86 400 confirms broker commitment

The transaction, which is subject to approval by shareholders and regulators, would see all 120 people in the 86 400 team become part of the NAB group.

Given that UBank does not currently distribute via brokers, many brokers had voiced concerns about whether the 86 400 proposition would still be available to them.

Speaking to The Adviser, the CEO of 86 400, Robert Bell, confirmed that brokers would continue to be “a big focus” for the neobank, including when it subsumes under the UBank brand.

Mr Bell said: “The future for us will continue to be a big focus on mortgage brokers. One of the things that is attractive to UBank about 86 400 is that we’ve built the technology and we’ve demonstrated what can be done in the broker channel.

“So, this actually means that, eventually, this will be a new distribution channel for UBank, which will sit alongside their direct piece. 

“We’re not not pulling away at all from brokers in this move. In fact, what we’re actually doing is accelerating through brokers.”

He added that both direct and third-party offerings could operate “side by side” and that the group would “always make sure that brokers get access to the same rates as direct customers”.

Mr Bell told The Adviser that since launching its loan products in late 2019, 86 400’s growth through the broker channel had accelerated, with the lender expecting to hit $400 million in loans drawn and loans approved early next month.

“The thing that’s driving that growth is the support we’re getting from brokers,” Mr Bell suggested, adding that the bank’s turnaround times were a particular attraction for the channel.

“It’s all-guns-going in terms of our strategy; it has not changed at all, and we’re focusing very, very heavily on mortgage brokers, because it’s working for us. 

“While the [UBank] transaction obviously has some steps to go before it completes, post-completion the intention is to ramp this up even further. At the moment, the only thing that’s really constraining us – to some extent – is that the bigger your mortgage book becomes, the more capital you need. 

“Merging with UBank means that the capital challenge effectively disappears, and we will be able to do more of what we’re currently doing. That’s certainly the plan,” he said.

“As we get more scale, then that gives us a little bit of ability to move a little bit more on the risk curve. So, that’s one of the things that we’ll be able to do in the next 12 months,” the 86 400 CEO revealed.

“You should also expect our innovation momentum to increase. We have way more ideas in terms of innovation that we could ever implement, at the moment. Certainly, we’ll be revisiting a lot of those as a bigger organisation with more backing. We’re hoping we’ll certainly be able to bring those to market.”

Mr Bell added that until the transaction completes, estimated to be “mid-year”, the two banks will operate separately.

Once finalised, he confirmed that the digital lender will subsume under the UBank name (as it has “more traction in the market”) but that the 86 400 “experience, the look and feel, the value proposition, and many – or if not all – the elements of 86 400 that customers love”, will remain.

He concluded that he believed the NAB deal would also be “good for competition”.

Mr Bell told The Adviser: “We have created a digital mortgage, and if we can get that digital mortgage to more people [through this transaction] and if we can get transaction and savings accounts to more people, then that is good for competition. 

“If we can do the things we are doing at scale, we think that will force other banks to take action and to digitise faster. I think more and more banks and businesses will look at taking the end-to-end process and making it more efficient, and more efficiency means faster decisions. And, quite frankly, faster decisions is what customers expect, demand and should ask for. So, we think that’s good for competition.

“Ultimately, we want Australians to have choice, and brokers bring that choice.”

[Related: Major bank to acquire 86 400]