A major aggregator has entered into a joint operation agreement with comparison website iSelect, which aims to benefit both brokers and consumers alike.
AFG has announced that it has expanded its partnership with iSelect, entering into a joint operation agreement that will commence on 1 April. The aggregator will not be acquiring a financial interest in iSelect under the agreement.
AFG has said that the agreement will help “provide an improved customer experience and to further enhance the provision of a digital home loan service to Australian borrowers”.
‘Customer experience and consistency of brand are key to success’
Speaking of the new joint agreement, AFG general manager, broker & residential, Mark Hewitt, said: “Digital comparison sites like iSelect are primed for growth in coming years as they provide fast and convenient online access to a choice of loans and lenders.
“This evolution comes from a long association between the two companies and will leverage the strengths of both companies to allow for further growth and customer care.”
While the aggregation company and the website comparison service have been in partnership for more than eight years (with AFG operating the home loan arm of the business, and iSelect’s in-house mortgage brokers utilising AFG’s technology platform), the new agreement will see iSelect’s brokers and administrative staff become employed by AFG.
“As part of the new joint venture, iSelect will continue to focus on their proven ability to generate leads from those customers who wish to utilise the digital channel. AFG’s role will be to assist those customers through the establishment of a fulfilment team, a team of brokers and administrative staff who have previously operated under AFG’s license as credit representatives and who will transition from iSelect to be employed by AFG.”
iSelect’s home loans team, which is based in Victoria, will be responsible for qualifying and servicing digital leads through to settlement.
They will operate under the iSelect brand, “powered by AFG”.
“iSelect’s online lead generation strength combined with AFG’s depth of understanding of the home loan market will enhance the customer experience,” said Mr Hewitt.
He added that iSelect’s “high volume lead conversion” has shown that “customer experience and consistency of brand are key to success”.
“[W]e believe the joint venture model with iSelect meets those benchmarks,” the AFG GM said.
Mr Hewitt added that he believed AFG’s technology platform, lodgement processes, compliance and broker education services will “further strengthen” the iSelect value proposition to their clients.
“An increasing segment of the market are those customers who choose to research products online.
“AFG will be able to take key learnings from this partnership to look to provide similar fulfilment services for all AFG brokers, enabling them to participate further in the opportunities the digital channel provides,” he concluded.
iSelect’s home loan business has ‘historically not been consistently profitable’
In an update to the ASX, iSelect confirmed it was changing its current home loan business model into a joint operation with AFG, adding that this will “enable both organizations to continue to ensure a compelling customer experience for Australian borrowers”.
It revealed that iSelect’s mortgage business had “historically not been consistently profitable”, and that the agreement with the “established home loans expert [AFG] will enable iSelect to remain in the Australian home loan market in a business model where iSelect can focus on lead delivery while AFG will focus on lead fulfilment”.
AFG and iSelect will jointly manage the operation, and net profit will be shared equally, according to the comparison website.
It added that benefits with this change are expected to be realised in the 2020 financial year.
[Related: AFG profits stable amid mixed lending result]
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Annie Kane is the editor of The Adviser and Mortgage Business.
As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts.
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