CBA’s executive general manager, third party and mobile banking Kathy Cummings talks to The Adviser about the future of broking and the bank’s exciting new initiatives
WHAT IMPACT WILL THE INCREASED COMPETITION BETWEEN AUSTRALIA’S LENDERS HAVE ON BROKERS?
There has never been more competition in the market than now. That said, the discounting war that is going on at the moment is eroding margins. Brokers need to be ever conscious of this, because there is only so much margin available.
HOW IMPORTANT IS THE BROKER CHANNEL TO CBA?
It is one of our main origination channels. Almost 38 per cent of all our mortgage volumes are written through the broker channel. It is a very important client acquisition channel for us.
DO YOU WANT TO GROW YOUR BROKER MARKET SHARE?
I only ever think about growing the whole business – you don’t shrink your business to success. We have been able to maintain the leading market share in the industry, despite all the increased competition of late. We have a strong focus on service and as long as we can continue to be competitive on price as well as provide excellent service, we will continue to be a favoured partner with brokers.
CBA IS A VERY INNOVATIVE LENDER. YOU HAVE MADE A NUMBER OF PRODUCT CHANGES/ENHANCEMENTS OF LATE. DO YOU HAVE ANY MORE INITIATIVES IN THE PIPELINE?
The Commonwealth Bank has been undergoing a replacement of its core technology platform which has already led to the introduction of ‘real time’ banking. We are now transitioning business banking on to the new platform and, in late 2012 we will be moving our retail lending products on to the platform. This will enhance our ability to develop innovative products including a fully functional transactional offset account.
Brokers are constantly asking me: ‘when are you going to launch a transactional offset account?’ and now I can safely say: ‘soon’. We hope this product will form the last piece of the puzzle and help us complete our service offering.
DO YOU THINK THERE ARE STILL OPPORTUNITIES FOR BROKERS IN A FLAT MARKET?
Our top brokers are still writing a lot of business. All of our elite brokers are very conscious of getting on-going referrals from their existing clients. They are servicing their needs to ensure they continue to use their services.
And, I must say, it is a very good market for investors if they have cash. If they can leverage, they are in a very good position because it is a ‘buyers’ market’ and there is a lot of competition out there. If you are ready to put an offer on the table, you can pick up a bargain.
For those brokers that are really in tune with their investor clients, they are probably going to do very well. If they don’t have strategic relationships in place, or they don’t have good relationships with their existing client database, they may struggle.
SO, WOULD YOU SAY INVESTORS ARE THE BORROWER SEGMENT TO TARGET?
They are. There are still some first home buyer opportunities out there, but those opportunities are definitely fewer and farther between. You are seeing a lot of mums and dads talking their children out of being first home buyers. Lending criteria has tightened up for first home buyers. Higher LVR lending is still very tight and responsibly so. The new regulation has put a lot more onus and accountability on brokers to ensure their customers are being put in the right product for their needs.
IN THE LONG RUN, DO YOU THINK BROKERS WILL COME TO SEE THE TRUE BENEFITS OF REGULATION?
Regulation has lifted the standard for everyone. It is important for both brokers and their borrowers to have evidence that shows the client’s future financial needs and financial situation has been properly examined and understood. All that investigation is going to make for a better borrowing experience and a far more stable customer.
DO YOU THINK THERE WILL ALWAYS BE A PLACE FOR MORTGAGE BROKERS?
Customers have chosen that. Some borrowers are very sophisticated and they want to deal with professionals that know what they are talking about. That is why they value brokers – because brokers are professionals and they offer professional advice. As long as they continue to offer those services, I think there will always be a need for brokers.
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