An Australian fintech has set its sights on disrupting the dominance of the mortgage broking industry by appealing to the banks who it claims are keen to reduce the $2 billion they spend on broker commissions.
Adelaide-based online home loan platform Joust has distanced itself from its competitors in the fintech space, which has seen a flurry of mortgage disruptors in recent years.
“Joust is not a comparison site with a myriad of static rates. It is also not an online broker or aggregator. We are a revolutionary marketplace model for home loan customers and lenders,” Joust co-founder and CEO Mark Bevan said.
Joust is leveraging the negative press that the third-party channel has garnered over the last 12 months, driven by mainstream media coverage of the Productivity Commission’s draft report and the ongoing Hayne royal commission.
The group stated that it is “aiming to disrupt the mortgage broker channel under siege from the Hayne royal commission’s financial services inquiry”.
Mr Bevan believes that the banks are also looking for a way to reduce their distribution costs.
“Banks pay over $2 billion a year in commissions to mortgage brokers for the delivery of home loan borrowers. I know they want to pay less,” the CEO said.
However, while 2,100 customers have already used the service, “jousting” mortgages worth more than $1 billion, mortgage brokers remain the preferred channel for Australian borrowers.
Data from the MFAA compiled by Comparator shows that Australian brokers settled $46.1 billion in residential home loans in the quarter to March 2018.
This represents 55.3 per cent of home loans and is 1.7 per cent higher than the March 2017 quarter (53.6 per cent).
Meanwhile, Joust, which has valued its business at $4.7 million, has relationships with over 20 lenders who compete against each other in real time to win a customer’s loan. The group recently launched an equity crowdfunding campaign to raise $2 million. Mr Bevan said that the funds will be spent on new products, geographic expansion and marketing. Joust is also looking to scale its platform and enter new markets.
“The Joust platform is imminently scalable and, we believe, it has significant growth potential both in its existing market and related markets. We currently operate only in the home loan space, but we are exploring offering new products through our platform, including insurance, car loans and personal loans,” the CEO said.
Crowdfunding site OnMarket’s CEO, Ben Bucknell, said: “As a fellow fintech disruptor, we are delighted that Joust has embraced the new equity crowdfunding laws. The investors that come to our platform are searching for the opportunity to invest in early stage, innovative and disruptive companies and Joust definitely meets this description.”
The new crowd-sourced funding legislation allows unlisted public companies the opportunity to raise up to $5 million per year from the crowd.