Several regional banks and credit unions are expected to begin providing home loans via a new online platform that aims to “take business from brokers”.
South Australian-based fintech start-up Joust is preparing its innovative real time platform which lenders can use to compete for the home loan business.
The brainchild of former major bank executive Mark Bevan, Joust created an online marketplace which connects consumers directly with lenders via a live auction process. Bids from the lenders can be seen in real time on a desktop or smart device.
Adelaide Bank, Beyond Bank, People’s Choice Credit Union and BankSA are expected to join Bank of Queensland, Gateway Credit Union and Australian Unity as “foundation lenders” on the new platform.
“Seven lenders have been terrific supporters of the Joust business model and clearly demonstrated their willingness to innovate and be leaders in digital services and the ultra-competitive home loan finance market,” Mr Bevan said.
Joust has ambitions to become an alternative way for Australian consumers to arrange or refinance a home loan.
The company is targeting prime mortgage customers with good credit ratings, good jobs and equity in their homes.
“One of the reasons the lenders have responded so well to our platform is that it allows them to tailor this to their own growth strategies, rather than just taking on all customers with a volume lever,” Mr Bevan said.
Joust will only target owner-occupier mortgage customers looking for variable rate home loans.
Consumers will have access to advertised rates, comparison rate and repayments, which will be directly comparable to the previous bid.
“Lenders have become very comfortable with our business model in that it is not disruptive to them,” Mr Bevan said. “We would certainly be targeting those vanilla, prime customers who may be going through a broker to create some competitive tension.”
“We think we can do that more effectively on our platform and give the banks the benefit of being able to compete on a lower cost origination basis.”
Mr Bevan said one of the main benefits to banks is the complete lack of channel conflict, as Joust is not looking to ‘own’ the customer or the relationship.
“We would hope to take some business away from mortgage brokers,” he said.
Joust has deliberately targeted challenger brands rather than the big four. According to Mr Bevan, the start-up has seen the strongest engagement from non-major lenders and mutuals.
“The challenger brands and the mutuals and credit unions who have got growth aspirations weigh up a broker strategy and when they take a closer look at it, they just see how crowded and expensive and difficult it is,” he said.
“A possible digital disruption play like ourselves is a low-cost way of opening up a level playing field and new origination source.”
Mr Bevan’s comments come after QT Mutual Bank revealed that its proposed merger with RACQ is a “strategic decision” to avoid the third-party channel.
QT Mutual Bank chief executive Steve Targett told The Adviser brokers are not part of the group’s plans.
“We are probably quite old-fashioned as organisations and think that we can penetrate that market direct,” Mr Targett said.
“We don’t use [brokers] at the moment. Part of the reason we haven’t done it is because there is certainly a cost associated with doing that. We felt at our size we wouldn’t get the quality of business we wanted and so what we have done is tried to focus on doing our relationship management direct,” he said.
“There is a price associated with it both in terms of the margin you pay, the trail, the internal costs and you’re not guaranteed to get the quality end of the business.
“We have strategically decided to stay out. A lot of people have dipped their toes in because they can’t find growth any other way. We have worked really hard to find the right merger partner so we don’t have to go into the broker market.”
Joust's online marketplace is expected to be rolled out on 30 May.
[Related: Bank to grow mortgages without brokers]
James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.
He has a sound pedigree to cover the business of mortgages and the converging financial services sector having reported for leading finance titles InvestorDaily, InvestorWeekly, Accountants Daily, ifa, Mortgage Business, Residential Property Manager, Real Estate Business, SMSF Adviser, Smart Property Investment, and The Adviser.
He has also been published in The Daily Telegraph and contributed online to FST Media and Mergermarket, part of the Financial Times Group.
James holds a BA (Hons) in English Literature and an MA in Journalism.
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