The managing director of a non-major bank has expressed concern over the impact that changes to broker remuneration may have on the newly revamped lender.
Speaking to The Adviser, Simon Lyons, managing director of Goldfields Money Limited, said that uncertainty surrounding proposed reforms to broker remuneration are “troubling”, adding that he is concerned that “significant” changes could damage the viability of the group’s retail banking and mortgage aggregation businesses.
Mr Lyons said that he was pleased with the Coalition government’s decision to discard its initial proposal to ban the payment of trailing commissions to mortgage brokers in its response to the banking royal commission’s recommendations.
“We think that uncertainty is troubling, and it’s good to see that at least one of the major parties have tried to make things more certain rather than less,” he said.
“Having that model changed significantly could have an impact upon us both as a mortgage aggregator and more importantly as a lender.”
He added: “We see the mortgage broking market more generally as being a really important source of business for us. It allows us to compete with the larger banks where they’ve got greater distribution networks than we’ve got.
“We think it’s a vital part of the financial services landscape in Australia. It’s got very high satisfaction rates from customers that use it.”
The managing director went on to add that “there’s got to be a sensitive way of managing conflicts of interest”, given that brokers originate 60 per cent of mortgages and are an essential distribution network for smaller lenders.
‘Bank built for brokers’
Mr Lyons’ remarks followed the bank’s announcement that the change of its brand to BNK Banking Corporation was approved by the Australian Securities and Investments Commission (ASIC), two weeks after 96 per cent of its shareholders voted in support of the move.
The bank will begin trading on the ASX under the new brand from Wednesday, 20 March, but will continue operating its banking business under the Goldfields banner until it launches its revamped digital platform later this year.
The rebrand comes six months after its merger with Finsure Group in September 2018. However, the group has noted that Finsure’s aggregation business and its wholesale lending business (Better Choice Home Loans) will continue to operate under their own brands.
When asked what the digital strategy would entail, Mr Lyons said that it would provide the bank with “more capability around the statutory processing of deposit accounts”.
He continued: “The new brand, BNK Bank, is going to be launched later this year, and that will be a further updated version of our digital platform, which will have online banking account opening for normal deposit accounts, loan accounts, etc.
“That’s the piece that we’re finalising now.”
Mr Lyons said that since the Goldfields’ merger with Finsure, the bank has collected market data from its third-party network to better inform the design of its own retail banking products.
“That provides us with an enormous amount of intelligence around what brokers want, what’s selling in the markets, and who’s buying what sort of products,” he stated.
The managing director added that the data would help position the banking business to “write more on-balance sheet loans”, which, according to the group’s half-year results for the 2019 financial year, total $176 million, compared to $37.8 billion in off-balance sheet loans.
Mr Lyons added that the revamped digital platform would be tailored for mortgage brokers.
“Mortgage broking and mortgage aggregation has always been a big part of our strategy,” he said.
“We’ve always gone to the market through brokers and, in fact, this bank brand has really been built for brokers as well.”
[Related: Shareholders approve bank-aggregator rebrand]