The Adviser is again proud to reveal the findings of the annual Third Party Banking Report – Major Lenders
Now in its fifth year, the ranking – based on broker feedback – remains the industry authority on the performance of Australia’s major lenders over the past 12 months. Covering product, support, technology, even commissions, the 2014 results are in – a tick of approval for some and, perhaps, a ‘try harder’ for others.
AS ONE broker recently told The Adviser, “If it’s not with one of the big four then it ain’t a loan.” Yet another concurred, adding: “The support and service from the non-majors is simply far superior.” Love or loathe them, there’s no denying the enormous power and sway that ANZ, CBA, NAB Broker and Westpac laud over this industry.
And with slick, well-managed marketing campaigns, huge support staff and deep, deep pockets, the fact the majors have over 85 per cent market share of residential home loans in this country is hardly surprising, and – some may argue – has been earned without the slog required by the non-majors and non-bank lenders to win their customers.
But with interest rates at historic lows and the resulting mass enthusiasm for all things property over the past 12 months, competition between the majors – be it for new business or refinancing – is hotter than a Melbourne property auction in a heatwave in January.
And with almost 47 per cent of loans (and rising) now being written through the broker channel, it’s an area the big four increasingly realise they need to nurture and foster; some have always done it well, while others, it could be said, continue to play catch-up. That said, it’s important to note that a bank like Westpac – who ranked poorly for categories such as pricing and competitiveness – has rarely chased business on price, preferring to target more affluent customers; a fact that needs to be taken into consideration when reviewing the results.
So what do brokers think of the majors? Enter The Adviser’s annual ranking. This year we received feedback from 677 brokers. There were four major categories – covering product, support, technology and commissions – and they included 23 sub-categories. This year the ranking was expanded to include six new sub-categories, primarily under the technology banner. These additions will inflate the overall scores from 2013 and need to be taken in context.
As in years passed, the results are based on the Likert Rating Scale, which provides a tangible ranking for a variety of responses that can then be compared to previous years. It’s important to stress there are no winners or losers of a category and any rating of 3.5-plus implies a bank is performing well in that category. And anything in the high threes or fours is a real vote of confidence.
So which bank triumphed? Which bank perhaps sat on their proverbial hands over the past 12 months? And which one went backwards? Without further ado, ladies and gentleman, the 2014 results are in…
Despite a fair bit of noise coming out of the Westpac camp over the past 12 months regarding its product range and commitment to the third-party channel, it hasn’t resonated in The Adviser’s polling. Westpac has cemented its position as least-favoured major in terms of product, while NAB Broker remains in the top spot for the second year in a row.
Not that it was all bad news for Westpac, who actually polled the most votes in the ‘very good’ category for its product range, boasting a total of 23.7 per cent of respondents’ votes to NAB Broker’s 23.3 per cent, CBA’s 22.8 per cent and ANZ’s 16.8 per cent. What dragged Westpac down was that almost 42 per cent of respondents rated it average to poor. Nor was it great news for ANZ, who slipped from second in last year’s ranking to third this year.
When it came to products, many brokers commented that their customers often had strong-held beliefs – rightly or wrongly – that one major was better over another. A number of brokers posted that CBA and ANZ had a better reputation in the market despite their rates actually being higher: “CBA is perceived as being more helpful,” said one broker. That said, there was also a view that “There’s a cigarette paper between the lot of them” and, we’ll concede, unfavourable comments were evenly spread amongst the four. Brokers also believed that customers with multiple loans with the one bank should be better serviced in terms of pricing.
This category asked brokers to rate the banks on the availability, quality and support to provide other products alongside residential mortgages. In fact, it’s a win for both camps for those who do it well; increased revenues and stickier clients for the broker and, obviously, a more loyal bank customer.
Again CBA came out on top, but it was Westpac that was the big improver. Paradoxically, Westpac scored poorly for product range, but it appears to be doing a much improved job in cross selling them.
A standout in many of the other categories, NAB Broker stumbled on cross-sell, with just shy of 50 per cent of respondents giving them a satisfaction rating of ‘average’ or worse. Bad news too for ANZ, with 55 per cent of brokers who felt its performance was ‘average’ or worse.
Despite an industry-wide push to promote cross-selling, many respondents admitted they weren’t that interested and would rather stick to writing just the residential loan. One broker even claimed it was the job of the branch that was being pushed down onto brokers as a money-saving exercise.
Three improvements brokers would like to see around cross-selling were: more product information from the banks; more financial inducement to sell (and a simplified backend); and better autonomy for brokers. As one broker pointed out, “The customer has to go into the branch to sign all the forms, so what’s the point?”
Another added: “If banks think customers choose one bank over another because of cross-selling then that’s just plain wrong.”
When it comes to pricing on residential mortgages, it appears NAB Broker remains king of the third-party channel with a fifth straight win in the category. NAB has worked hard to ensure its standard variable rate (SVR) is the lowest in the market and that’s clearly borne fruit in terms of increased business and a favourable reputation in the marketplace.
CBA came in second position, which is largely to be expected as the lender has a long-held industry reputation for having the second cheapest SVR. ANZ remained in the bronze position, although there was little movement between the top three from 2013’s results.
Westpac remains entrenched at the bottom of the scale for the fifth year in a row. However, to its credit, its scores have steadily risen since real lows in 2012 and, it should be remembered, Westpac rarely uses rates to drive business.
COMPETITIVENESS OF POLICY
When it comes to products, pricing and policy it appears CBA has been the most consistent of the four and that’s been mirrored in broker feedback that CBA can be easier to work with and often has a better reputation among customers. Again, it retains top spot for competitiveness of policy, something it won back from NAB Broker in 2013.
In good news for ANZ, it usurped NAB to take second spot.
Again, Westpac was left bringing up the rear – albeit with an improved score – with brokers continuing to regard its policy as both confusing and restrictive.
CREDIT ASSESSMENT STAFF
In 2013’S credit assessment staff category brokers universally rallied against banks that’d taken their processes overseas. Come 2014 that seems far less of an issue for brokers, rather the greater problem was skill and accessibility of assessment staff. As one broker put it, “Why is it that we [brokers] have to have education and hold licences and assessment staff don’t?”
NAB Broker once again came out on top, although slipped on its score from 2013. Westpac was least favoured but, to its credit, markedly improved its score from 12 months previous. That said, if broker comments are to be reckoned with, Westpac still has a long way to go in improving this area of its communication in the third-party channel.
Almost 22 per cent of respondents voted CBA’s credit assessment staff as ‘very good’, followed by NAB Broker (20.3 per cent of respondents), Westpac (18.1 per cent) and ANZ (13.8 per cent).
One broker argued it could be the assessors themselves who are the problem when he proffered this gem:
“Do you know the difference between God and a credit assessor? God doesn’t think he’s a credit assessor!”
What a difference a year makes. Westpac – last year’s fourth place getter – has snared top position sending last year’s top place getter – ANZ – back to last spot. But putting the results in perspective, it appears that brokers are, by and large, happy with turnaround times. Fifty to 60 per cent of respondents rated all four banks either ‘good’ or ‘very good’ in this category and only a small, single-digit percentage ranked them as ‘poor’.
Broker feedback centred on turnaround times being very important to their businesses and many expressed they’d enjoyed 24-hour turnarounds in the past and were frustrated when times had blown out to four or five days. “The smaller the loan, the longer it seems to take,” said one broker. Another added: “If you’re one of their top brokers then turnarounds aren’t a problem, but for the rest of us it’s a completely different story.”
CALL CENTRE SUPPORT (NEW CATEGORY)
This new category to 2014’s ranking looked for overall service quality around technical knowledge, responsiveness and helpfulness. Hardly surprisingly, with the majors taking vast parts of their call centres overseas, a recurring gripe here was around language difficulties, with ANZ coming under particular scrutiny in this department.
Broker comments showed people had widely different experiences – both good and bad – with all the banks, and the results also showed that a majority had ticked all four as either ‘good’ or ‘very good’ for call centre support: 61.1 per cent of respondents for CBA; 55.3 per cent for NAB Broker; 49 per cent for ANZ; and 45.9 per cent for Westpac.
As one broker put it: “It’s a shame the majors get things like BDM support right, speed of processing right, only to be utterly let down by call centre support.” Another added: “You call up with a problem so the last thing you need is someone who can’t answer it.”
IT’S THE treble for NAB Broker, having now taken top spot in this category for the past three years.
Although it’s consecutive fourth places for Westpac, the score is still a marked improvement on last year and shows its work in the third-party channel is bearing fruit.
Brokers were asked to vote on the overall quality of BDMs, access, proactivity and ability to solve problems. Not only did NAB take top place, but a whopping 42.7 per cent of respondents rated its BDM performance in the ‘very good’ category. Interestingly, 14.6 per cent of brokers rated Westpac’s service as ‘very poor’, but twice as many again – 30.2 per cent – said it was ‘very good’. “Westpac have a BDM support service?” asked one facetious respondent. However, another added: “At least I know my Westpac BDM’s name. The other three? You never hear from them.”
Generally speaking, broker comments were mostly favourable of their own personal BDM experience. And gripes were as expected – slow response times, BDMs unable to answer questions or lacking authority and a perception that favoured brokers – or those who wrote a lot of business – received preferential treatment.
WITH CLIENT support we’re talking effectiveness in servicing clients post-settlement, and although it couldn’t knock CBA off the top perch for a fifth straight year, the real improver here is Westpac. NAB Broker’s client support – which copped a pasting in 2013’s results – has actually worsened over the past 12 months, leaving it bottom of the pile. If this year’s results hold water all four need to try harder in the area of client support. Some 53 per cent of respondents ranked ANZ’s client service as ‘average’ or worse; it was 52.3 per cent of respondents for NAB; 46 per cent for Westpac; while CBA came in at 42.1 per cent.
Interestingly, the finger of blame for poor client support was often pointed towards the branches. “It’s all down to the competency of the branch staff and that’s variable at best,” said one broker. “NAB is just terrible at this side of the business, especially with loan variations,” said another. Meanwhile one broker was particularly scathing of ANZ’s support: “ANZ are so far behind the game here it is not funny. I can’t believe so many brokers actually support them,” they said.
WHILE IT took a hammering in client support, NAB Broker has managed to retain top spot for satisfaction in broker communication and its good work in conveying its proposition to the broker market has clearly continued into 2014. Westpac was arguably the biggest improver here.
Generally, brokers felt the communication they received from the banks – quality of updates, product and price changes, servicing times – was ‘good’, with CBA receiving 46.3 per cent of respondents’ votes in this category, NAB Broker 45.3 per cent, ANZ 44.4 per cent, and Westpac 39.4 per cent.
These results were mirrored in broker comments that appeared happy with the level of communication from the banks, although one disgruntled broker took umbrage over how one particular major delivered its communiques: “They keep bombarding me with faxes,” he chided. “Who sends a fax these days? Don’t they realise it’s 2014?”
NAB OVERTAKES CBA for top position in a category that asked brokers to rank the banks on their communication – verbal and written – and responsiveness to issues, problems and queries. And, delving into the detail, all four are doing a reasonable enough job here. Some 58.7 per cent of respondents ranked NAB Broker as ‘good’ or better (12.7 said it was ‘poor’ or worse). CBA got 57.7 per cent ‘good’ or better (12.6 per cent said ‘poor’ or worse). ANZ scored 52.3 per cent of brokers’ votes as ‘good’ or better (11.5 per cent said ‘poor’ or worse). And even last-placed Westpac saw 47.7 per cent of respondents rate it as ‘good’ or better (although 17.8 per cent scored it in the ‘poor’ to ‘very poor’ categories).
Broker feedback was divided into two camps. There was too much communication – “I get 5,000 emails for every NAB deal and it’s just plain annoying,” said one irritated broker. Or, the other concern was not enough feedback: “As soon as there’s an issue, you don’t hear from them,” said one broker. Another added: “Most problems can be sorted by a phone call, if only they’d answer.”
TRAINING AND EDUCATION
TRAINING AND EDUCATION for things like product and compliance is an important tool in the bank-broker relationship. Those who do it well are far more likely to have better alliances with brokers who’ll ultimately spruik their platforms harder. Probing the 2014 results it’s arguably an area the big four could improve. NAB Broker retained top spot, but all save Westpac slipped when compared to 2013.
While most results fell in the ‘average’ to ‘good’ category – ANZ (76.3 per cent), CBA (74.4 per cent), NAB (73.6 per cent) and Westpac (69.8 per cent) – none of the four scored either exemplary marks or were made to wear the dunce cap.
Brokers complained training was irregular and tended to be all about a bank’s products and not enough about policy and procedures. Regional brokers thought they were being ignored, while one broker moaned banks’ “personal development days” all seemed to occur at the same time and “this just leads me to say no to the lot of them”.
THIS CATEGORY is all about the banks’ commitment to helping brokers build their businesses. Again, NAB Broker retained the number one spot it earned last year. However, it slipped in its overall satisfaction score along with CBA and ANZ. Despite its rise in the rankings, 28.9 per cent of respondents felt Westpac’s support was ‘poor’ to ‘very poor’ (16 per cent gave it top marks), and ANZ’s woes continued with 27.7 per cent giving it a rating of ‘poor’ or worse and only 6.7 per cent stating it was ‘very good’.
“It’s all a load of hot air [from the banks],” complained one broker. “When more of the work gets pushed back on us it’s hard to believe the lender is trying to help us build a business.”
COMMITMENT TO CHANNEL (NEW CATEGORY)
ANOTHER NEW category for 2014 asked brokers to rate the banks’ ongoing commitment and loyalty to the channel, enhancing services and support to brokers and their business. Another first place here confirms NAB Broker’s exceptional year.
Westpac polled poorly, which qualified this broker’s comment: “If Westpac rates any higher than ‘poor’ in this category then I will be highly suspicious of any data you have obtained.” So, hopefully, that assuages any concerns the results aren’t bona fide.
Others felt the non-majors offered better commitment, with ING DIRECT garnering praise. There was some consternation about banks wanting a certain number of loans to gain and keep accreditation, but the best comment belonged to the broker who posted: “The banks need to get over this idea brokers are somehow their enemy.”
AH, THE prickly issue of channel conflict! And we don’t just mean the perception of banks stealing broker clients but the overall approach to the third-party channel when compared to the banks’ branch networks. Respondents rated the availability of products, promotion of the third-party channel and preferential treatment.
NAB Broker won the category. However, much of the feedback said NAB branches could be notorious in luring and refinancing brokers’ existing clients.
The results appeared to suggest there weren’t huge discrepancies from bank to bank. NAB Broker polled ‘very good’ in this category from 15.9 per cent of respondents, while CBA received 13.5 per cent of votes in this category, Westpac 12.6 per cent, and ANZ 11.3 per cent.
Broker comments weren’t as odious as anticipated considering the touchy subject. “ANZ will rip a customer off you at the branch in a heartbeat,” said one broker, “NAB has a reputation for this but has improved”.
The comments also inferred brokers felt branches were offered bigger discounts: “Every time my customer walks into a branch I’m sure they’re trying to undercut my pricing,” said one broker.
IT IS back-to-back wins for the folk at NAB, with brokers continuing to buy into their ramped trail structure. Admittedly, Westpac takes bottom spot, but with its recently improved commission structures (an increase by as much as 30 per cent announced in late January) it’s the vast improver when compared to 2013’s results. In fact, the results probably reflect sentiment in the industry – NAB and ANZ have better commissions, CBA better rates, and Westpac remains with work to do after largely ignoring all but its top business writers since the GFC.
Although most brokers were favourable of Westpac’s recent changes, the general consensus was that the major’s commissions remain low, particularly when compared against the non-majors.
One disgruntled broker said: “Commissions remain low when compared to the actual time and costs to meet NCCP requirements.” Others complained that NAB and CBA didn’t pay trail in the first year of any loan, and again NAB Broker’s ramped trail was clearly a winner with many. And some were disparaging of the commission process altogether – “Commissions encourage brokers to look after themselves,” said one.
NO REAL surprises here. When it comes to majors’ commission remuneration, there is as you’d expect, a great deal of disquiet – primarily around the efforts put in by brokers for the perceived nominal return offered by the big four. And as one broker commented, “Who’s not going to love more money?”
NAB Broker retained top spot when brokers were asked their opinion of commissions paid, whether as a base or through achieving the bank’s metrics. However, only 13.2 per cent of respondents said NAB was ‘very good’, compared with ANZ (7.1 per cent), Westpac (4.7 per cent) and CBA (4.4 per cent.)
When it came to broker comments regarding remuneration, they weren’t widely different to those of the commission structure metric; no trail in the first year was unfair, the non-majors’ remunerations were better (any commissions less than 20 basis points weren’t worth it), while many vented a disdain of the majors’ clawback policies.
“We do a lot more work these days for no more pay,” remarked one broker of the big four’s remunerations, “and banks do less for more money. How on earth is that fair?”
WHEN WE’RE talking ‘web presence’ it’s not some fancy corporate website with bright colours and pictures. Rather, it’s broker usability; things like effectiveness of the web portal, ease of navigation, product service and information. Again, for 2014, it’s CBA showing the way with web usability. However, the real improver here has been Westpac, who has invested heavily in its web systems for brokers, particularly in the area of mobile devices.
The majors know the importance of this too; the easier a bank’s systems – particularly when it comes to things like ease of lodgement – the more likely a broker is to use a bank.
NAB BROKER regains the top spot it surrendered to CBA in 2013 in the category of online lodgements. Here, the survey looked for overall efficiencies, usability and functionality of the system and it seems there hasn’t been any noticeable improvement in broker mood from 2013. Again, average speeds, confusion in navigating the sites and loans being rejected because of simple uploading errors were the main source of broker consternation – although many brokers admitted to simply using their aggregator’s software.
That said, all bar CBA actually improved on their scores from the previous year. “The banks all have great lodgement systems, including online supporting documents,” said one happy broker, while another didn’t like that information had to be entered twice: “The format in the second half is different for each bank,” he said. “The information doesn’t feed through and can be clunky and slow.”
ONLINE APPLICATION STATUS TRACKING (NEW CATEGORY)
ANOTHER NEW category that saw Westpac take the crown. Brokers were asked to judge on general features, overall efficiency and usability. Over 30 per cent of respondents rated Westpac’s service in the top bracket of ‘very good’ and a large chunk rated all four in the ‘good’ category. A caveat to that was ANZ’s performance, with 18 per cent of respondents marking them ‘very poor’ or ‘poor’.
Broker comments mirrored the voting with one stating it was one part of the process that “the major four have largely got right”, while another said “it’s definitely one area the big four are markedly better at than the smaller lenders”. Any negatives came from it not being updated, too much useless information and poor speeds. “The banks spend all this money on technology,” said one broker, “then they don’t update it, and you end up having to phone them anyway.”
ONLINE RESOURCE (NEW CATEGORY)
ONLINE MEANS immediacy and it’s often an exercise in pointlessness if your site is not up to date. But, according to this year’s results, it’s CBA who does this better than most – almost 24 per cent of respondents ranked CBA as ‘very good’. For ANZ, it’s another area in which the bank may need to invest, with over a third of brokers ranking it ‘average’ or worse.
That said, brokers certainly used this category to vent their spleens. Many complained all four sites were difficult to navigate. Despite its victory, one broker described CBA’s online resource as “too extensive, it’s like finding your way around a maze”. Another said of CBA: “They don’t allow you sufficient time for overlap ... It gets very frustrating when clients have to re-sign.”
VALUATION ORDERING ONLINE (NEW CATEGORY)
A COMEBACK win for ANZ in a category that looked for overall functionality and efficiency of the valuation ordering process. A staggering 44 per cent marked ANZ as ‘very good’ for this category. Equivalently, NAB saw 35.4 per cent of respondents give the rating ‘very good’, for CBA it was 17 per cent of respondents, and Westpac a dismal 9.5 per cent of respondents.
According to broker comments, it was a relatively new area for Westpac, who it’s clear is struggling to get its message out to brokers. “Non-existent” and “no online valuation process” were the views of Westpac’s valuation ordering online proposition.
MOBILE DEVICE INTERFACE (NEW CATEGORY)
With an increasing majority of Australians accessing technology remotely, this new category is an important one. CBA grabbed top spot, but a deeper look at the results shows all four are pretty evenly matched and it wasn’t far off a dead heat.
Interestingly, the banks may be ramping up their mobile offerings but, according to comments from the survey, many brokers are yet to tap into it. Many brokers were unaware of the offerings and it was a technology they’d not yet introduced to their businesses (which, if anything, shows a need for some education and training on the banks’ part). Many broker comments were along the lines that it was a very new technology that they’d either never used or not had a favourable experience with. “Didn’t expect the majors to be remotely close to putting me in this space, so have not investigated,” said one, while another added: “You can have the best technology but if your back end’s a crazy mess, it adds no value anyway.”
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