ... is well positioned to provide this as an adjacent product have been at play. Commercial finance activity fell. A pandemic that was understandably shaking business confidence and shrinking the economy inevitably meant a slowdown in demand for commercial loans. Across the market, commercial lending activity initially fell by around 40–50%, and borrower hardship support grew. But to the market’s surprise, and, to be honest, Thinktank’s initial surprise, residential lending quickly picked up, so much so that calls have emerged for regulatory intervention to take some heat out of the market where the higher risks are perceived. The fact that the company funded more than $1bn in loans in the 2021 financial year can be largely ascribed to a combined increase in residential and SMSF lending,
tially two residential and one commercial, each of which is expected to be larger in size than preceding transactions. Thinktank is confident of strong underlying and ongoing institutional demand for forthcoming issues, further enhancing its reputation in a still growing and important market that is a vital part of the supply of credit to Australian business and consumer borrowers. This, in turn, offers product diversification and significantly adds to competition with the country’s major banks.
Per Amundsen is a director of Thinktank, a lender specialising in commercial property finance.
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PEOPLE
BIG INTERVIEW
GERALD FOLEY: BUILDING BESPOKE PARTNERSHIPS Reflecting on 20 years of partnering with brokers, nMB’s managing director talks to MPA about how the business came about, and the way it has supported brokers this year
TWO DECADES on from its launch, National Mortgage Brokers is celebrating not just its 20th anniversary but a record settlement year and reaching a $20bn loan book milestone. Reflecting on the company’s journey to date, managing director Gerald Foley says nMB’s focus has always been on creating an aggregator that brokers could “pick and stick” with. It was an unexpected turn of events that led to the launch of nMB. Foley had originally helped set up the mortgage broking arm of a stockbroking company, but when the business was bought by another company, which decided not to continue with the same financial strategy, Foley and his colleagues Kon Avramidis and Sal Cinque made the decision to buy out the broking arm. They relaunched the business as nMB on 1 September 2001. “Even though the origins of nMB were largely brought about through the decisions made by others, once we decided to launch, it was all focus on building an aggregator
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model where brokers would ‘pick and stick’ with us,” Foley explains. “We have always aimed to treat our brokers as partners, and the relationships formed over the journey have evidenced this approach.”
Learnings from a career in finance Looking back at the people and experiences that have influenced him over the years, Foley says it’s difficult to just list a few. His first boss in banking was an “old-style banker”: focused, disciplined, and he knew everything about his customers. He understood the value of keeping in touch with customers, of networking and “a good lunch”. “All lessons I feel I’ve taken on well since!” Foley says. However, it isn’t just industry experience that can have an impact, he says, explaining that he has learnt a lot from the way other business infrastructure functions. One example that has stayed with him involves his youngest daughter. Being very ill when she was young, she spent a lot of time at
the Royal Children’s Hospital in Melbourne, with Foley by her side. “Spending this time watching the hospital teams go about their various duties and seeing the care and importance each person placed on their respective roles was a great lesson,” he says. “There is no room for a weak link. In a hospital environment, the outcomes can result in greater illness, or worse. In business, weak links create unnecessary disruptions, or poor customer experience, which can cause long-term harm.” The aggregator was acquired by Aussie Home Loans in 2012 and then later by Liberty in 2017 – it has benefited from industry greats like Aussie’s James Symond and Liberty’s James Boyle driving its growth. But it’s the broker network that has continued to have the biggest influence on the business as it has developed over the past 20 years. “Influence comes from so many places – mostly our broker network. We remain engaged, and our brokers drive us to look for
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PROFILE Name: Gerald Foley Title: Managing director Company: nMB Years in the industry: 30+ Career lowlight: “Seeing the impact of the GFC on good people and businesses was definitely a low point. As is usually the case, we all get through these testing periods – dust yourself off, learn the lessons and then get on with it.” Career highlight: “Since starting nMB in 2001 there have been many highlights. Day one of kicking off a new business that has been able to last the test of time, and today have so many great relationships built through it, must be the highlight.”
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PEOPLE
BIG INTERVIEW
ways to provide new and improved support mechanisms,” Foley says.
Supporting broker businesses Over the years, nMB has developed its 5 P’s, Foley says, which have enabled the aggregator to work with brokers through various stages of their business journey: planning, premises, people, partners and process. “We love to work with brokers looking to go on the broker-to-broker-business journey. Across our team we have a broad range of experience, and we are able and available to work with our brokers in a bespoke fashion.” A lot has changed since the early days; in fact, Foley says “the one constant has been change”. The industry has seen its biggest evolution
need to – but I feel from the broker response since we launched this service, it has been accessed and helpful in dealing with current challenges,” Foley says. He was also pleased to see the banks updating their policies to allow for the shift to online, but not long after the onset of the pandemic the industry saw “the new world of COVID” present a different set of challenges for brokers. “Many customers were experiencing very real hardship and needed support like never before,” he says. “Brokers, who usually spend most of their time working around and creating good outcomes, now needed to deal with customers in distress due to a mix of illness, job and other family pressures.”
“Once we decided to launch nMB, it was all focus on building an aggregator model where brokers would ‘pick and stick’ with us” with the development of technology platforms, as well as the much larger numbers of borrowers now turning to brokers for help in searching for a home loan as they find themselves short of time and/or information. Over the last 18 months COVID-19 has also thrown up unprecedented challenges. nMB’s initial focus was on providing tools to help brokers manage their customer engagement, and on checking in with brokers where they could. With the support of its parent company Liberty Financial, nMB also launched a Broker Wellness Support program that its brokers and their teams could access. Information and services included links to various support providers, such as R U OK?, as well as free access to a confidential and professional counselling service, which offered short-term support. “We will never know – and don’t want or
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Moving forward from its milestone anniversary, Foley says nMB will continue to focus on its growth strategies and introducing new tech platforms. The aggregator will also work with business owners as they build their businesses and look at opportunities to merge, acquire or even transition. It’s really important to establish good partnerships not only with your aggregator but with other people who can support you, he adds. “Make sure to surround yourself with people who will be there with the experience, tools and drive to support you,” Foley says. “This can be a mix of your business partners, aggregator, outside influencers and like-minded people within your broader business group. There is so much experience people have gained and are willing to share with you. Just ask!”
GERALD FOLEY’S CAREER TIMELINE
1981
Various lending roles at Westpac, RESI Building Society, Security Pacific Central Mortgage Limited as a lending manager, and National Mortgage Market Corporation Ltd
1994
Moves to AIDC Ltd as associate director mortgage finance
1996
Appointed manager of originator services at ANZ Bank
1997
Joins Mortgage Choice as state manager Victoria and international lending manager
2000
Appointed managing director of Johnson Taylor Potter Mortgage Plus
2001
Takes over at National Mortgage Brokers as managing director
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ANZ & BROKERS
WORKING BETTER TOGETHER FOR YOUR PROFESSIONAL CUSTOMERS
Our LMI premium is currently waived, with no minimum income requirements, for eligible professional customers. For example, a medical practitioner who has an LVR of up to 95%* could save up to $36,000 based on an $800,000 home loan. Eligible Customers Include: Medical Practitioners, Specialists, Dental Practitioners, Optometrists, Chiropractors, Physiotherapists, Veterinarians, Lawyers, Accountants. The amount your customer could actually save depends on their circumstances, such as their profession, their loan amount and where their property is located.
ANZ Brokers * This LVR is for medical practitioners, specialists and dental practitioners who are existing ANZ lending customers (that have held an ANZ lending product for at least 6 months) with an owner occupier loan making principal and interest repayments. For other eligible customers, the LVR is up to 90%. Different LVRs may apply to other lending options, such as investment lending. Terms, conditions, fees, charges, and credit approvals and eligibility criteria apply to ANZ home loans. Please visit anz.com.au/promo/broker for the offer terms and conditions, including how to verify customers’ qualification/registration. © Australia and New Zealand Banking Group Limited (ANZ) 2020. ABN 11 005 357 522. Australian credit licence number 234527. Item No. 97528C 08.2021 WX248035
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SPECIAL REPORT FEATURES
MAJOR BANKS ROUNDTABLE
STRENGTHENING THE TIES After another year of Australians moving in and out of COVID-19 restrictions, the four major banks gathered to discuss topics such as turnaround times, the new tools they are implementing to improve lending processes, and why mortgage brokers are a channel they want to invest in
THE MAJOR BANKS have been under heavy scrutiny over the last few years, as mortgage brokers and customers lost trust following the banking royal commission. Not afraid to acknowledge that, the heads of third party at the big four joined MPA at a virtual roundtable to discuss how they are working to rebuild relationships. For mortgage brokers, this lack of trust has extended beyond the royal commission. They have accused the major banks of making it harder for their customers to get loans approved due to tightening credit appetites and an increase in paperwork – and they have also been frustrated by long turnaround times, which hit an average high of 27.1 days to unconditional approval in the third quarter of FY21. The surge in homebuyer activity throughout 2020 did nothing to reduce the strain, and brokers were left questioning whether their borrowers were better off elsewhere. In fact, MPA’s recent Brokers on Non-Banks survey showed a 20% increase in the proportion of brokers who said their customers were open to using non-banks. The top three reasons for choosing non-banks over banks were
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the wider view they take of a customer’s circumstances, their faster turnaround times, and banks tightening of their policies. Asked how they would respond to this, the major banks all said that competition was good for the industry but they were trying to improve their service levels and provide easier loan options for their customers. Turnaround times were the subject of one of the biggest conversations of the day, with the four banks determined to convey how focused they were on improving times to approval. Much of what they were doing involved improving technology and digital processes, creating simpler forms, and better prioritisation of applications. For the second year, the Major Banks Roundtable was forced online as both Victoria and NSW battled lockdowns and travel restrictions. This did not stop the group from discussing the biggest topics of the last 12 months, and MPA would like to thank the four bank executives for taking time out of their busy schedules to come together virtually.
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FEATURES
MAJOR BANKS ROUNDTABLE THE PANELLISTS
Adam Croucher General manager, third party banking, Commonwealth Bank
Simone Tilley General manager, retail broker, ANZ
vw Are you seeing more borrowers
come to you through mortgage brokers? How is the third party channel a valuable partnership? If at last year’s Major Banks Roundtable we thought this year would be different, we were wrong. Forced back online due to the lockdowns in Melbourne and Sydney, representatives of four major banks gathered last month to discuss the areas they had been putting a particular focus on in the last 12 months, and how they were supporting brokers. With broker market share surpassing
Phil Waugh Executive, broker distribution, NAB
Sarah Willsallen Acting head of broker distribution, Westpac
“I don’t think you can work in broker and not love it or believe in what we do,” she said. “We respect the customer’s channel of choice, and it’s great to see that more customers are tapping into the powerful resource that comes with a mortgage broker to help them navigate through their homeownership journey.” Seeing mortgage brokers as valuable partners to Westpac, the bank conducts regular research to gain feedback from them. “The feedback we gather from brokers, whether it be through our research and
“Ultimately we want to do whatever we can to help make it easier for brokers to do business with us” Sarah Willsallen, Westpac 60% for the first time in 2020, it is clear that growing numbers of consumers are turning to the third party channel. The record growth in broker applications has been “phenomenal to witness and be a part of ”, said Sarah Willsallen, acting head of broker distribution at Westpac. Reflecting on her own homeownership journey, she pointed out that she had had a longer relationship with her mortgage broker than with her hairdresser, her GP and her personal trainer.
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our quarterly NPS surveys or via our many BDMs, is used to build out our strategy for improvements and changes,” Willsallen said. “Ultimately we want to do whatever we can to help make it easier for brokers to do business with us.” At Commonwealth Bank, loans coming through the third party channel have remained strong throughout the year, with funding increasing by 30% year-on-year. Adam Croucher, CBA’s general manager of third party banking, said the broker
channel was hugely important to the bank, which was focusing on a new strategy to make the partnership with brokers even stronger by ensuring that it was easier and simpler to do business with. CEO Matt Comyn also reiterated CBA’s commitment to the channel following its recent full-year results. “We’ve really been focusing on making sure our broker partners are supported every step of the way through our increasing investment in full-time resources across the value chain, especially through our operations,” Croucher said. “Simplification is really important to us, processing, and investing in new technology. So, as we emerge from the lockdown our focus is to continue to support and remain extremely relevant in the third party channel for our brokers and our customers.” ANZ has also been seeing an increasing number of home loans coming through the broker channel. Head of retail distribution Simone Tilley said the bank recognised that there were aspects of the broker experience it needed to improve on. ANZ participates in groups like the Combined Industry Forum and the MFAA’s lender forums. “I just want to iterate that every rock is being lifted so that we can propel forward quickly,” Tilley said. “We want to maintain a strong relationship with brokers, provide a compelling proposition, and continue working better together into the future. “We acknowledge that we have work to do. From experience, what gets focus often gets results; and I know that everyone has been patient, but we are committed to improving the overall service proposition as fast as we possibly can.” Government incentives like the First Home Loan Deposit Scheme have also helped bring mortgage brokers to the major banks. NAB’s executive, broker distribution, Phil Waugh, said the bank had secured 62% of the FHLDS places available to major lenders in 2021.
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“We’re absolutely focused on what it means for a broker and how we can support that broker to grow their business” Phil Waugh, NAB
MARKET SHARE BY LENDER TYPE 2.5%
2.3%
2.5%
2.6%
2.8%
8.3%
6.3%
5.0%
5.5%
6.0%
10.1%
9.5%
11.8%
12.3%
12.6% 5.1%
5.4%
5.1%
5.4% 6.2%
6.3%
5.6% 6.8%
7.9%
7.5%
7.1%
6.9%
12.5%
6.0% 6.2% 7.2%
14.0% 13.3% 15.4%
13.4%
41.5% 50.1%
Waugh said NAB had seen “enormous growth” through the broker channel of around 10.5% over the past year. He added that the bank understood the importance of the channel and supporting customers, no matter which channel they came through. “We’re looking at the customer having a choice as to how they interact with our organisation, and ensuring that we service and support that customer consistently, no matter which channel they come through for a home loan,” Waugh said. “Certainly, a competitive mortgage broker market is essential to maintain competition in the home loan market and enable access to credit for Australian homebuyers.”
How are you working through issues like turnaround times, which have been a particular pain point for brokers? In the first quarter of FY20, the time taken to receive an unconditional approval was around 18.8 days. Since then, turnaround times have only got longer, reaching a peak of 27.1 days in the third quarter of FY21, according to AFG figures. The major banks said they understood the difficulties brokers had faced and had been working hard over the past 18 months to resolve the problem. Willsallen said there had been unprecedented housing demand and growth across the industry, and Westpac had spent the
JanMar 20
51.7% 49.0% 44.1%
AprJun 20
JulSep 20
Credit unions, building societies and mutuals
OctDec 20
JanMar 21
Independent regional banks (Suncorp, Bendigo)
Non-bank lenders Any other type of lender Brokers’ white label loans International banks (ING, Citi, etc)
Regional banks owned by or aligned to major banks Major banks (ANZ, CBA, NAB, Westpac)
Source: MFAA Industry Intelligence Service, 12th edition
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FEATURES
MAJOR BANKS ROUNDTABLE BROKERS SENDING MORE LOANS TO NON-BANKS Have you sent more loans to non-banks in the last 12 months compared to the previous year?
No 30.94%
Yes 69.06%
Source: MPA Brokers on Non-Banks 2021 survey
“We’ll continue to focus and run extremely hard when we need to, to make sure that the sustainability and consistency is there” Adam Croucher, CBA last six months investing in people and changing and reviewing its policies to speed up its processes. “Our approval times are in line with the industry, and we’re committed to making it simpler and faster to do business with us, including hiring a large number of additional people to help process the home loan applications we’ve been receiving,” she said. At NAB, times to unconditional approval have remained the “highest priority”, Waugh said. One thing the bank has been working on is simplifying forms, as well as ensuring it has forecasts of application numbers and appropriate resourcing to support these
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by bringing on extra credit assessors. Waugh said NAB’s turnaround times now sat at around five days, and as the bank’s SLAs had improved, so had its Net Promoter Score. “We’re really proud that we’ve made significant improvements on our time to unconditional,” he said. “When we think about our decisioning and our SLAs, it’s largely around the speed, clarity and consistency and ensuring that we’re as convenient as possible for our brokers. It’s something we will continue to focus on, and we know it’s highly valued by brokers and customers.”
Simplifying processes and introducing automation has been key to the banks’ success in improving their SLAs. As part of ANZ’s effort in this area, it is looking at mandating the submission of certain documents and leveraging machine learning to automate verification of documents. Acknowledging that response times were not where the bank wanted them to be, Tilley said ANZ intended to be as open and transparent as possible, communicating its assessment times each week to its aggregator partners. Adding that home loans were the “heart of the bank”, she said: “I think it’s easy to lead and smile when the sun is shining and everything is smooth sailing, but I’m incredibly proud of the ANZ team. “Everyone has had the courage to be visible, communicate openly, iteratively and transparently each and every time we’ve been engaged. “I have every confidence that ANZ will respond strongly from this period with a
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MAJOR BANKS ROUNDTABLE COVID-19’S IMPACT ON TURNAROUND TIMES
Brokers are saying it is easier than ever to move away from major banks, because the non-banks have greater appetite and more flexibility. What is your response to that?
Lender turnaround times* by quarter, FY2018–2021
30
Turnaround times to unconditional approval
27.1 25.2 25
23.9
No. of days
22.5 20
25.0
19.5
20.4 20.6
19.7
20.1
21.2
18.1
22.7
21.0 19.8 18.8
15
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY18 FY18 FY18 FY18 FY19 FY19 FY19 FY19 FY20 FY20 FY20 FY20 FY21 FY21 FY21 FY21
*Average number of days from submission of the loan application by the broker to the lender providing formal approval Source: AFG Index, July 2021
more streamlined data-led approach to the way we automate and simplify processes across all home loan applications.” CBA has seen a direct correlation between its investment in streamlining processes and its improved service levels after boosting its resources throughout the year, including increasing its number of full-time employees by 25%. The bank’s investment included introducing new products and services, and even in the last few months it has seen turnaround times improve to one to two days for simple deals and two to four days for complex applications. “FY21 results showed that 85% of our applications via the broker channel were
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In MPA’s recent Brokers on Non-Banks survey, 70% of brokers said they had written more loans through non-banks in the last 12 months than in the year before. There is no doubt the lending landscape has become more competitive, said Waugh, but NAB prided itself on being “the bank behind the broker”, so it was continuing to invest in technological support for the broker channel to ensure it could offer competitive turnaround times and consistent service. He added that the major banks had a responsibility to support the industry, and to be able to keep leaning into it was paramount to NAB’s success. “I think there’s greater responsibility for us to ensure that we’ve got market-leading processes as well,” Waugh said. “On top of that, [there’s] our support for the industry – supporting brokers as a broker family, but also supporting the broker industry through the transition to BID.” The competition created by the nonbanks was welcomed by CBA’s Croucher, who said it ensured the major banks continued to be innovative.
“We want to maintain a strong relationship with brokers, provide a compelling proposition, and continue working better together” Simone Tilley, ANZ decisioned within two days, which is a direct result of our focus on operations and the execution of the channel,” Croucher said. “So we’ll continue to focus and run extremely hard when we need to, to make sure that the sustainability and consistency is there.”
He pointed to CBA’s “industry-leading features”, like its Home Loan Compassionate Care, its Property Share loan and its CommBank Green Loan. CBA has also partnered with energy retailer Amber, which offers customers access to renewable energy at wholesale
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prices to complement the home loan. “We relish that competition to make sure that we stay relevant and deliver on what we can for our customers,” Croucher said. “Customer preferences are constantly changing, so we need to continue to be innovative with our products and services to meet those changing needs.” In order to maintain its competitive edge against non-banks, Westpac has made a number of policy changes and investments to make things simpler for borrowers. The major bank has increased options for self-employed applicants, expanded its fasttrack eligibility, improved its loan processes for high-value properties, and is offering LMI waivers for a wider range of professionals. Willsallen said she was especially proud of Westpac’s expansion of its medico policy to include waivers for physiotherapists and chiropractors. “They’re some of the few medical specialties that actually have a higher proportion of women participants than men, and it’s a really important part as we look at women in homeownership,” she said. “I was really pleased to get that through, but we’ve got so much more work to do, and we’re working on how we can help improve our time to decision. “There’s a really, really long list [of changes], and there’s a lot of one percenters in that list, but they all add up to make it simpler and faster for brokers to work with us.” Countering the perception that nonbanks are more flexible than the major banks, Tilley explained that ANZ was constantly reviewing its policy settings to ensure they were fit for purpose. “Across the market there’s a prevailing perception that major banks have rigid eligibility criteria for borrowers, with no niches or ability to navigate complexity,” Tilley said. “At ANZ we have a suite of competitive and flexible policies that allow us to better serve customers across a wide variety of niches, alongside our broader ANZ offering of course.”
“We’ve got so much more work to do, and we’re working on how we can help improve our time to decision” Sarah Willsallen, Westpac
BANKS ON BROKER SUPPORT
Q
What are you doing to make sure brokers feel they can continue to put loans through the major banks?
Adam Croucher, CBA: We undertook an extensive consultation process with our brokers to really understand how we could improve our processes. We’ve listened to our broker partners and made significant investments in our operating model, our broker application system and process, the efficiency of credit officers, and the sort of processes and systems that support the broker channel. We’ve also streamlined our broker accreditation process for newly accredited brokers and have uplifted our onboarding experience for brokers coming into the industry. Simone Tilley, ANZ: We’re continually reviewing and updating our processes, policies and pricing to meet the needs of customers and brokers. We value the insights we receive from aggregators, brokers and industry bodies and will continue to work together as we navigate things into the future. From a process viewpoint, we are investing in automation of our assessment processes to reduce turnaround times and improve the broker experience. From a policy viewpoint, we have a suite of competitive and flexible policies that allow us to better serve customers across a variety of niches, alongside our broader ANZ offering. Phil Waugh, NAB: NAB is open for business and continues to have great SLAs, support, products and policies, and we continue to work on having fluid and clear policies for our broker community. We have competitive pricing and offers for every customer in the market, from first-time buyers to empty nesters, right through to investors. NAB supports the industry as a whole. The big change in recent times has been the best interests duty, and we’re proud of how this has been implemented and the negotiation process to get there. Sarah Willsallen, Westpac: Feedback is important to us, and we’ve been responding by making improvements and changes to help make it easier for brokers to do business with us and ultimately get more Australians into their homes. It’s a privilege that that’s what we get to do every day. We’ve recently invested heavily into back-office resourcing and technology to improve application servicing. Twenty-five per cent of that has also been invested into employing more people for our BDM and BSO support team, directly on the front line working with our brokers.
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MAJOR BANKS ROUNDTABLE
Understanding, too, that predictability is a key driver for brokers when placing a loan with a lender, Tilley said the bank was focusing on the consistent application of policy settings. Another way that banks like ANZ could differentiate themselves was through open banking, she added. “The portability of data means that customers are likely to expect lenders to provide more personalised services and tailored offerings, and this will provide an opportunity for lenders to further differentiate themselves in the future,” she said.
Are you focusing on any specific areas now and over the next 12 months? (for example, tech, products, education)? Australia is moving away from lockdowns, but the focus on transparency and
“Being out there and amongst our broker community over the next 12 months is going to be critical to our success” Phil Waugh, NAB
AprJun 18
JulSep 18
OctDec 18
JanMar 19
57.5%
59.4%
60.1%
57.0% 52.1%
55.3%
54.9%
59.7%
55.8%
56.8%
59.1%
55.3%
53.9%
BROKER MARKET SHARE, JAN 2018–MAR 2021
JanMar 18
AprJun 19
simplicity continues at the major banks. Westpac has been working on its customer onboarding journeys with the aim of “bridging the gap” between the bank, brokers and customers. It is also continuing to focus on its time to decision, introducing a new
JulSep 19
OctDec 19
JanMar 20
AprJun 20
JulSep 20
OctDec 20
JanMar 21
mortgage origination platform that will be key to achieving this over the next 12 months. The bank is also making improvements in areas such as its e-valuations and desktop valuations, and redesigning its escalations model to identify simpler deals where it can provide faster approval. Improving communication has been a high priority for Westpac over the last several months, particularly with respect to how the bank communicates mandatory updates to brokers. “We understand that a broker may receive several emails from lenders every day, and we wanted to simplify our emails to minimise the amount of time a broker requires to digest the information,” Willsallen said, explaining that the bank had seen a significant lift in email opening rates. “We’ll continue to improve our communications because we recognise [brokers] are engaging with a lot of lenders, and they’re trying to run a business and support their customers. It’s important information, but how do we get it to them in a way that actually really works for them and respects their time and investment?” Coming out of lockdown – when the importance of its relationships with the broker community has been paramount – much of NAB’s focus will be on continuing to strengthen those relationships. As a new leader at the bank, Waugh intends to work on building those relation-
Source: MFAA Industry Intelligence Service, 12th edition
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MAJOR BANKS ROUNDTABLE
ships for himself, and earning brokers’ trust. NAB has set up a new broker experience team to support the sales teams, which will focus on end-to-end governance of the broker business and fast-tracking digital enhancements, “with the aim of being the most reliable bank for brokers”. Waugh added that the introduction of NAB’s new mortgage origination process for all origination channels would be an important part of its effort to support the broker community going forward. “I do think that being out there and amongst our broker community over the next 12 months is going to be critical to our success and to delivering on what we say we’re going to deliver, and that’s largely around consistency, clarity, simplification and digital,” he said. For ANZ, improving processes and technology will continue to be a focus, but the bank also wants to help brokers with their professional development. One way it will continue to do this is through its Doyenne Program, which was established in 2018 to raise the visibility of female brokers and drive more balanced representation in the media.
“I think it’s driven a natural ripple effect of change,” Tilley said. “Since the program has begun, we’ve seen a demonstrable shift in how female brokers are represented across the entire Australian landscape, and it’s a program that hopefully will continue for many years to come.”
He said this would be important over the next six months, particularly in terms of helping brokers through the constant changes in the market. As part of its investment in technology, CBA has released the second version of its home loan pricing tool, enabling brokers to
“We relish that competition [from the non-banks] to make sure that we stay relevant and deliver on what we can for our customers” Adam Croucher, Commonwealth Bank ANZ will also continue to evolve its education and training in the broking industry. “Lenders have a strong role to play in supporting the education and training needs of brokers. These opportunities are critical as the third party industry grows in complexity and sophistication,” Tilley said. Still on the theme of education, Croucher said CBA had invested in its BDMs and relationship managers with a particular focus on onboarding new customers.
get real-time and more accurate pricing for individual needs; as well as enhancements to the connection and data flows between its own systems and CRMs. “Ultimately, [we’ll be] improving the timeliness of data in ‘time to yes’ information to be made available to brokers,” Croucher said. “This is an ongoing engagement and will be a real focus area for us over the next 12 months – and also enhancements to our ApplyOnline service, in particular improving the document upload and checkin process to really reduce effort and reduce duplication from the brokers.”
With all those technological improvements, do you still see a place for the broker? The major banks have all talked about their strong focus on technology and how they can make processes easier to use. But they are not the only lenders doing this: second-tier banks, non-banks and fintechs have all been offering digital tools to make things simpler and quicker. Does this mean it will become easier for the customer to go directly to those lenders? The major banks all dismissed this idea, with Waugh jumping in first to say there was “absolutely” still a place for brokers. He pointed out that NAB was making these improvements with both customer and
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MAJOR BANKS ROUNDTABLE
“We have a suite of competitive and flexible policies that allow us to better serve customers across a wide variety of niches” Simone Tilley, ANZ broker at the forefront of any discussions and decisions. “We’re absolutely focused on what it means for a broker and how we can support that broker to grow their business,” Waugh said. “All of our solutions are designed with the broker in mind and to ensure that we make their business and the relationship with their customers better and stronger, and more convenient for them to grow.”
Looking at customer-driven growth of the broker market over the last 20 years, Willsallen said it was clear customers valued the service provided by brokers. They bring relationships and expertise, and she did not see this changing. “Lending is incredibly technical and complex,” she said. “We have spent an hour talking about how we’re all trying to listen to feedback and do it faster and make it simpler and do
BANKS ON BDMs
Q
Brokers have relied on BDMs a lot over the last 18 months. How are your BDMs ready to support brokers?
Simone Tilley, ANZ: We’re incredibly proud of our dedicated team of BDMs who work with brokers to workshop complex scenarios and share insight with their brokers around ANZ products, policies and processes. Their product knowledge and overall professionalism in the market, through what has been an incredibly difficult few years, I would regard as first-class. Sarah Willsallen, Westpac: Our research with brokers shows that our BDMs are highly valued and often are our brokers’ number one reason for promotion. We plan to continue to invest in our BDMs. Our BDMs are well equipped to support their brokers with tools and resources to share and continue to educate brokers with the changing market’s new policy changes and improvements. Adam Croucher, CBA: Over the last few months, we’ve invested in expanding our team with a differentiated tiered service and support model, which means that every broker now has a relationship manager. We think these changes will help brokers utilise all of the support options that we have with new policies. Phil Waugh, NAB: Our BDMs live our values and offer genuine support to the broker community, and we want to attract the best-in-market BDMs to our business. Investments in a learning and development platform and launching that continues to be a focus for us – understanding the importance of that for our brokers, but also freeing up time for our BDMs to better service brokers.
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it better; that’s all true, but every customer’s circumstances are still unique. “A broker is able to use their expertise in mapping out for that customer what their options are, the pros and cons of each alternative, and to help navigate what can be a really tricky and complex environment at a time that’s deeply important to the customer if it’s a home purchase.” With brokers currently spending as much as 30% more time on processing an application, this comes at a cost. Croucher said CBA was digitising its processes in order to reduce that time and expense for brokers. He also pointed out that the improvements the major banks were making were designed to simplify processes in order to help brokers, not replace them. For neobanks with a full digital end-to-end process, he said it was about respecting the customers’ channel of choice, regardless of what channel that was. “We need to make sure that we connect the customer to the channel that they want to deal with,” Croucher said. “And right now over 60% are coming through mortgage brokers, which is fantastic for us, fantastic for the industry.” Acknowledging that the home loan process is more complex than ever thanks to changes in regulation, Tilley agreed that brokers were spending more time on due diligence and fact-finding. She said it was lenders’ obligation to simplify, automate and digitise their processes so they were easier to deal with and more predictable. “As long as the market is demonstrably clear about the digital service proposition and the functionality of the digital service proposition, I think the two can work hand in hand,” Tilley said. She added that digital offerings could work better for refinances, given that these customers were more experienced with the home loan process and may require less support. “During times of uncertainty, customers particularly value the ‘navigator’ role that brokers play in their home loan journey.”
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SECTOR FOCUS: SME LENDING
Confidence returns to small businesses After almost two years of ups and downs for Australia’s small business sector, lenders believe now is the time for brokers to reach out to SME customers as they prepare to move forward
AT THE start of October, Melbourne reached its 245th day in lockdown, bypassing Buenos Aires in Argentina as the most locked-down city in the world. Small to medium-sized businesses have faced considerable challenges during the long period in lockdown. While many have managed to adapt to the restrictions, others have been forced to close completely for the entire duration. According to the ACA Research and Fifth Quadrant COVID-19 SME Sentiment Tracker, more than half of all SMEs in Australia have reported a drop in revenue. Despite the lengthier Melbourne lockdowns, NSW businesses have reported the largest revenue losses. Over the ups and downs and uncertainties of recent months, lenders have seen business needs shift. La Trobe Financial’s chief lending officer, Cory Bannister, says SMEs have responded in different ways: some have followed a defensive game plan, while others have gone on the offensive. “A number of SMEs have really thrived during COVID, whether that’s through organic growth based on their particular industry being in demand, or in some cases as a result of them pivoting or slightly shifting
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in their business model, which has uncovered some opportunity,” Bannister says. He explains that these business owners have been looking for capital to grow. “They can see the opportunity in front of them and want to lay those roots and foundations now, ready to capitalise that on the move out of this period. “On the flip side, we’ve seen evidence of some severe stress, as you would expect, and some business owners that really have to play
owners because they have resulted in gaps in their income, Bannister points out. La Trobe Financial’s products, like its Lite Doc loans, have been designed to accommodate that, as well as other life events. Alongside those great products, brokers are well placed to provide the right guidance and support to consumers. “You never forget the people that helped you in times of need. So, for brokers, the appeal is that you’ve got the ability to create
“You never forget the people that helped you in times of need. So, for brokers, the appeal is that you’ve got the ability to create clients for life” Cory Bannister, La Trobe Financial defence. They’re looking to restructure their commitments to get them through what’s a very challenging period, with the hope that once they get over that they can then start to rebuild from the other side.” The stops and starts of the last year have affected SMEs and self-employed business
clients for life,” Bannister says. “Not only is it a great thing to do just to help people, which is what brokers do fantastically well, but it’s also an opportunity for them to help themselves and grow their portfolios.” As brokers support those customers during the country’s reopening, Bannister
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RECORD NUMBER OF MORTGAGE BROKERS WRITING COMMERCIAL LOANS Number of mortgage brokers also writing commercial loans
5,000 4,727
4,500
4,486
4,539
Oct 19Mar 20
Apr 20Sep 20
4,000 3,500
3,668
3,617
3,670 3,481
3,000 2,932
2,500
2,647 2,374
2,000 1,500
1,673
1,641
Apr 15Sep 15
Oct 15Mar 16
1,000 500 0
Apr 16Sep 16
Oct 16Mar 17
Apr 17Sep 17
Oct 17Mar 18
Apr 18Sep 18
Oct 18Mar 19
Apr 19Sep 19
Oct 20Mar 21
Note: Commercial brokers as those mortgage brokers who had written a commercial loan through their aggregator’s panel for the period. Mortgage brokers who solely wrote loans direct with lenders are not included. Source: MFAA, Industry Intelligence Service, 12th edition
says they will need to be compassionate and empathetic about what has been a significant life event. Warning that the effects of the pandemic could continue to play out for some time, he adds that brokers need to keep in mind that it will not be “a light-switch moment”. When dealing with their customers they should look at their short-, medium- and long-term needs and wants, and work with them on future planning. “We’re going to need to take a patient and cautious approach for a few months and perhaps years yet as the impacts of this play out,” Bannister says. “We would certainly encourage brokers to talk to lenders like us, and other NBFIs as well, to ensure they’re
“Small business lending adds valuable diversity to a broker’s loan book, and we know there are valuable opportunities in this market” Nick Reily, OnDeck considering all options for SMEs. “I think right now more than ever, complex credit is on the increase, and it’s going to need lenders that have got the capacity and the willingness to take the time and understand each individual situation and tailor a solution accordingly.”
Preparing to meet pent-up demand Small business lender OnDeck saw a 175% jump in broker-originated loans from January to June 2021 compared to the year prior. Average loan sizes also increased by 20%. National channel and partnerships manager Nick Reily puts much of this heightened
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FEATURES
SECTOR FOCUS: SME LENDING activity down to the lender’s launch of KOALA Score, its innovative risk-predicting creditscoring model which uses AI and machine learning. This has also enabled the group to introduce Lightning Loans, offering finance of up to $100,000 based on six months’ recent bank statements and no upfront asset security, approved in as little as two hours. “As a leading online small business lender, OnDeck has always been about offering a unique best-in-class credit-scoring capability, understanding the needs of small business by providing better unsecured loan solutions. These unique capabilities are backed by a team that is passionate about small business,” Reily says. Although the lockdowns over the last few months have caused a lot of stress and worry
know there are valuable opportunities in this market for brokers,” Reily says. “It’s important for brokers to realise that there are lending options available where the deal can be closed quickly without taking up considerable chunks of time from a broker or small business owner.” OnDeck is seeing a lot of “pent-up demand” among consumers that will need to be met, and which small businesses should prepare for by having the teams, inventory and assets in place. “Now is the time to look ahead, and brokers can provide a value-add service to their small business clients, helping them prepare today for the upswing in demand that history tells us is likely to occur when current restrictions end,” Reily says.
“Providing SME lending support is a fantastic way for mortgage brokers to grow their businesses” John Mohnacheff, Liberty
Keeping wheels turning in business Learning from the shock of 2020, Liberty saw many businesses use the relative stability at the start of this year to put contingencies in place. While many sought finance to expand their operations, others looked to introduce more flexibility within their businesses to provide a greater level of protection against changing circumstances. Even over the last few months as restrictions were brought back in, businesses used the down time they had as an opportunity to rethink and explore new possibilities, says Liberty’s group sales manager John Mohnacheff. Recognising the financial challenges that many SMEs were facing, in 2020 Liberty introduced a new dedicated business lending unit to ensure it could provide the support required. As part of the launch of this unit, it introduced two new business lending products, Liberty Access and Liberty Lift – it also remains a participant in the government’s Coronavirus SME Guarantee Scheme and SME Loan Recovery Scheme. “According to our business partners, our
for small businesses, OnDeck is continuing to see increased demand, particularly in regional areas. The jump in demand across the regions highlights that many enterprises are pivoting to take advantage of new products or services and new means of engaging with their customer bases during the pandemic, Reily says. However, the lender’s research shows that small businesses often face an uphill battle to secure funds from mainstream banks. Of businesses that have applied for finance from a traditional lender, one in four (24%) have had their application rejected by a bank, a figure that rises to 38% of small businesses that have been in operation for less than five years. Brokers can help their SME customers find the right finance, and fast. “Small business lending adds valuable diversity to a broker’s loan book, and we
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© h
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Source: Sensis Business Index August 2019
19/10/2021 12:29:02 pm
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Speak to your Business Development Manager today. If you are not an accredited Citibank mortgage broker visit citibank.com.au/mpa
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19/10/2021 10:19:01 am
FEATURES
SECTOR FOCUS: SME LENDING MORTGAGE BROKERS’ COMMERCIAL SETTLEMENTS BREAK $10BN MARK Value of commercial lending settled by mortgage brokers
$0bn
$2bn
Apr 15–Sep 15
$5.74bn
Oct 15–Mar 16
$4.82bn
Apr 16–Sep 16
$8.05bn
Oct 16–Mar 17
$7.90bn
Apr 17–Sep 17
$8.85bn
Oct 17–Mar 18
$8.94bn
Apr 18–Sep 18
$9.05bn
Oct 18–Mar 19
$8.79bn
Apr 19–Sep 19
$8.99bn
Oct 19–Mar 20
$9.69bn
Apr 20–Sep 20
$9.37bn
Oct 20–Mar 21
$10.27bn
$4bn
$6bn
$8bn
$10bn
$12bn
Note: Commercial brokers as those mortgage brokers who had written a commercial loan through their aggregator’s panel for the period. Mortgage brokers who solely wrote loans direct with lenders are not included. Source: MFAA, Industry Intelligence Service report, 12th edition
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Liberty Lift loan, which provides funds of up to $1m with no mortgage security, has been an ideal solution for many SMEs,” Mohnacheff says. “For others, financial support is helping to keep the wheels turning through the quieter period. While it’s an undoubtedly difficult time for many businesses, we know from previous experience that a reprieve is coming and that there is a light at the end of the tunnel.” While supporting SMEs in navigating challenging situations can require brokers to put in a little extra effort, Mohnacheff says it provides a terrific opportunity to build strong, fruitful customer relationships. Liberty offers comprehensive training for mortgage brokers who have not explored SME lending before. “Providing SME lending support is a fantastic way for mortgage brokers to grow their businesses, as these are among some of the customers in need of the greatest support,” he says. “Not only can it provide a steady flow of business, but it’s also a great opportunity to use your expertise to help Australian businesses doing it tough.” As restrictions ease, Liberty expects businesses to need continued support, such as help in arranging loan top-ups or lines of credit while speed picks up, or consolidating any debt they may have accumulated during the lockdown. Mohnacheff says brokers should stay in close contact with their SME customers as their circumstances can change quickly. He explains that writing an SME loan is only minimally different to writing a mortgage, as long as the information is clear. “While determining the use of the funds may require some further conversation between the broker and the customer, the application process remains essentially the same,” he says. “One notable difference is that SME customers often require significantly faster access to funds than a typical mortgage customer. Understanding this, Liberty takes care to deliver fast turnaround times on all
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19/10/2021 12:29:11 pm
“Even if they’re just reaching out to their customers to lend an ear, brokers have more experience than SMEs in dealing with banks”
“The other thing I’d say is there can be more reward in lending to SMEs. SMEs have more financing needs; they don’t just have a home loan that they set up and forget for the next four or five years, or buy an investment property and sit on that for however long – SMEs have financing every year.”
John Kolyvas, ING
Rising confidence in commercial
SME loan applications to help ensure our business partners can deliver the best customer outcomes.”
Open lines of communication Although SMEs have certainly felt the effects of the lockdowns, many businesses have rebounded quickly. In 2020, ING introduced a specific COVID-19 hardship program for SMEs. It saw a big cohort of businesses requesting assistance, but the majority were able to return to normal loan payments within three to six months. While there are still businesses today that require assistance, the number needing help during the most recent lockdown was much lower than previously, says ING’s national sales manager, commercial, John Kolyvas. “This time around they are more aware of what’s happening and how it’s impacting them,” he says, adding that ING has also put a bigger focus on understanding the impact on small businesses and how each industry is faring. ING has also increased its due diligence in order to really understand customers and their needs and make sure they are getting the right level of assistance. “During the pandemic we have spent time to really understand what small businesses are going through and then passed insights on to brokers so they can be best placed to support their clients.” Kolyvas says. “Even if they’re just reaching out to their customers to lend an ear, brokers have more experience than SMEs in dealing with banks, and in how banks operate. “You need to stay proactive. Make sure you’re staying in touch with those customers,
even if the customer doesn’t have a need at the moment. Make sure you’re regularly reaching out to them and talking about where they’re at, what they’re doing, and how they’re dealing with the pandemic and dealing with lockdown.” Kolyvas adds that mortgage brokers who don’t already offer SME lending will probably be surprised at how much they already know. “Brokers who haven’t done much commercial but deal with a lot of SMEs in processing home loans already understand all of this. It’s just a matter of them being able to articulate it and put it in writing,” he says.
TOP THREE REASONS SMEs SEEK FINANCE
Buy plant and equipment (57.5%)
Improve cash flow (40.6%)
Pay down debt (34.3%)
After the pandemic hit in 2020, commercial property lender Thinktank saw its business customers rearranging their financial affairs to ensure they were prepared if a similar situation were to occur in the future. They established lines of credit and restructured loans to reduce repayments and improve monthly outgoings, freeing up cash flow. This meant a quieter start to 2021, and while Thinktank has not seen lending for commercial property spike to the levels of residential, commercial property finance solutions are ever-growing, with strong demand in SMSF lending. There hasn’t been any significant change during the latest round of lockdowns, which reflects borrowers’ greater level of confidence in their ability to withstand current economic challenges. Thinktank’s general manager, partnerships and distribution, Peter Vala, says there is still positivity in the market, and the lender’s relationship managers are continuing to help SMEs with property purchases, particularly in the SMSF space. Like in residential lending, Thinktank is also seeing a lot of inbound refinance activity, particularly using its mid-doc loans, which do not require financial statements. “When an SME is seeking finance, their historical financial data may not be the best indicator as to current performance,” Vala says. “This could be due to a period of lower trading, no trading at all, or even as we are often seeing, a spike in trading. Alternative forms of income verification may be more appropriate and fairer to use.” Vala says now is the perfect time for brokers to speak to their customers, as it’s during difficult times that long-term relationships can be formed.
Source: ScotPac 2021 SME Growth Index
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19/10/2021 12:29:21 pm
FEATURES
SECTOR FOCUS: SME LENDING SMEs’ REASONS FOR NOT USING NEW FUNDING METHODS
47.3% applications were rejected or only approved in part
28.5% excessive admin and documentation were required
28% reluctance to take on more debt
10% no need for additional funding Source: ScotPac 2021 SME Growth Index
“Speak to your customers and see how they are tracking. They may be reluctant to ask for assistance, or be unaware of what can be done to assist their cash flow,” Vala says. “R U OK? Day was a great reminder that it’s important to ask the same thing of your clients: Are they OK? If you don’t, you can be certain many major and second-tier banks will be wanting to edge their way into building new relationships. “Being there for your clients right now is more important than ever before, to both look after them and your business at the same time.” Vala also explains that writing a mortgage for commercial property is not significantly different than for a residential property – the same points are covered, just in more depth. For brokers who are unsure of how best to communicate commercial structures and concepts, Thinktank holds free Commercial 101 and 201 workshops.
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“Being there for your clients right now is more important than ever before, to both look after them and your business at the same time” Peter Vala, Thinktank “Being able to speak the borrower’s language and translate a lender’s require ments makes the broker a valuable resource for any client,” he says. “Because of this greater level of detail and scope, the loan process with an SME often uncovers more considerations, such as asset replacement needs, working capital or other lending opportunities. It’s one of the reasons why commissions are generally higher in commercial lending, as it reflects the added level of work and ongoing management of the customer’s loan with the lender.”
Ready for SMEs to bounce back Defining the year as one of “stops and starts”, Prime Capital’s chief commercial officer, Steve Sampson, says the various state lockdowns have meant lending to SMEs has been sporadic. But with the growing vaccine rates and lifting of restrictions over the last couple of months, confidence has been returning. With 25 years’ experience of supporting SMEs, Sampson says the team at Prime Capital understand the nuances of running a business. Ensuring that SMEs can bridge
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19/10/2021 12:29:32 pm
Bigger, better, faster, stronger. When you choose OnDeck, you choose a loan provider who knows small business. Our solutions are smart, simple and designed to put you and your clients first. Bigger We generally offer larger loans than our competitors, thanks to The KOALA Score™, one of the most predictive credit scoring engines in Australia. Better Our loan terms are designed around the needs of small businesses. We won’t ask for upfront security on any size loan. Faster With Lightning Loans™, we can fund up to $100k in as fast as 2 hours with only 6 months bank statements, and more complex loans up to $250k in as fast as one business day. Stronger Our focus is on strengthening your business and our dedicated Broker team pride themselves on understanding your needs and providing exceptional service.
Get onboard: Visit ondeck.com.au/broker Email broker@ondeck.com.au Call 1800 831 294
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JMS624_0721
Contact us today to learn more about our Broker Partner Program.
19/10/2021 10:19:51 am
FEATURES
SECTOR FOCUS: SME LENDING HOW COVID-19 HAS AFFECTED SME REVENUE 17%
Increase in revenue
8%
7%
10%
8%
7%
24%
22%
23%
19%
23%
68%
71%
67%
73%
70%
9%
9%
13%
27%
28%
26%
64%
64%
61%
13%
33%
17%
14%
27%
31%
57%
54%
17%
40%
37%
43%
46%
16%
18%
15%
28%
29%
33%
31%
54%
56%
51%
57%
11%
No change in revenue Decline in revenue
54%
2020
Mean % change in revenue (All SMEs)
2021
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
-35%
-33%
-29%
-32%
-29%
-26%
-25%
-24%
-18%
-22%
-17%
-14%
-14%
-16%
-17%
-17%
-22%
Source: ACA Research and Fifth Quadrant COVID-19 SME Sentiment Tracker
the gap as they come out of lockdown, Prime Capital has offered support by, for example, reducing interest rates and raising LVRs. The lender has launched a campaign designed to help businesses get started again. It has reduced its interest rate on its Business Basics Plus loan to 4.95% and increased
normal times as easy and as fast and as simple as possible.” Prime Capital has also rolled out training webinars for brokers, to support them as they assist SMEs. The business sectors that will probably need more financial assistance than others
“When you help them through the tough times, that’s going to give you an opportunity to create tremendous goodwill and long-term relationships” Steve Sampson, Prime Capital its LVRs on residential security in capital cities to 75%. “This will help businesses tap into any equity that they need to, as the prices of property in most states have increased quite a bit,” Sampson says. “We’re recognising that and giving customers the opportunity to tap into it so that they can make this transition back to
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include retail, tourism, hospitality and education. But Sampson predicts they will “bounce back with a vengeance”. “I think we’re going to have a boom market for businesses requiring capital in the coming months as the country returns to normal. And I think that brokers should be really widening their horizons right now,” he says. “My advice would be to wise up and get
the knowledge. Lenders such as Prime Capital have solutions to assist businesses to recover. It’s really fast, and it’s really simple to do. It’s much easier than you might think. “When you consider that 70% of the Australian workforce are employed by small business, you’ll also be helping many, many people get back on their feet.” Traditional lines of finance may not be an option for many SMEs, Sampson warns, as they are too cumbersome and difficult. Instead, borrowers will be looking for lenders like Prime Capital that can offer fast, easy finance. This is also where a broker can come in and act as a “solution provider”, looking at the entire breadth of the market. “Some businesses may need very short finance, and some may need longer as they trade back to normal,” Sampson says. “These borrowers will remember you for that. When you help them through the tough times, that’s going to give you an opportunity to create tremendous goodwill and long-term relationships with these customers. And at Prime, we really drive to strengthen that relationship between the customer and the broker, and the lender.”
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19/10/2021 12:29:50 pm
ING's $3,000 cashback offer is available for customers who refinance an eligible home loan from another lender. Minimum refinance amount $500,000+, LVR less than or equal to 80%. Customers must apply to refinance before 31 December 2021 and settle on or before 31 March 2022. Check out the terms and conditions at broker.ing.com.au That could be $3,000 for your customers to do their thing, whatever that is.
To find out more about our $3,000 cashback offer talk to your ING representative or visit broker.ing.com.au For the curious: Information is correct as at date of publication and subject to change. All applications for credit are subject to ING's credit approval criteria. Fees and charges apply. Details of these and the terms and conditions are available at ing.com.au or by calling 133 464. ING is a business name of ING Bank (Australia) Limited ABN 24 000 893 292, AFSL and Australian Credit Licence 229823.
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do your thing
19/10/2021 10:20:21 am
FEATURES
SECTOR FOCUS: BROKER TECHNOLOGY
Enhancing the broker experience Digital tools are helping to streamline the home loan process, and brokers who are not embracing technology face being left out. MPA talks to four industry leaders about the benefits of using technology
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19/10/2021 10:34:36 am
TECHNOLOGY WAS always going to be ever-present in the world of work, but no one was prepared for the sudden and enforced transition to a mostly digital environment that COVID-19 brought about. Not only were video calls a tool for friends and family to keep in touch, but business meetings and doctors’ appointments had to become virtual too. Arguably one of the industries most impacted by the move was the mortgage and finance sector. With personal information being shared and legal documents to sign, it was a steep adjustment to going digital. The industry proved itself agile, though, in being able to swiftly adopt new digital methods to ensure customer needs were met throughout the pandemic, says Blake
says it’s vital that brokers are able to access these tools to ensure they are at the top of their servicing game and maximising efficiencies. “If you do not have some of these available through your CRM now, you should be looking to see what tech is out there and thinking about how you will integrate it into your business,” he says. “We’ve entered an age of digital efficiency that will only accelerate as time moves forward, so you need to be involved now. “In the course of the last 24 months, I have seen brokers write double previous volumes without working additional hours, by improving their processes and workflows and maximising digital efficiencies. I fear that brokers who do not presently or are not
“Especially with heightened volumes, technology has not only been the linchpin for the industry’s progression but has helped propel it to new heights” Blake Buchanan, Specialist Finance Group Buchanan, head of aggregation at Specialist Finance Group. “Especially with heightened volumes, technology has not only been the linchpin for the industry’s progression but has helped propel it to new heights,” he says. The aggregator itself had made sure that all the tools a full-time professional broker would need were integrated into its SFGConnect system for a smooth, onestop-shop experience. Allowing for digital signatures, customer portals, credit bureaus, document collection, verification of identity, video conferencing, compliance tools and more, the system was ready to support brokers going digital. Even as restrictions ease, Buchanan
now looking at investing in their processes may be left behind.” Simply having the technology is not enough, however. Feedback from various broker surveys has shown that technology can in fact make things more complicated. Buchanan says it can depend on the lender. Many lenders that have become technologically driven have seen blown-out SLAs and additional reworks. While digital lenders and neobanks have achieved improved turnaround times, he says this can come at the cost of stricter policy parameters. However, the larger banks that cater for broader policies and individual assessments have fewer digital tools, meaning turnaround times are lengthened as files are
HOW IS YOUR TECHNOLOGY HELPING WITH TURNAROUND TIMES? Tony Carn, NextGen.Net: What has been really fascinating is looking at how lenders have been working hard to increase the percentage of their loans that fall into that straight-through process category, whether by using better tools at the point of sale – like e-signatures, document verification services, better validation rules in ApplyOnline – or looking at their policy and process and how they can get that through faster. We’re helping a lot of lenders verify documents and issue more information requests (MIRs) with what we call OneView – so, [you view] the documents in ApplyOnline, and if you need to ask for more information, do it quickly, because the faster you ask for it, the quicker your time to yes is going to be. Lenders who can get their MIRs out in a matter of hours have the fastest turnaround times in the market.
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19/10/2021 10:34:53 am
FEATURES
SECTOR FOCUS: BROKER TECHNOLOGY
WHAT ARE SOME TIPS YOU WOULD GIVE BROKERS ON USING TECHNOLOGY? Blake Buchanan, Specialist Finance Group: Think about the customer journey and how you think they would like the service they receive from you to look and feel. Once you have mapped this out, think about your business process and start planning out the steps. Technology can’t manage all of these steps for you, but the ones it can, you should ensure it does. This process should become ingrained in your company to ensure that your offer is consistent and that all staff can pick up a file knowing exactly where it is up to and what needs to be done. You need to be in front of prospective and existing clients at the right time, so use technology to assist in these areas. Brokers often assume that marketing is expensive and time-consuming, but it doesn’t have to be if you use the right technology and partners.
being passed from team to team for approval. “There needs to be a balance between tech and people, and historically, sometimes there has been too much trust placed in tech,” Buchanan says. “As time marches forward, we’re seeing lenders release more enhancements for more harmony between digital assessment and human review that will speed up and more accurately assess applications.” Technology isn’t going anywhere. The balance between technology and human will need to continue into the future, and not just in banking but in the broking process itself. One of the areas in which Buchanan can see technology improving the process for brokers is in getting approval of blue-ribbon finance applications, which currently go into the same queue as more complex deals. “Why can’t these files have a different lane, knowing that the likely outcome is approval? Well, they can, and they should,” he says. “We’re already seeing steps towards this in other areas of our lives, with an example being government apps that link all of your data in one spot, such as Medicare, ATO portals, registrations, and more. You don’t have to stretch your imagination too far to see this as being the way forward for financial transactions in the near future.”
Building technology from the ground up Technology is also having an impact beyond making loan applications simpler and faster. AFG’s chief operating officer, John Sanger, says a “surprising change” has been the significant shift that has resulted in technology playing a key role in brokers’ upskilling and professional development. Online learning management systems and the increase in remote learning have “wholly turned the learning and development field on its head”, Sanger says. In its transition to working virtually, the aggregator has doubled its learning and development team and adapted its learning
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and development program. Brokers can now choose to attend webinars live or on demand, and the program automatically records and stores CPD points. “We’re seeing record numbers of brokers branching out into our broad-based course library, which is now over 900 courses strong, to learn about business management, leadership, cybersecurity and a range of content that previously sat outside the traditional aggregation technology offering as we strive to help our brokers build their futures,” Sanger says. The aggregator offers an extensive technological solution that extends beyond one single platform and across all areas of a broker’s business. Along with its learning and development program, Suite360 provides solutions for lodgements, CRM, analytics, calculators, deal-tracking, marketing and more. “We approach our technology by looking at the jobs our brokers need to get done and then building our technology from the ground up to perform those tasks in the best way possible,” Sanger says. AFG’s latest offering is ‘CRM’, which has been built from the ground up to change how its brokers work. Sanger says the group built CRM to allow brokers to get more done in less time, with collaboration tools built into the system, along with pipeline management and efficiency features, from improved deal mapping and direct document pass through to ApplyOnline and digital signatures for document collection. Understanding the need for compliance support, it also focused on easing the burden on brokers by building compliance reasoning into its technology. At the right moment in the application, the technology prompts brokers to automatically capture customer details and enhance the way products are selected to ensure brokers meet their clients’ needs and objectives.
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19/10/2021 10:35:11 am
Redefining commercial finance
Thinktank has a proven track record of providing straight forward commercial property finance solutions, with no surprises• Support your self-employed and investor clients with: • ‘Set and forget’ loan terms from 6 months to 30 years • Purchase, refinance and equity release ($100K – $3M) • SMSF finance options • National Relationship Manager support • The deepest commercial property experience in the market
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Into people. Not just transactions.
19/10/2021 10:36:16 am
FEATURES
SECTOR FOCUS: BROKER TECHNOLOGY
WHY SHOULD BROKERS EMBRACE TECH TOOLS AND PROCESSES? WHAT ARE THE BUSINESS BENEFITS? John Sanger, AFG: Globally we’ve seen massive advancements in the ability of businesses to meaningfully translate data into insights. We believe that the brokers who are ready and willing to embrace data-led decision-making will be those who will hold the competitive advantage. We are often focused on getting customers in the front door in business, and we miss the ones wandering out the side exit. This ‘churn’ can be a high cost to busy brokers. At AFG, we’re using our Red Alert platform early warning system to help alleviate this problem for brokers in a scalable and automated way that is just not possible for them to do alone. [The platform] uses machine learning to ingest and process hundreds of thousands of data points to find patterns and predict future customer behaviour. These patterns are then compared to existing customer data points to identify which customers are most likely to change in the immediate future. The results are automatically displayed for brokers to reach out to the customer or use the SMART Marketing Automation tool to trigger a scheduled communication. These systems will never be perfect, but we see accuracy predictions of 37%. Our modelling shows that this could increase to 60% accuracy as the algorithm continues to learn.
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AFG is also ensuring its technological offering is making things simpler for brokers within their businesses – for instance, by supporting their marketing efforts. An area that can often create extra work and complexity for brokers is now being automated by digital tools. “At its best, technology simplifies our jobs to be done, but at its worst, technology overwhelms with unnecessary choices, steps and decisions,” Sanger says. “We believe in designing our technology so it’s simple to use or even automated like our SMART marketing platform.
support the value of brokers in the eyes of their customers.”
Tech and data speeding up approvals Technology provider NextGen.Net’s chief customer officer, Tony Carn, agrees that the broker experience won’t be replaced, and says it’s about using technology to empower the broker. In fact – touching on a point Buchanan made – he says some digital lenders that promise fast direct-to-lender turnaround times have a very narrow focus in terms of the loans they offer. Carn says the size of
“We approach our technology by looking at the jobs our brokers need to get done and then building our technology from the ground up” John Sanger, AFG “We automate the whole process and have a team of expert marketers working behind the scenes to take the complexity out of those decisions. The result is a fully automated marketing platform that drives leads and referrals, year-round campaign activity to manage the customer and contact cycle, and a perpetually updated website.” With technology continually evolving, there are many tools on the market that offer consumers the ability to find their own home loan quickly. So, is there still a place for the broker? Sanger believes technology will serve to enhance the broker experience, rather than replace it. “At its heart, customers rely on brokers as trusted advisers through all stages of the mortgage process,” he says. “Any technology that makes the process more efficient or effective will serve to
the market that does not fit into those loans is growing, and the “human intervention” and “helping hand” that brokers can provide is critical, particularly alongside the best interests duty. “The responsibility that a broker has under the best interests duty to provide an impartial service and give advice on what’s the right path to take and how to do it, it’s the fundamental reason why brokers are writing 60% of volume,” Carn says. “That is such a strong value proposition, and on an ongoing basis too. Once the honeymoon’s over, who’s going to be there to help you? That’s where I think brokers are adding a lot of value. And just embracing the evolution of technology along the way will make people’s lives a lot easier.” He calls out advancements like open banking, which will enable brokers to provide a “seamless and streamlined” process.
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Carn says that as part of a recent upgrade to ApplyOnline, NextGen.Net has implemented comprehensive credit reporting, which allows the broker to receive the report digitally into the application. It is also evolving its document verification services to include a fully featured VOI solution called NextGen-ID, providing the opportunity for an industry standard in remote ID verification rather than having differing ID solutions across the market. “We’re looking to equip brokers, because as long as they have the tools there and they
different categories, how lenders compare to others in the market, the time taken to approve a loan, and the time taken for more information requests. Its benchmarking reports not only show lender turnaround times, but brokers can specifically drill down into a lender’s approval times for first home buyers in the 85–90% LVR band in NSW, for example. “Turnaround times are a shared challenge for everybody – applicants, brokers and lenders,” says Carn, pointing to three key
“We’re looking to equip brokers, because as long as they have the tools there and they use them, they will always be at the centre of the lending ecosystem” Tony Carn, NextGen.Net use them, they will always be at the centre of the lending ecosystem,” Carn says. Processing around 98% of all mortgage applications, NextGen.Net has access to an incredible amount of data. It can track conversion rates, the balance of lending in
drivers that affect SLAs: the quality of the loan application, the credit process and policy of the lender, and the lender’s platform and how integrated with other services it is. NextGen.Net has found that more information requests add around 35% to
overall processing times. But with lenders using the tools through ApplyOnline, they are able to limit the number of requests going out. In September 2021, NextGen.Net’s benchmark reporting saw the proportion of straight-through loans grow to around 12% of loans, from 5% in March.. Carn says it’s important to remember that the applicant is the one ultimately affected by slower processing times resulting from more information requests, rather than focusing on blaming either the lender or the broker. “It’s a shared problem across the industry to address that and how they can get it done better,” he says. “We’re seeing much better quality at the point of sale, and I hasten to add, it’s not that brokers weren’t submitting quality in the past, but often there weren’t good tools to ensure it. I think e-signatures, document verification and better lender-streaming are all things that are contributing really, really well.”
Tech critical to brokers’ success Another technology that can save brokers time is Quickli’s servicing calculations tool.
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FEATURES
SECTOR FOCUS: BROKER TECHNOLOGY
Offering a solution to “a problem that has been around since the dawn of the industry”, Quickli combines all lenders’ calculators into one interface. Founder Eric Dill says it has traditionally been a painstaking process to figure out which lender is willing to lend to a customer, and suggests brokers should simply find their favourite calculator and stick with it. With Quickli, brokers can prequalify a
etc. This type of tech has allowed many brokers to flourish,” he says. “It’s been a true blessing to be in an industry that is thriving while so many other industries have been hit hard. It’s important we don’t take it for granted, and it’s important we continue to capitalise on it while we can. Getting the right tech in the door while the going is good will be critical to the ongoing success of many brokers.”
“Getting the right tech in the door while the going is good will be critical to the ongoing success of many brokers” Eric Dill, Quickli customer earlier in the journey and then get an accurate indication of where the deal does or does not fit across more than 20 lenders. “It sounds too good to be true, we know that, but it has become the new ‘go to’ calculator for so many brokers despite being only a few months old,” Dill says. “It saves a tremendous amount of time, reduces error, and delivers better results to consumers by comparing serviceability across a wider panel of lenders in mere minutes.” The interface also includes a practical BID application, enabling the broker to demonstrate that they have reasonably checked lenders and have a legitimate record of why many of those lenders were or were not a good fit for their client. Dill says the implementation and regular use of technology has been the foundation of any efficient and successful brokerage. As a broker himself, he knows how important it’s been to adapt to the right technology, particularly over the last 18 months. “I couldn’t imagine running a business these days without Zoom or online document collection platforms or electronic signatures,
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Believing that the future of mortgage broking will be paved by businesses that know how to combine excellent brokers with excellent technology, Dill says technology is pointless without a broker behind it. “Brokers are not being replaced by tech any time soon,” he says. “I don’t see the industry flourishing with one but not the other. The majority of consumers will always prefer the human element – even the millennials.” Dill assures brokers who are still apprehensive or cautious about incorporating technology that they don’t need to do a complete overhaul all at once. Introduce one thing at a time, he says. Just make sure you give it a solid go – and don’t be afraid to invest a bit of money in getting the right technology on board. “I’m one of those brokers that struggles to prioritise getting new tech and new systems in place, especially when I already feel under the pump,” he says. “But it’s when we’re busy that we need the good tech tools the most. Force yourself to carve out time for the tech that you think will save you the most time.”
HAVE YOU SEEN TECHNOLOGY HELPING WITH TURNAROUND TIMES, FEWER REWORKS AND MORE ACCURACY? Eric Dill, Quickli: Turnaround times and reworks have a lot to do with the collaboration efforts (or lack thereof) between the tech the brokers are using and the tech the banks are using. This is a nightmare from my point of view. Getting big banks, aggregators and brokers all in the same room to discuss innovation and the prospect of building tech that is more congruent across the industry would be a monumental achievement. It’s hard. It’s the reason you see more and more brokers and bankers taking the tech into their own hands, and the result is brilliant. Look at CashDeck, look at Sherlok, look at Quickli – these are independent to banks and aggregators, and yet they’re fundamental to many brokers’ businesses and solving real-world broker problems.
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19/10/2021 10:37:08 am
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19/10/2021 10:37:23 am
FEATURES
RECRUITMENT
Talent management in a hybrid world With the way we work changing, the approach to hiring and holding on to skilled staff needs to change too. Colin D. Ellis looks at how global companies have done this, and explains the steps your business can take to ensure you retain top talent
ONE OF the biggest issues HR departments have faced is the ability to attract and retain emotionally intelligent, skilled people – the types of employees who will not only deliver great service and results but also contribute positively to the evolving culture of a business. Hybrid working has shifted how talent is recruited forever. According to Microsoft, only 15% of organisations had policies that encouraged flexible working pre-COVID-19. Since the start of the pandemic, that percentage has quintupled to 76% as organisations realise that hybrid working is now expected by employees. The days of full-time, office-based work are a thing of the past, and talented people can now market themselves on a global job board. In the face of this, organisations will have to work harder than they have ever done before to manage and keep hold of them. Employees are on the lookout for opportunities to move and take advantage of these new conditions right now. According to one US report, a quarter of people will be looking for a new job post-pandemic, while almost half will look to leave their current employer if it doesn’t offer a hybrid working approach.
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FEATURES
RECRUITMENT And into this equation will come forwardthinking organisations that have realised they have an opportunity to build a hybrid working culture and approach that offers a competitive advantage, attracting skilled people from around the world. Sydney-based technology organisation Atlassian is one example. Prior to 2020, Atlassian had relied heavily on being able to employ highly skilled people from around the world and help them relocate to Australia. The pandemic (and Australia’s immigration rules) meant they had to rethink their approach. In 2021 the company implemented a ‘Team Anywhere’ approach to transition to a fully
HR managers need to take an innovative approach to onboarding to ensure that experiences of new staff not only meet expectations but exceed them distributed workforce. This approach has three elements: • Work flexibly: Working with managers and teammates to determine where and how work needs to get done and establishing the routines and habits to ensure that it is • Re-imagine teamwork: Rethinking how teams interact and the tools used to help them do so, virtually and in person (when restrictions allow) • Talent everywhere: Establishing global talent pods to actively search for diverse, talented people to contribute to culture and results By implementing this approach, not only can Atlassian tap into a richer pool of talent but it is also improving the productivity and effectiveness of its teams by giving them the opportunity to choose how, when and where to do their work. Atlassian is just one example, and there will be many others too, so HR managers cannot afford to be complacent. They will need to lift
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their talent management game, ensuring they have an approach that is attractive to potential candidates, technology that supports collaboration, and a culture worth belonging to. Immediate things to consider to ensure talented people are retained: • Culture development: Culture is, and always will be, the number one determinant of team and organisational success. HR managers should ensure that culture redefinition work is planned for this year and beyond, because ‘the ways we do things around here’ has changed significantly in the last 12 months. • Hybrid working policy: Many senior managers are playing a waiting game rather than acting proactively in implementing a hybrid working approach. Talented people aren’t going to wait around to see what happens; decisions need to be made and communicated clearly. • Onboarding: Having taken the time to hire people, and assuming that a return to the office isn’t imminent, HR managers need to
take an innovative approach to onboarding to ensure that experiences of new staff not only meet expectations but exceed them and set them up for success. • Technology: It’s not enough to have implemented Microsoft Teams and changed your background to a virtual one. Consideration must be given to investing in tools that can contribute to collaboration, as well as training programs that show staff how to use them productively. • Support for home costs: The average cost of setting up a home workspace is $660, and this is necessary to ensure that a productive working environment exists and staff adhere to health and wellbeing policies. HR managers need to decide how much support is given to staff to be able to do this. The expectations of employees have changed significantly since the beginning of the pandemic, and HR managers need to respond swiftly to ensure they retain the very people they need for their businesses to be successful now and throughout future crises.
Colin D. Ellis is bestselling author of The Hybrid Handbook: How to Set Yourself Up for the Future of Work and helps organisations around the world transform their working cultures.
www.mpamagazine.com.au
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FEATURES
LEADERSHIP
Seven habits of woke leaders Leading by example creates a bigger impact than lecturing others to change, writes author and leadership specialist Nikki Fogden-Moore
CONSCIOUS LEADERSHIP (in both the personal and professional spheres) is vital to creating strong teams, families and companies. Now more than ever, the responsibility of leading by example sits with companies that have been given the charter to make decisions that impact individuals at home as much as at work. As leaders we cannot avoid the spotlight being on our own actions and how we handle unprecedented times with grace and vision. Leadership is about evolution as much as resolution and resilience. Here are seven habits of truly ‘woke’ leaders:
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Awake leaders don’t ‘advertise’ the fact
Awareness does not require a badge of honour. It is a private and humbling process that often involves deep reflection, tough lessons and true experience. It is the art of listening and observing rather than announcing. Woke leaders are too busy being themselves to tell you how ‘aware’ they are.
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Awake leaders make time for their own wellbeing
As a core way of looking after their own mental, physical and emotional performance, conscious leaders know they should
As a core way of looking after their own mental, physical and emotional performance, conscious leaders know they should put on their own oxygen masks first www.mpamagazine.com.au
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FEATURES
LEADERSHIP put on their own oxygen masks first. Burnt-out leaders cannot perform. Running a company, a family and a life is like the grand slam of premier sportsmanship. It requires mind/ body/soul wellbeing to reduce the effects of stress, improve decision-making and get regular sleep. A healthy heart is the best investment for sustainable success. ‘Woke’ leaders have the self-discipline to maintain their personal wellbeing as part of a positive P&L.
3
Awake leaders discern without judgment
Observation without projection. I refer to this with my clients as “owling” – one of the most brilliant ways to review a project, person, group or situation. Rather than swooping in and reacting based on triggers and fears in difficult situations, ‘woke’ leaders press pause and take a moment to see it from a higher perspective. Is this going to matter in the long term? How does this affect the ‘now’, my team, customers, our core delivery? Where are the triage points? What is the next right thing to do? There is no judgment, but rather a more strategic and intuitive alignment to reflect, ascertain and make a decision from a place of informed neutrality.
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Awake leaders are kind and compassionate by default
Kindness and empathy are crucial traits of effective woke leaders. They understand that individuals and teams around them will have different lives, perspectives and situations they are facing, and not everyone has the tools or resources to hand as many leaders do. Kindness does not require validation. It is the natural balance to create a combined sense of achievement and showing significance.
5
Awake leaders know when to retreat to hear their own intuition
You will often find a conscious leader quietly taking a moment to themselves, whether it’s 10 seconds or an hour, to review, refine and get centred; and to connect with their trifecta of experience, intuition and intellect – three very
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crucial tools to be used in unison. This means stepping away from the white noise of peer pressure, opinions and the familiar. Pioneers need space to create the small pivots that achieve incredible results. They trust their gut and know how to press pause to clearly discern between that and everything else.
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Awake leaders are always curious
How can this be better? What other options are there? How can I evolve? Woke leaders choose to replace fear with curiosity. Not in a reckless way but by understanding that if you keep doing things the same way you will get the same results. Making decisions from a place of ‘what if’ rather than avoidance, doubt, blame and shame. Woke leadership means a commitment to continually learn and be agile.
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and often shut down performance. Instead, evolved leaders provide a clear framework for the common why/what and a best practice for the how. It’s the art of saying something clearly once, with regular milestones, aka ‘pit stops’, as checkpoints, rather than micromanaging. Empower teams to have input at each stage, and nurture the result with clear KPIs and best practices that ensure quality of time, budget and end delivery along the way. ‘Woke’ leadership is an inside job. It’s a subtle recognition that when we are aligned it provides an incredible place of humility, strength and natural character to cultivate trust and momentum. This is where true co-creation and collaboration can exist. Being a genuine leader is a constant evolution with grace and awareness – it’s progress, not perfection.
Awake leaders lead by example
Aware leaders do not lecture. We have all no doubt had to reprogram through the years and learn in our journey of leadership. Overmanaging and over-informing do not create an environment of learning and growth. They de-oxygenate the environment
Nikki Fogden-Moore is a renowned change leadership specialist. She is a proven expert who is dedicated to putting extraordinary leaders and individuals in the driver’s seat of life and work.
www.mpamagazine.com.au
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FEATURES
PRODUCTIVITY
Why productivity hacks won’t help Many of us turn to hacks and tricks for an easy way to achieve more work in less time, but Amantha Imber explains that they may not get to the root cause of the problem
HAVING SPENT the last few years researching, writing and podcasting about the world of productivity, I’ve learnt that many people – myself included – love a good hack. A productivity hack promises us an easy way to achieve so much more in so much less time. For example, you might have read that batch-checking your email is far more effective than dipping in and out of your inbox multiple times an hour, as most of us do. You might have heard that using website blocking software such as Freedom will help you stay focused on tasks
and not succumb to digital distractions. While both strategies will help improve your productivity, the problem with hacks like these is that they can be like putting a Band-Aid on a gaping wound. If the way we work is fundamentally broken, hacks can only help so much before things come undone. If our inbox remains an overwhelming mess, checking it less won’t fix the fundamental problem. Likewise, if you are suffering from digital addiction, websiteblocking software may not actually help you overcome your addiction.
If the way we work is fundamentally broken, hacks can only help so much before things come undone
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FEATURES
PRODUCTIVITY Get to the root cause Instead of relying on hacks, try to get to the root cause of your productivity problems. Often, this comes down to reviewing your workflow. Workflow is the underlying explicit or implicit system that specifies how your work gets done. Workflow refers to how tasks are assigned, executed and tracked. For Georgetown University computer science professor Cal Newport, dealing with email overload is a classic example of how the underlying workflow is broken, and how hacks to stay out of your inbox won’t fix things. “Often, the underlying issue is that there’s this workflow that depends on ongoing email communication to get anything done,” Newport explained on my How I Work podcast. “If you want systemic change, you have to replace your current workflow with something better. To what extent are you rearranging the deck chairs on the sinking Titanic when you’re building a more complicated system for
‘To Discuss’. “I realised I could save a ton of email communication through having a ‘To Discuss’ column,” he told me. Every time Newport had something that he needed to ask his department chair or program administrator or anyone else he was working with, he resisted the urge to just shoot off an email in that moment. Instead, he
Instead of relying on the latest productivity hacks to transform how you work, think about some of the most inefficient workflows in your organisation an underlying workflow that’s just inevitably going to keep you overwhelmed or not have enough time to work on what’s important.”
Change your communication workflow When Newport was appointed as the university’s director of graduate studies, he saw the role as a chance to change his workflow around how he communicated with his team. Newport organised his tasks using a Kanban board, a simple chart to help visualise a project’s workflow using the Agile methodology. At its most basic, a Kanban board has three columns: To Do, Doing, and Done. All tasks associated with a project start in the ‘To Do’ column and gradually make their way across to the ‘Done’ column. Newport added in a fourth column labelled
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listed the topic for discussion on his board. “While sending an email in the moment would give me a little bit of relief, every one of those is a new unscheduled message that’s out there and a new unscheduled response. That’s then going to potentially lead to a long backand-forth chain of unscheduled messages, which I learned doing the research for my book, A World Without Email, is productivity poison.” Newport ended up having ‘To Discuss’ columns for separate people that he frequently needed to discuss issues with. Then, whenever he was next meeting with them, he would be able to plough through the topics for discussion swiftly and resolve them then and there. “This probably saved me many dozens of unscheduled emails per week by just waiting until I got to those next meetings.”
First look for low-hanging fruit Newport’s advice is to change common workflows one at a time – and to pick the lowesthanging fruit first. For example, workflow around scheduling meetings is highly inefficient in most companies. Oftentimes, 10 to 20 emails can be exchanged to organise a simple 30-minute meeting. Instead, using meeting scheduling software such as Calendly.com can dramatically reduce the to-and-fro communication required for this common basic task. Meeting scheduling software works by allowing the user to allocate blocks of time they have available for meetings, then send a scheduling link to the person or people they want to meet with so they can book in the time that works best for them. Ten-plus emails can be replaced by a single email – a classic example of how changing the workflow provides a far better solution than an email productivity hack. So, instead of relying on the latest productivity hacks to transform the way you work, instead think about some of the most inefficient workflows in your organisation. One by one, redesign them to make the process more efficient so you are no longer reliant on hacks that don’t address the root cause of the problem.
Dr Amantha Imber is the founder of Inventium, Australia’s leading behavioural science consultancy, and the host of How I Work, a podcast about the habits and rituals of the world’s most successful people.
www.mpamagazine.com.au
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AMA21
Celebrating 20 years
CONGRATULATIONS TO THE 2021 WINNERS AND EXCELLENCE AWARDEES After another extraordinary year for the industry, mortgage professionals and businesses have continued to raise the bar in terms of service, innovation, professionalism and leadership. And nowhere is this more evident than in the Australian Mortgage Awards 2021 Winners and Excellence Awardees. Mortgage Professional Australia, Australian Broker, publisher Key Media, and our esteemed event sponsors extend warm congratulations to them all. As the Australian Mortgage Awards celebrates 20 years, we also take this opportunity to give our sincerest thanks to our sponsors and community of readers. With your invaluable support through the years, this event has grown into the biggest showcase of the industry's most incredible individuals and businesses, inspiring excellence in the mortgage profession. The virtual event held on 15 October 2021 and the award recipients will be commemorated in MPA Issue 21.12 out in late November, which will take an in-depth look at their achievements.
To view the full list of award recipients, visit
australianmortgageawards.com.au
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Award Sponsors
Official Media
Organised by
BROKER
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PEOPLE
BROKERAGE INSIGHT
Small-town brokerage builds big presence After many years in the finance industry, David Traynor decided to start a local brokerage. Fast-forward eight years and his team of 22 licensed brokers at Regional Finance Solutions are spread across NSW, Queensland and the ACT SPANNING REGIONAL NSW as well as Sydney, the ACT and the Atherton Tablelands – with more Queensland locations to come – Regional Finance Solutions is more than just a brokerage. After an old associate convinced David Traynor in early 2013 to start up his own broking business, things snowballed, and there are now 22 licensed brokers working under the brand across multiple locations.
The brokerage has also added peripheral services such as business and rural insurance, as well as utility connection services, in order to provide a more rounded offering to clients. With the majority of its offices located in regional areas, Regional Finance Solutions can service often-unmet segments of the market. Traynor says that as banks have reduced their presence in regional Australia, there is a vacuum of skills, knowledge and
“Having someone with banking skills and knowledge, along with a local history, visit clients gives them a sense of comfort” “The intent was to have a quiet life running a small-town practice, but as my wife Debbie says, I ‘don’t do small well’,” Traynor says. Regional Finance Solutions’ brokers range in age from their 20s to 70s, and its services encompass various kinds of finance. Since the brokerage obtained its credit licence in 2016, it has also been steadily building its own lender panel, which includes exclusive boutique lenders. These provide a mix of competitive pricing, niche products and services, and consistently good service levels, which Traynor says has been a major contributor to the company’s ongoing success.
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services, which also makes it difficult to understand the local economies and what’s happening in local markets. “Having someone with banking skills and knowledge, along with a local history, visit clients gives them a sense of comfort that they are not being forgotten and are a little less left out of the industry,” he says. “Regularly our brokers are not just having a client/loan discussion; it will be about the season, the market, their families, what’s happening outside the clients’ daily world. It’s old-school banking and relationship-building. “The biggest difference between a banker
DAVID TRAYNOR’S CAREER PATH
1982
Begins working in banking, which takes him to various towns in regional NSW
2001
Joins Bankwest
2008
2012
2013
Leaves Bankwest role of chief manager, rural and regional banking, Eastern Australia. Purchases a small country motel with his wife, Debbie, for a change of pace. Continues to do consultancy and contracting work in the finance industry Suffers mobility issues as a result of deep vein thrombosis, which leads to the eventual sale of the motel Starts up Regional Finance Solutions
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REGIONAL FINANCE SOLUTIONS AT A GLANCE Franchise owner: David Traynor Location: Inverell, NSW Year founded: 2013 Services offered: Lending; insurance products Number of employees: 4 head office staff; 22 licensed brokers
“The intent was to have a quiet life running a small-town practice, but as my wife Debbie says, I ‘don’t do small well’ ” and our brokers is that our team are selfemployed, just like many of our clients, so they truly understand their concerns and look after their wellbeing. Often, I think that as much as providing access to credit, we are just an ear to talk to.” How much clients value the relationshipbuilding can be seen in the feedback they give. After each loan settlement, clients are asked to rate the brokerage on areas like ease of speaking to a broker, the time taken to understand the client’s needs, and how well the clients were kept informed. Out of 270 surveys recently conducted, 96% of clients gave the
company top marks of 5 out of 5 for overall service. The remaining 4% gave it 4 out of 5. Traynor says these surveys are not there to give the brokers a hard time when things go wrong but to identify gaps so they can keep improving the experience of their clients. “Our view is that if one customer has a bad experience, they will tell 10 people, but if they have a good experience, they will possibly tell two or three. So it’s important to us that as many of our clients have as good an experience as possible,” he says. Traynor says reliance on brokers in regional areas continues to grow. These markets have
been pushed to new highs as people realise they no longer need to be near a major city to work. He says homeownership is becoming more difficult in the regions, and while rising prices may have longer-term benefits, in the short term people’s spending power is being impacted as incomes fail to catch up, which is hurting local businesses. Keen to adapt as each new challenge rolls in, Regional Finance Solutions used COVID-19 to rethink how it did business and move to a more digital framework. The brokerage has introduced digital fact-finds, online collection of supporting documents, electronic VOI, and DocuSign where possible. “We have learned that, if there is an online solution, go grab it with both hands, work with it and make it adapt to our business,” Traynor says. “If there isn’t a solution, sometimes you need to create one; we have a great business partner and have continued to build our own IT solutions.” As the impacts of the pandemic ease and the business moves forward, Traynor says the company is “back in growth mode”. “During the last 18 months we have all faced challenges, both personally and professionally. We have grown stronger and become much smarter. While there will be more challenges [ahead], we also believe that our business will continue to grow and prosper.”
www.mpamagazine.com.au
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PEOPLE
OTHER LIFE
TELL US WHAT YOU GET UP TO Email rebecca.pike@keymedia.com
“ I enjoy educating you ng footballers to get to their true potential not only in football but in life as well”
10 yrs
Age at which Tony Hohtoulas began playing football
4.5
Number of hours he coaches each week
4–18 yrs
Age range of the young players Hohtoulas coaches
BUILDING TRUE POTENTIAL After an injury forced this Melbourne broker to rethink his football journey, he turned to coaching young players instead
DESPITE SUFFERING a career-ending ankle injury at the age of 18, Mortgage Choice broker Tony Hohtoulas continues to share his love for football by coaching young players each week. He took up the sport as a 10-year-old, playing for Northcote City Football Club until he had to stop because of his injury.
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“I still had a passion and burning desire for the game and wanted to give back to the sport that I love. I turned to coaching to educate young footballers to their true potential,” he says. Each Saturday, Hohtoulas offers three 90-minute coaching sessions at the Melbourne Football Academy, which
specialises in teaching football to boys and girls from as young as four to the age of 18. With a stressful job like mortgage broking, he says coaching football gives him an outlet to forget the stress and “enjoy time spent with committed young individuals who have the same love of the game that I do”.
www.mpamagazine.com.au
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