The CEO of the big four bank has acknowledged that “time to yes” between direct and broker channels is markedly different, which he suggested was partly due to high volumes.
Speaking at a hearing of the standing committee on economics during their ongoing Review of the Four Major Banks and other Financial Institutions on Thursday (15 April), the CEO of the Commonwealth Bank of Australia (CBA), Matt Comyn, acknowledged that the “time to yes” for home loans was different dependent on channel.
When asked what the current turnaround times were, Mr Comyn said: “It would be within two days, certainly in the proprietary [channel]. In the broker channel, it would be slightly longer than that at the moment.
“For the best part of 18 months, up until the end of last calendar year, we wouldn’t have been too far out of that, a couple of extra days [for broker channel],” he said.
“But we’ve been under operational pressure in the last few months simply because application volumes would be somewhere in the order of up 40 per cent year-on-year.”
In response, the chair of the committee, Tim Wilson MP, member for Goldstein, suggested that his own experience of seeking approval on a CBA loan was longer than Mr Comyn had stated.
He said: “From personal experience, I can say that if your average in the market is two days, [then] not everybody is getting that outcome. And that is not a criticism of the service I’ve received, just simply an observation.”
Indeed, the most recent Broker Pulse survey, which received 199 responses from broker members between 1-10 April 2021, showed that brokers reported CBA’s turnaround times were sitting at 12.7 days for the channel.
While this was an improvement on previous months (brokers reported in January that CBA’s turnarounds were at 17.2 days), it is still markedly different from the proprietary channel turnarounds and the bank’s performance in 2020 (when turnarounds averaged between four and five days).
However, the Broker Pulse survey does corroborate Mr Comyn’s attestation that broker channel usage of the major bank has increased by around 40 per cent year-on-year. For example, in March 2020, 33 per cent of brokers responding to Broker Pulse said they had used CBA for loans over the survey period, while this had increased to 46 per cent as at March 2021 (a 40 per cent difference).
The monthly Momentum Intelligence survey, which each month asks brokers to rate their experience of using lenders, revealed that the average Net Promoter Score (NPS) of lenders hit -10.18 in March 2021, the lowest point since the inception of the Broker Pulse survey in 2019 mainly due to long turnaround times, a perceived inconsistency of credit decisioning and a lack of transparency on application progress.
According to Mr Comyn, the lending industry as a whole had seen turnaround times increase “quite markedly” over the past decade, which he said was “particularly post-royal commission and responsible lending guidance”.
“For us, we’ve been quite consistent, but I’ve certainly heard reports of some institutions’ time to yes be 20-30 days,” he added.
Mr Comyn has previously suggested that the bank is “working on” turnaround times for the broker channel.
Speaking to The Adviser following the bank’s financial results in February, Mr Comyn said: “It is important, from our perspective, to make it easy for our brokers to do business with us and to make sure that we’re providing a competitive and leading decisioning process and turnaround time. And I know that that’s a focus from Angus [Sullivan], who runs the retail bank, and our third-party team.”
According to a recent update from the Mortgage & Finance Association of Australia (MFAA), some lenders have suggested that rework from broker applications was “a very significant factor” to longer turnarounds, while “some say that there’s reluctance of brokers to consider supporting other lenders”.
However, CEO Mike Felton said earlier this year that he was “convinced” that channel conflict was “alive and well”.
“[I]t does seem evident that, at a time when resources are tight and volumes flowing, it does appear that broker channel SLAs blow out and yet branch seems to remain fairly stable,” he said.
The MFAA CEO said that there had also been a “strong acknowledgement of the problem” from several lenders, and that all four major banks had expressed “a genuine and absolute concern” about the issue “and are working hard to resolve [it]”.
“[A]ll four of the majors expressed to me that their intent is to get alignment in processing times between first and third-party channels,” he said.
As well as noting turnarounds on mortgages, Mr Comyn called on government to enable lenders to accept digital signatures on business loans as a means of expediting turnaround times.
The CBA CEO said that he would “certainly appreciate the support from the committee” regarding the “broader digitisation and particularly the acceptance of digital signatures for business lending”.
Mr Comyn said: “That actually has quite substantial impact on turnaround times for business loans, in the order of 24 days to six days… That has been our experience because, clearly, it takes a lot longer for a customer to then go and print out the documents that we provide them and then for them to signature and then send it back to us and then for us to process it.
“An electronic signature just simply enables a much faster facilitation of documents and ultimately gives customers greater certainty in a much shorter time frame,” he said.
“I think that would benefit small-business customers which, as I said earlier, are absolutely the lifeblood of the Australian economy [and] critical to the recovery.”
Find out more about the turnaround time issue in The Adviser's short explainer video, below.
[Related: CBA focused on turnaround times, says CEO]
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.
The CEO of Newcastle Permanent has said the lender will continue ...
The customer-owned bank has released a cashback offer for new and...