ANZ has always been keen on brokers. The bank is generally viewed as one of the more consistent and reliable of the big four when it comes to third-party distribution. Chief executive Shayne Elliott has spoken favourably of the value brokers provide to the group and the warm feelings appear to be mutual: Brokers rated ANZ the best of the majors in this year’s Momentum Intelligence Third-Party Lending Report – Major Banks.
Nevertheless, changes in customer behaviour, the increased adoption of mobile devices, cost cutting, capital requirements and better use of data are all being considered by banks as they prepare for the future.
ANZ is undergoing a significant transformation. Under the leadership of Mr Elliott, the group is now looking to digitise many of its processes and streamline its model, moving away from both branches and brokers and towards a technology-driven solution.
This is according to AFR columnist Christopher Joye, who explains in a recent article that ANZ plans to use “predictive modelling” to beat its competitors by providing risk-based pricing.
“Risk-based pricing is a vital pre-condition to allowing ANZ to pivot away from expensive mortgage brokers and branches towards end-to-end online origination in which customers can quickly buy deposits, loans, insurance, investments and super via a website in real time with no physical documents required,” Mr Joye writes.
The Adviser contacted ANZ for confirmation of these plans but received no reply.
If Mr Joye’s observations are correct and ANZ is indeed looking to move away from traditional distribution channels, then the risks are significant. Right now, customers are still voting with their feet and seeking out the assistance of mortgage brokers. The minority are heading to their local branches.
But if ANZ manages to harness customer data effectively enough to provide risk-based pricing on home loans, the results could be transformative for the Australian mortgage market. It could essentially challenge the ultimate value proposition of brokers: choice. If ANZ can offer tailor-made rates, the intrigue alone could see borrowers (no longer loyal to their mortgage provider anyway) logging on to an ANZ portal to see what it’s all about.
These plans will no doubt take time to develop, and integrating risk-based pricing will be challenging.
In the meantime, it looks to be "business as usual" for the major bank, and ANZ’s digital transformation is currently serving brokers pretty well — last month, it scrapped handwritten mortgage applications in favour of a "click and drag" process to upload all documents.
ANZ has also shown its support for intermediaries by recently partnering with online-based broker uno home loans. ANZ’s head of retail broker distribution, Simone Tilley, said the bank is “embracing digital disruption”, which she says is “taking place across the industry”.
“Our customers want access to secure and reliable home loans that can be turned around in a short time and we are committed to providing that for them,” Ms Tilley said. “By joining with uno home loans, we will provide more customers with greater access to choose the home loan that is right for them.”
So, for now, things appear to be normal. But change, as always, is on the horizon.
The move towards a complete end-to-end digital mortgage has been talked about for years. While the technology might be there, the customer appetite currently isn’t, as evidenced by the modest success of online models like UBank.
What will be interesting to watch is if ANZ — or any other player, for that matter — can launch an offering powerful enough to engage consumers en masse. When people start opting in to risk-based pricing and opting out of a choice of lender, we'll know the tables have turned.
ANZ has since responded to this article. An ANZ spokesperson made the following comment: "Brokers remain a preferred channel for many customers and currently account for about 50 per cent of home lending/home loans by ANZ. It means brokers are a key distribution channel for ANZ now and in the future."