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Third Party Banking Report 2015 - Non-Major Lenders Reply

Adam Zuchetti & Emma Ryan 16 minute read

Last month, we revealed the results of The Adviser’s 2015 Third-Party Banking Report – Non Major Lenders, demonstrating how brokers feel the banks are performing for the broking channel. Now, we hear from each of the banks about their thoughts on the rankings and how their performance will influence development and innovation in the year ahead

The 2015 Third-Party Banking Report – Non-Major Lenders rankings were our best ever, with 1,017 professionals from across the country sharing their thoughts and opinions on the performance of Australia’s leading non-major banks. As the results from the highly anticipated report revealed, there are some areas brokers are quite pleased with – and others where all banks could lift their game.

Yet there were also interesting results across each of the 10 non-major banks we profiled. Some saw a remarkable improvement in their performance this year compared with 2014, while others witnessed a slide in their connection with the third-party channel. And a couple saw brokers rate them for consistency, if not necessarily improvement.

In case you missed it, here is a recap of how the non-major banks compared, and their thoughts on what brokers are telling them across their product, support, commission and technology offerings.

10. Heritage Bank (unchanged from 2014)

Commendable performance: BDM support More work needed: Online tracking

Coming in last place on the rankings table was Heritage Bank. Head of third-party channels David Ure says the result is disappointing, but has not deterred the Toowoomba based bank from its plans to drive growth in broker-fed loans.

“Earlier this year, we undertook a roadshow with presentations right around the country to announce a package of service upgrades and reiterate just how important the broker market is to Heritage Bank,” Mr Ure says. 

He notes the group has recruited an additional four BDMs, committed to continually enhance electronic lodgement and website capacities, and launched a new Home Advantage package product.

“We believe we offer a great package. It’s more a case that we need to get that message out widely and encourage brokers to experience the improvements we have made,” he adds.

When asked about how difficult it is to compete with some of the larger non-majors, Mr Ure says that while the market is very competitive, Heritage Bank has managed to grow its loan book “based on the right mix of product, price and proposition to both the broker and the end customers”.

“Heritage offers a hands-on service where we value relationships with our brokers and satisfaction for the home loan customers, not just the bottom line,” he adds.

“If brokers are looking to provide home loan customers with an outstanding result, with a focus on value and service, then Heritage is a great option.”

In the technology category, 11 per cent of brokers surveyed described Heritage Bank’s online tracking as “very poor”. Mr Ure has defended the bank’s offering, saying the bank’s online tracking is “very similar to what’s available on the market”.

He did, however, say that Heritage Bank is always looking to improve and is “committed to enhancing this aspect of our service offering”.

Speaking to The Adviser recently, Heritage Bank CEO John Minz stated brokers had originated approximately 46 per cent of all loans approved in last financial year. The aim in the 2015/16 is to get that to 50 per cent.

Despite the results from the survey, Mr Ure says the bank still expects to increase the amount of loans written via brokers by providing the products and the experience that their home loan customers value.

“We have significantly improved our overall package of benefits for brokers, and we have increased our market share. We also offer extremely competitive interest rates and great products, with great service,” he says.

09. ME Bank (down from eighth in 2014) Commendable performance: Product pricing. More work needed: Broker support

It was a disappointing year for ME Bank in the rankings – however its slide down to ninth place on the rankings table belies the fact that its score remained fairly stable in most categories.

“We’ve been scored similarly to 2014 and, importantly, there’s room for improvement. The broker channel is critical for ME, with half our target customers using brokers, so we’re focused on improving our service and have already made four significant changes since the survey was conducted,” says Lino Pelaccia, general manager of broker sales at ME Bank.

Mr Pelaccia is hopeful that a range of newly introduced measures to improve both broker support and its customer service offering will boost its ranking this time next year.

“The completion of our technology transformation program in July also enabled ME to launch its first basic home loan product, and more recently we introduced new discounted variable rates on our standardhome loan member package, for the first time,” he explains.

“[Other improvements] include increasing our up-front commissions from 0.60 per cent to 0.65 per cent plus GST, and introducing a new business rules engine that has been providing conditional approval within minutes for half of our home loan applications.”

08. Adelaide Bank (up from ninth in 2014) Commendable performance: Product range More work needed: Turn around times

Ranked overall in our report, and moving up one place since 2014, was Adelaide Bank.

Despite the lender indicating that the result is lower down the ladder than it would like to be, it’s good to see continual improvement.

Like many of the non-majors, the bank showed improvement in the product category, moving up three places since last year.

“Our products are a real strength, particularly the integrated offset and personal finance tools, which we introduced

Bank’s senior manager, broker distribution, Fons Caminiti. 

“Additionally, I suspect our improved pricing is having an impact as well.”

Adelaide Bank also enriched its support offering, ranking seventh overall in the support category – an increase of one place compared with 2014.

“We’ve been getting a lot of positive feedback around our BDMs and the dedicated Partner Assist team that backs them up,” Mr Caminiti explains.

“Having a small, dedicated team – particularly on the phone – means brokers get a personalised service and, heaven forbid, even get to talk to the same person regularly.”

Brokers also appear to be satisfied with Adelaide Bank’s commission structure and remuneration, ranking the bank sixth overall in the commission category – up from seventh a year earlier.

However, Mr Caminiti says the reason behind this is not due to any significant changes made.

“We don’t move our commission around much, as we think they’re fair and easily understood. Perhaps that’s becoming more fashionable?” he suggests.

Commenting on the number of brokers who expressed frustration at “clunky” websites, Mr Caminiti notes Adelaide Bank is in the midst of launching a new document upload system “which will see the end of  faxes forever”.

“In parallel, we’re building our new origination system, which is due for launch mid-next year. It’s a sexy piece of kit,” he adds.

In the last financial year, 90 per cent of Adelaide Bank’s loan book was sourced through the broker market.

Going forward, Mr Caminiti says the bank plans to extend its appeal to brokers by tapping into greater resources and expanding its product offerings.

“Our main priority at the moment is the replacement of our origination systems with a best-practice, end-to-end platform. It’ll make a real difference, not only to us and our partners, but to customers who will have greater transparency, and control, of the process,” he notes.

“We’re also continuing to broaden our third-party exclusive product offerings around non-lending products.”

07. Citibank (down from fifth in 2014) Commendable performance: Product offering More work needed: Broker communication

Sadly, 2015 wasn’t a good year for Citibank, with a somewhat stinging critique of its overall offering from brokers, as it slipped two places in the overall rankings from last year to finish in the bottom half of the table.

“Our focus continues to remain on our product offering and striving to deliver exceptional customer service. Notably, we’ve increased our product ranking, which validates that focus,” explains Janine Copelin, Citibank’s managing director of sales and distribution.

The product category was the bank’s standout performer, increasing notably against its peers.

“Our offer has always been clearly articulated around the key customer segments of emerging affluent and globally minded consumers. Citibank’s BDMs have been actively communicating our strategy across our third-party channels and continue to build on our close relationship with brokers and these important customer segments in which we actively target,” Ms Copelin says.

Yet, as our report in the last issue of The Adviser pointed out, Citibank fell sharply when it came to broker communication. Still, Ms Copelin says the bank is committed to brokers and is taking this feedback on board.

“Where we can improve our offering, we will. Importantly, our focus remains on banking a customer and not simply selling a product. Where we align ourselves across key distribution platforms, which embrace and have the same goal, we will continue to be recognised for striving to deliver a remarkable customer experience,” she says.

“We will continue to target our key customer segments and remain focused on striving to deliver a remarkable experience for our customers. Of course, further improvements to our digital strategy over the next 12 months will help us achieve that focus. Given our strong working relationship with brokers, we have achieved higher than the market average result. Brokers will continue to be an important channel for acquisition of target market customers for Citi.” Ms Copelin adds.

06. AMP Bank (up from seventh in 2014) Commendable performance: BDM support More work needed: Product range

Despite improving its overall ranking in this year’s report, AMP Bank is relentless and says there’s still more that needs to be done.

“While it shows that we are doing some things well, it also shows that we still have more to do. Our aim is to continue to improve and to make sure we keep supporting the needs of our brokers and customers,” AMP Bank head of sales and marketing Glenn Gibson explains.

One of these priorities is improving the products on offer, which decreased in overall broker satisfaction in this year’s results.

Mr Gibson highlights the challenging environment as a reason, and says that the bank will focus on ensuring it has “the right products that are competitive in the market” over the next 12 months.

In the support category, AMP Bank increased its ranking by an impressive two places, which Mr Gibson credits to the group’s BDMs.

“Our BDMs have always been highly regarded by our brokers, and in the past 12 months we’ve increased our service offering that underpins the relationships and support that the BDMs provide,” Mr Gibson says.

“Building strong relationships with brokers is a major focus for our BDMs and the improved ranking is testament to how we value the importance of continuing to improve our overall service to brokers.”

A recurring theme from brokers was frustration at remuneration. One broker stated: “We are doing so much work for little reward. We are now doing the banks’ job.”

Mr Gibson replies: “Servicing the customer and customer satisfaction is a result of the partnership between brokers and lenders.” He says both have an important part to play, not only in introducing a customer, but also in providing ongoing servicing and support over the life of their loan.

Looking ahead, Mr Gibson says AMP Bank is focused on delivering its enhanced mortgage origination platform, adding: “AMP Bank has always had competitive and attractive products, and our dedication to delivering service that matches these products is paramount to our future success.”

05. Bankwest (down from third in 2014) Commendable performance: Product offering More work needed: Remuneration

Bankwest managed to retain a position in the top five on the rankings table, despite sliding in most category areas.

Stewart Saunders, general manager of broker sales at Bankwest, says: “The Adviser’s annual ranking of non-majors is a great way for us to get additional feedback from brokers, which we can use in our business planning. It helps us to ensure that we are delivering what matters to our brokers and customers. This year’s survey comes at a time of great change in the lending landscape, and our ranking reflects some of our strengths and provides valuable feedback about where brokers see us needing to improve.”

The WA-based bank performed well against its peers in terms of its product and technology offerings (third and fourth respectively), a fact Mr Stewart says reflects other feedback the bank has received from both brokers and customers.

“Perhaps the best example is our click-to-chat service, where brokers are able to instantly message a support colleague in order to quickly address a range of requests or enquiries. Our products have been competitively priced and we are working to simplify our product suite to ensure brokers easily understand what’s on offer and what best meets the needs of their customers,” he points out.

“Bankwest’s size and agility, as well as our incredibly talented IT and technology teams, mean we can respond to customer and market demands in short timeframes to not only meet but exceed expectations.”

Meanwhile commission was an area Bankwest struggled with noticeably, with brokers savaging its decision to not pay trail commissions in the first year, a fact that is not lost on the bank.

“We have received feedback on our commission structure and, along with the price and product offerings, we will review this closely. The first year trail will be included in this review to ensure we have a sustainable model,” says Mr Stewart.

“Bankwest has a number of exciting initiatives that will be rolled out over the year, which will provide benefits to brokers. We will be launching a new upfront valuation portal, we will be refining our application processing and working to build a better on-boarding experience for our brokers’ customers. [201415] FY15 saw close to three quarters of Bankwest home loans originate through brokers. In the year ahead, we see this remaining stable or growing marginally with overall growth involumes,” he adds.

04. Suncorp Bank (unchanged from 2014) Commendable performance: Business support More work needed: Online tracking

Suncorp Bank has been a consistent player in the non-major space, coming in at number four on our list overall for the second year in a row.

Over the last 12 months, 70 per cent of the regional bank’s loan book has been introduced by brokers, and the bank has grown its intermediaries business year-on-year by 41.72 per cent.

Suncorp Bank has maintained a reliable service proposition to its broker partners and customers, including the strengthening of its risk-management capabilities and the implementation of a new banking platform. This helped it rank second in the product category this year, an increase of two places on 2014’s result.

“As Australia’s fifth-largest bank, we are committed to supporting Australians to achieve their financial goals,” Suncorp Bank head of intermediaries Steve Degetto says.

Mr Degetto puts much of its success down to the group’s Home Package Plus product range.

“To receive multiple industry endorsements, including second place in this category, really highlights our commitment to offering customers a flexible home loan package, which is not only great value but has a range of cost saving benefits too. Additionally, our annual waiver of the Home Package Plus fee continues to deliver added value to customers,” he explains.

Suncorp Bank prides itself on being a “genuine alternative for brokers and their customers” and it is this that led to the group retaining its third-place ranking in the support category, according to Mr Degetto.

“We have achieved this reputation through remaining connected with our customers, and fostering sustainable, transparent relationships with our broker partners,” he says.

“Over the past 12 months, we have continued to invest in our broker channel and remain focused on ensuring our broker partners feel connected to our business.”

Suncorp Bank also managed to retain its fifth place ranking in the technology category, which Mr Degetto says is an area in which it is committed to invest further.

“We are in the process of replacing our core banking platform, which will enable us to improve cost efficiencies and system capabilities, ultimately delivering an improved experience for our brokers,” he says.

“We believe this, combined with our investment in enhancing our digital proposition for brokers, will see our position in this category lift over the next 12 months.”

Given the significant changes in investor lending of late, Mr Degetto says the non-major sector has a vital role to play in keeping up with demand going forward.

“This is a dynamic environment and banks are required to constantly review their portfolios and make decisions in response to market movements and regulatory requirements,” he explains.

“Suncorp Bank is committed to maintaining its competitive position in the market and supporting customers to achieve their financial goals, now and into the future. Our prudent serviceability measures and approach to responsible lending is a testament to this.”

03. St. George/Bank of Melbourne/Bank SA (up from sixth in 2014) Commendable performance: Broker support More work needed: Product offering

As noted in last month’s issue when presenting the results of the survey, the St. George Group was by far the standout performer in terms of improvement, with huge rises in broker satisfaction across most categories.

Clive Kirkpatrick, general manager, mortgage broking, explains: “St. George has undertaken a number of initiatives to strengthen and improve our processes and procedures, and deliver an exceptional customer experience and a faster time to ‘yes’. It’s fantastic to see that our efforts are beginning to make a difference for our brokers.”

The biggest improvement came in the form of support, with brokers ranking it fourth overall in the category (and a whisker or third) – a hefty increase on 2014’s performance when it received the wooden spoon in this area.

“We’ve had people across the entire St. George business work together to make some important improvements. Some of our focus areas include: improve[d] settlements experience, faster re-financing, improving our internal decision-making

channels, strengthening our communications to our brokers, work on valuations (including use of contract of sale) and much more. There have been multiple initiatives to further strengthen our support to brokers, and the work is continuing,” Mr Kirkpatrick says.

The rise wasn’t universal, however, with the bank slipping slightly in the rankings for its product offering.

“St. George remains committed to providing excellent products, services and processes ensuring a great broker experience. This commitment will always remain front and centre for us,” says Mr Kirkpatrick.

“Our work in improving our current processes and procedures will continue next year, and brokers can expect a more simplified and efficient process. Additionally, we will continue to provide great customer-focused campaigns to help the broker in their conversations with their customers.”

02. Macquarie Bank (unchanged from 2014) Commendable performance: Product range More work needed: Technology

“Over the last 12 months, it’s been more about maintaining and refining what we have been recognised as doing well,” Doug Lee, Macquarie Bank’s head of sales and distribution - intermediaries, says of the bank’s performance.

Mr Lee puts the bank’s success down to consistently responding to feedback supplied by its broker partners: “Recognition and feedback from brokers allows us to understand which parts of our overall proposition are resonating well and where we need to shape our business to ensure we’re continuing to meet the needs of our clients.

“We regularly run proactive strategy sessions and roundtables with the leadership teams of our key third-party groups, as well as their state heads, to share views and thoughts relevant to our industry, emerging market trends, key challenges and changes to the regulatory landscape.

“We achieve this in conjunction with our broker advisory boards around the country and through adoption of their feedback and ideas, which ensures we stay relevant and significant so the brokers are meeting their clients’ needs,” he adds.

Macquarie Bank was named as having the best turnaround times of all the non-majors – a testament to its emphasis on consistency and communication, Mr Lee says.

01. ING Direct (unchanged from 2014) Commendable performance: Product pricing More work needed: Turnaround times

"We're very proud to be ranked number one for the fourth year in a row,” declares ING Direct’s head of broker distribution, Mark Woolnough, on retaining its domination of The Adviser’s 2015 Third Party Banking Report – Non- Major Lenders.

“I think the factors that have combined to make us number one for the fourth year in a row are all an indication of what it is about working with us that appeals to brokers. We have great support teams, competitive pricing, simple products and a great post settlement experience.

“We also have a strong brand that resonates well with consumers and has seen us ranked Australia’s most recommended bank. Our focus is on helping our customers get ahead, and I think this is displayed through everything wedo,” he adds.

However, despite its number one ranking, ING Direct encountered its own share of criticism from brokers. Despite easily having the best pricing in the market, its overall score slipped slightly from last year; and while it topped the overall rankings for support, the bank – like all its peers – was given the thumbs down on turnaround times.

“I think in general there has been a lot of change in the industry in the past year, with increased regulatory scrutiny, a low interest rate environment, and changes to credit criteria across the market. The ongoing issues of affordability in some states, and increasing competition in terms of pricing, all play a role in the sentiment of borrowers, brokers and lenders,” Mr Woolnough says.

“We are investing in a new mortgage origination system, which will substantially reduce turnaround times, remove manual processes and improve the broker and customer experience.” 

With more than 90 per cent of its loans originating from brokers last year – “brokers are our mortgage business,” Mr Woolnough says – ING Direct is committed to engaging with brokers and providing market leading products for them to showcase to borrowers.

“We have some great pricing initiatives, such as our Orange Advantage interest rate promotion of 3.99 per cent per annum [owner-occupied purpose] through to the end of October. We have also been focused on expanding our commercial team, to better support our broker partners to grow their businesses through adopting new revenue streams,” explains Mr Woolnough.

Third Party Banking Report 2015 - Non-Major Lenders Reply
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