ING DIRECT recently suggested that the broker channel was partly to blame for its delayed turnaround times. While the lender has now released “handy tips” to try and overcome them, it has us asking: who’s to blame for turnaround blowouts?
According to the challenger bank’s head of distribution, Mark Woolnough, a whopping 74 per cent of broker applications received by the bank in August required re-work due to a range of factors, including missing financial information or no verification of identity.
To overcome this, the bank has now sent brokers a list of requirements and documentation needed to avoid assessment delays (but its roadmap for the technology fix is still a while off, to be built “this year into next year”).
While Mr Woolnough also acknowledged and apologised for the delays caused by the bank’s own technology problems (largely due to the lack of web tracking on loan applications causing delays on the phones), the suggestion that the third-party channel should also shoulder some of the blame had some of our readers reeling.
It’s not the first time broker applications have shouldered a portion of the blame for causing delays in processing times either. According to ZipID, between 20 per cent and 60 per cent of all broker applications require re-work from funders due to problems with identification submissions.
The problem is that, much of this issue comes down to not the broker but the technology used and/or issues with the ID and information supplied by the customer.
And banks themselves have put their hands up and said that turnaround times are often affected by means beyond their control. Some of the larger banks have struggled to keep their turnaround times down as prudential measures take effect (brokers recently rated the big four’s turnaround times as the worst in the industry), and non-majors equally suffer as they become inundated with applications as a result.
At a recent roundtable discussion in Sydney, Bank Australia’s head of third party, Richard Irving, explained that one of the biggest challenges for mutual banks right now is managing their lending limits “just like the bigger banks do”, while Beyond Bank's head of third party, Darren McLeod, explained how the lender was “caught out” by how quickly the market moved as lenders pulled out of various segments.
“I think we underestimated the fact that a broker, even though they don’t know your brand or much about you, will jump on you in this market if you have a product that nobody else does,” Mr McLeod said.
He added: “You can quickly become inundated with applications, even if you haven’t been promoting a particular rate. The market can move overnight and balancing high demand with your quality and service levels is important. The tap can really get turned on quickly.”
But it’s not a new problem. This cycle of banks tightening up and others struggling to pick up the slack has been a vicious one for decades — maybe even since broking began in this country.
In fact, turnaround delays are such a perennial and ongoing issue that some fintechs have come to market largely to solve the turnaround problem. In July, Australian startup fintech Tic:Toc claimed that they could approve a home loan in just 22 minutes “without the need for a human credit assessor” (however, it does offer human assistance when customers request it).
While some consumers (including myself) may balk at the idea of stepping into hundreds of thousands of dollars worth of debt in such a short amount of time — and without human oversight — consumers, brokers and even lenders don’t want to wait weeks for their home loan to be approved.
Indeed, according to a recent survey by HashChing, most brokers believe that it takes banks three days to process a home loan (56.7 per cent), nearly a fifth (19.8 per cent) think it can take up to a week, and a similar number (17.1 per cent) believe it could take banks just 24 hours.
So why the delay?
At the end of the day, it’s not the fault of one party that is causing processing times to inflate — but surely, if the issue of turnaround blowout has been an ongoing problem, it is high time a solution was found.
We need to work harder, have better communication, provide further education, and adopt faster technologies to finally find a solution. And it will require lenders, brokers and consumers to come together and support — rather than point a finger — at one another.
What do you think is the key to improving turnaround times? And what is the ideal turnaround time?
Who do you aggregate through?
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