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Challenger bank unfazed by broker uncertainty

by Charbel Kadib6 minute read
Melissa Christy

A neobank plans to “forge ahead” with its broker strategy and expand its distribution network despite continued uncertainty over proposed reforms in the broking industry.

Speaking to The Adviser, neo-lender 86 400’s home loan lead, Melissa Christy, said that despite uncertainty over the future of the third-party model, particularly regarding proposed changes to remuneration, the lender is determined to proceed with its plans to expand its broker distribution network ahead of the launch of its mortgage products.

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“At the moment, I’m not concerned,” she said. “Brokers have close to 60 per cent of market share. Its definitely the right channel for us.”

Ms Christy added: “As far as commissions, I think we [still have to] wait and see [where they go], but we are forging ahead with our broker strategy.”


86 400 recently announced its partnership with Yellow Brick Road (YBR) subsidiary Vow Financial, in a move designed to provide the lender with access to Vow’s broker network.

Ms Christy told The Adviser that 86 400 is looking to secure further broker partnerships before the full launch of the home loan offerings.

“Were definitely in talks with other aggregators. We would like to have another one before launch, but well see how that goes,” Ms Christy said.

Ms Christy noted that the broker network would complement 86 400’s digital platform by providing borrowers with a human port of call.

“[We’ve partnered with the broker network] to get us scale in the beginning but also because its a face-to-face channel and obviously a lot of customers still like that face-to-face channel,” she said.

“Being a digital bank, its good to have that option.”

She continued: “I think brokers make the whole process easier, and customers feel more comfortable about who they choose.

“Being an unknown lender in the marketplace and being a new digital bank, people will struggle to understand who we are and what were about.”

According to Ms Christy, 86 400 plans to roll out a pilot of its home loan offerings over the coming months with a view to a full launch in the second half of 2019.

The digital lender must first receive a full banking licence from the Australian Prudential Regulation Authority (APRA).

Volt Bank was the first challenger bank to receive a full ADI licence, with APRA approving its application in January.

Fellow neo-lender Xinja Bank also received a restricted ADI licence in December 2018 and is expecting to secure a full licence later this year.

When asked what separates 86 400 from its competitors, Ms Christy said: “I guess whats different about us is were focusing on the experience the broker has, which will also be a positive experience for the customer. 

“Were looking to make the whole experience simpler, by looking at the time to ‘yes and the time to ‘no for an application, but also focusing on reducing the amount of documentation a customer needs to provide and making the process easier upfront to submit an application.

“I think well look to attract brokers with a simpler proposition, so well make it easier for them and really get rid of the current pain points that they have, which is tying together an answer and the volume of paperwork that needs to be submitted for a deal.”

She concluded: “Were trying to streamline a lot of what they do upfront.”

[Related: Neo-lender banks on brokers with new partnership]



Challenger bank unfazed by broker uncertainty
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Charbel Kadib

Charbel Kadib


Charbel Kadib is the news editor on The Adviser and Mortgage Business.


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