In a bid to claw market share away from the majors, Citibank has introduced new products and slashed the rates on its existing ones. But according to the company’s head of mortgages Vibha Coburn, the bank still has plenty more to offer
HOW IMPORTANT IS THE BROKER CHANNEL TO CITIBANK?
We were one of the pioneer lenders to embrace and support mortgage brokers over 10 years ago. This channel continues to be a key channel for us with over 80 per cent of our loans sourced through our partner brokers.
We understand fully that brokers provide great service and choice of interaction to customers (face to face, they go to you or you go to them); and they have the infrastructure to fully support customers throughout all the phases of their application process.
We therefore continue to be very committed to this channel and will continue to enhance our offerings and solutions to suit the needs of our brokers, and ultimately the customer, of course.
Our most recent pricing structure ‘rate for risk’ is a demonstration that we are committed to continue expanding our products and services.
THIS YEAR, CITIBANK HAS SLASHED THE INTEREST ON BOTH ITS VARIABLE AND FIXED RATE MORTGAGES FOR CERTAIN BORROWERS AND LAUNCHED COUNTLESS OTHER RATE PROMOTIONS. HOW HAVE THESE PRODUCT AND PRICING CHANGES BEEN RECEIVED BY BROKERS?
The pricing review was part of improving the competitiveness of our solutions and was one of our strategic pillars to achieve growth in 2011. This recent rate movement on the fixed rates follows a new pricing model released in June 2011 whereby customers get rewarded by lower rates for loans with lower LVRs on their variable rate loans.
On fixed rates, we took the opportunity to pass on the benefit of the lower cost of funds arising [from] recent economic news from overseas to the consumer, and were one of the first to move in the market. Our brokers have been enthusiastic about our 60 day lock-in from application date with no charge.
WILL YOU LOOK TO IMPLEMENT SIMILAR PRICING PROMOTIONS IN THE FUTURE?
We constantly monitor our market competitiveness, value proposition, economic outlook and balance them with overall funding sources to provide the best solutions to brokers and customers.
We don’t aim to be the cheapest but rather ensure that our products are competitive, and that we can provide a strong value proposition that our brokers can confidently stand behind when recommending our products and services.
DO YOU HAVE ANY PRODUCT OR POLICY CHANGES IN THE PIPELINE?
Our service proposition to our brokers is a key component of our offering and there is a reinvigorated focus to ensure that our servicing platform is best in class.
We also constantly review our policies and procedures to ensure we are balancing risk while ensuring we are meeting the needs of our brokers and customers.
HOW IMPORTANT ARE AUSTRALIA’S SECOND TIER LENDERS?
The second tier lenders do form a true alternative to the big four banks in Australia as they are strong in certain geographies and/or customer segments and are able to better tailor their offerings in a focused manner.
For instance, our global presence ensures we bring to Australia the best that we have available around the world in relation to our service, innovative well-priced products, flexible credit assessment and dedicated team.
We also capture the interest of globally minded Australians, many of which have studies or returned after working overseas, or were either born overseas or are children of parents who were born overseas. This creates opportunities for us.
I also believe that the second tier banks are able to personalise service much better, and in this relationship-centered business that is a crucial factor for success.
For instance, our brokers have access to all our team members and we are able to process and respond to feedback in a nimble fashion. In a market where offerings may be fairly similar, the extent of relationships and flexibility is the true differentiating factor for most of our business partners.
ARE THERE STILL BUSINESS OPPORTUNITIES FOR BROKERS IN THE CURRENT MARKET?
Customers want to buy a house or investment, not a mortgage – that makes selecting a mortgage a very emotionally-charged decision as it’s one of the biggest financial commitments that some of us make in our lives.
A broker provides assistance to investigating all the possible choices while giving customers the emotional reassurance that they are making the best choice by getting the opinion of a person in the know. As people get busier and their lifestyles get more hectic, the ‘value add’ from a broker becomes even more important when considering property purchases.
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