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The chief executive of an Australian bank has spoken out about channel conflict in the mortgage industry and says a customer’s decision to use a broker must be respected.
Speaking to The Adviser, Heritage Bank CEO Peter Lock said while channel conflict “is always a possibility” for lenders that use both branch and broker networks, both channels must ultimately respect the customer’s choice.
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“If the customer has made the choice to go to the branch or go to a broker, you need to respect choice. If you don’t respect choice you are going to end up with a dissatisfied customer or a dissatisfied broker,” Mr Lock said.
“If a broker has recommended your brand then you’ve got an obligation to make sure you make that broker look good, and ensure the customer experience is good. Then you will get more business. To me it’s a no-brainer. You respect the channels that you are paying for to introduce business to you, and you don’t try to white ant it.”
Heritage Bank has a national broker network and 61 branches in Queensland. Mr Lock said he has seen no evidence of channel conflict at the mutual since he took on the top job in late 2015.
“I believe that you can work very well with both channels,” he said, adding that branches can be used effectively to help on-board broker clients.
“At the end of the day the broker wants a seamless transition.”
Brokers have been a major part of Hertiage Bank’s mortgage strategy. The mutual lender has been working with brokers for 20 years. The group’s head of broker distribution, Michael Trencher, told The Adviser last year that the bank’s 61 branches are well aware of the significance of the broker channel to the group’s growth strategy, and that channel conflict is minimal compared to his experience working for majors like NAB and ANZ.
“All the on-boarding of broker-introduced customers happens through our contacts centre,” he said. “We have 61 branches, but they are only in south-east Queensland, and I work very closely with the branch management team. The broker proposition is very well known to our branch staff, so if there’s ever a conflict, it gets sorted out pretty quickly.
“That’s one area I haven’t had many complaints about at all.”
[Related: Major bank branch undercutting broker rates]
