The chief executive of banking disruptor Xinja has revealed that mortgage brokers have been involved in the group’s home loan plans and will be “essential” to its strategy.
The crowdfunded online lender recently received an Australian credit license (ACL) from the Australian Securities and Investments Commission (ASIC) and plans to utilise the broker channel to facilitate its digital home loan approval process.
Former NAB executive and Xinja founder and CEO Eric Wilson told The Adviser that the business sought advice from brokers during its product prototyping sessions.
“We believe that brokers form an essential part of our business model and indeed we have included a number of brokers in our product prototyping sessions,” Mr Wilson said.
“We were lucky enough to have two brokers in our personal networks who were good enough to take an informal look at our plans, processes and... very rough prototypes.
“They gave us some thoughts about what brokers might think of Xinja, how we could help brokers and the challenges they face.”
According to Mr Wilson, brokers stressed the need for much wider prototyping with the third-party channel once the group’s plans and mortgage product have been further developed.
Mr Wilson added that Xinja will seek further advice from brokers as it continues to develop its residential lending platform.
“We are probably now about [eight to 10] weeks from being ready to do that prototyping and will be reaching out to brokers that we know or who are kind enough to volunteer,” the CEO continued.
“On a more general level, we believe that expert advice provided by the broker community is essential for large, important decisions such as home loans.”
The Xinja founder also claimed that the neo-bank intends to begin its home loan operations with a “conservative risk profile”, offering small volumes until its online lending process is “fully digitised” and capable of approving loans in 20 minutes.
The CEO said: “Xinja will begin with a fairly conservative risk profile around home loans. It is likely we will steer clear of low and no doc loans to begin with and seek healthy LVRs.
“In the short term, we will be seeking to release a small number of home loans as we perfect our systems and further enhance our technologies.
“For the medium term, by June we should have a fully digitised home loan providing a 20-minute approval process.
“We hope that this will delight brokers and direct customers alike. In the longer term, we have plans to continue to innovate in the home loan market.”
Xinja has also applied for an Australian Financial Services Licence (AFSL) and a banking licence to become an authorised deposit-taking institution (ADI) through the Australian Prudential Regulation Authority (APRA).
The lender’s chief risk officer, David Nichols, who previously worked for CBA and Qudos Bank, said that Xinja plans to positively contribute to the regulatory environment.
“We are fortunate to be entering a highly regulated financial services sector and look forward to contributing to this regulatory landscape in a positive way,” Mr Nichols said.
According to the CRO, the new market player observed the “rise of the neo-bank” in the United Kingdom and endeavoured to introduce the technologically integrated lending platform to the Australian market.
Xinja has raised over $1.4 million since launching its crowdfunding operation, with Mr Wilson also claiming that, after receiving an ACL, the neo-bank has attracted an “encouraging” level of demand for its home loan product.
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