Following Macquarie’s announcement that it will cease offering new white-label loans, the joint CEO of a non-bank lender has suggested that banks will increasingly simplify their offerings in the next year.
Macquarie Bank announced last week that it would discontinue its white-label loan products after having considered the “future evolution of the industry”.
The non-major lender informed brokers that, effective “early next year”, it would cease offering white-label mortgage products, as it moves to “simplify” its home loan offering.
“After considering feedback and the likely future evolution of the industry, we found the multiple white-label brands we offer add complexity in terms of technology and operations,” Macquarie said in an update to brokers.
“We want clients to be able to access all the great features of our banking experience and future enhancements, so from early next year, we’ll no longer offer new white-label home loans.”
Macquarie added that it intends to focus its efforts on “making the Macquarie home loan offering the best experience” for clients and brokers.
The bank also stated that the change only applies to new loans, stating that it will continue to serve existing white-label clients.
Speaking to The Adviser following the announcement, Scott McWilliam, joint CEO of non-bank lender Resimac, said that he expected banks to continue to “simplify” their offerings in the next year.
Mr McWilliam said: “Lenders will be looking to simplify their offerings and businesses over the next 12 months, which is a general theme in the market at the moment.
“You can see that with Macquarie, with their discontinuation of their white-label offering as they focus their growth strategy utilising their own brand. It is effectively a more targeted product offering that allows them to consolidate risks and costs. There are further complexities in the background that come with white-label product manufacturing and dealing with intermediaries, so I think a number of lenders will be looking to consolidate their offerings.”
He continued: “White label aside, I think we will continue to see more lenders simplifying their overall business model, including their remuneration structures, and I think that will be a big theme for 2019.”
The joint CEO said that the shift represented an “opportunity” for the non-bank market and white-label funders, such as Resimac.
“This is an opportunity for us. Providing white-label solutions to mortgage originators is part of our history at Resimac, we've been doing it for over 20 years.
“As well as continuing our own brand and strong service proposition with brokers, white-labelling remains an important part of our distribution strategy. We have deep relationships in the sector and we already have the appropriate framework and technology in place as part of BAU. Our broad product suite allows our white label business partners to either take the entire product offering on board and compete in the the broader market or select certain products to market and to be more specialised in one particular market segment. Our business partners see a lot of value in that flexibility.
“With Macquarie exiting this space, I see this as further opportunity for those businesses that support the white label space and see that as an important part of any distribution strategy. And we are one of them.”
He added: “We’ve experienced strong growth in the last 12 months, but the non-bank sector is still only a small part of the market so I think there is a lot more room for us to grow.”
Looking forward, the joint CEO said that the new Resimac brand will continue to build relationships through the broker channel, as it is a “priority” channel for the lender.
Touching on the moves by lenders to adopt a new upfront commission calculation, Mr McWilliam said: “Resimac is supportive of the current core remuneration structure and we are supportive of the Combined Industry Forum’s six principles and will be rolling those out in time.
“We are absolutely opposed to a consumer-pays fee for service. We do not think this is in the best interests of the consumer," he added.
“It’s important to have a fair and equitable remuneration structure to encourage new talent into the industry. There is an ageing broker base in this market, and we need to get people in who aren’t just broking part-time but see it as a full-time career. Therefore it is important that there is a reasonable and fair remuneration structure to attract them to the industry,” he said.
It is expected that Resimac will roll out a new remuneration structure for brokers before the end of the month, moving in line with the Combined Industry Forum recommendations.
[Related: Homeloans and RESIMAC to consolidate]
Annie Kane is the editor of The Adviser magazine, Australia’s leading magazine for mortgage brokers.
As well as writing news and features on the Australian mortgage market, financial regulation, fintechs and the wider lending market – Annie is also the host of the Elite Broker podcast and regulator contributor to the Mortgage Business Uncut podcast.
Before joining The Adviser team at Momentum Media in 2016, Annie wrote for a range of business and consumer titles, including The Guardian (Australia), BBC Music Magazine, Elle (Australia), BBC Countryfile, BBC Homes & Antiques, and Resource magazine.
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