Brokers now control more than 50 per cent of the mortgage market. As their influence among borrowers continues to grow, the major banks are increasingly looking to join forces with this group of elite professionals.
The results of this year’s Third-Party Lending Report – Major Banks demonstrate that all the big four banks have paid attention to the market and are recognising the value of the channel, placing greater emphasis on responding to the needs of brokers and their customers.
Westpac fared the best in terms of the impression it’s making on the third-party channel. Brokers ranked Westpac first overall this year, while CBA ranked second, followed by ANZ and NAB.
Each bank obtained a higher total score than last year, with ANZ recording the greatest improvement overall.
In the support category, all majors except for CBA saw an improved result on last year’s report. CBA’s drop, however, was minor and was higher than any score achieved by the banks in 2014.
Brokers were especially satisfied with the major banks’ commitment to the third-party channel, BDM support and broker communication.
All banks saw an improved score in the overall technology category, compared to last year’s report, with brokers impressed with the big four’s web presence, online application status tracking and valuation ordering online.
However, several brokers were displeased with the majors’ current mobile interfaces and gave this area the lowest score in the technology category.
With the exception of NAB, all the majors saw an improved score in the overall product category, especially in the product range and product cross-sell areas.
Westpac took a slight hit in its competitiveness of policy, as did NAB which, along with ANZ, also suffered in the rate competitiveness department.
The weakest result overall was in the commissions category, proving that the big four still have some way to go before their broker partners are fully satisfied. All banks except Westpac recorded lower scores in the commission category. Banks’ rates and channel conflict were also issues brokers expressed concerns about.
More than 1,000 brokers were surveyed for this year’s Third-Party Lending Report – Major Banks. The scores were based only on respondents who had done business with a major bank in the past 12 months.
There was a broad spectrum of brokers who participated in the report, with 23.3 per cent settling between $2 million and $3 million worth of loans a month in the 2014-15 financial year and a further 16.5 per cent settling more than $5 million per month.
Forty-five per cent of respondents have more than 10 years’ experience, 25.6 per cent have between one and three years under their belt and 11.7 per cent have 19 or more years’ experience.
The report’s results are based on the feedback provided by brokers, with respondents ranking the banks across four primary categories – product, support, technology and commissions.
The Adviser spoke to a representative of each major bank, uncovering what they think of the results, what they hope to improve on in next year’s report and how they are expanding their service proposition to the broker network.
Here are the big four’s responses to The Adviser’s Third-Party Lending Report – Major Banks…
• Overall ranking: 4
• Overall product ranking: 4
• Overall support ranking: 4
• Overall commission ranking: 1
• Overall technology ranking: 4
Despite receiving the lowest score overall, NAB maintains that its focus is firmly on the third-party channel.
“We welcome feedback and are committed to constantly improving our proposition to brokers,” NAB Broker general manager Steve Kane says.
“We will use the results from this year’s report as an opportunity to understand what brokers want and adapt our business offering accordingly.
In 2015, NAB rolled out a ‘Knowledge is Everything’ roadshow, a spring campaign and realigned its operational structure to ensure dedicated support through the life of the customer’s loan and beyond.
The bank was also a sponsor of The Adviser’s Better Business Summit and New Revenue Streams Boot Camps.
These initiatives, along with the expansion of the bank’s BDM team, is one possible reason brokers increased NAB’s overall score in the support category this year.
“In addition to a strong BDM team, brokers now have a relationship associate who can help manage individual deals and resolve client issues along the way. There is also a broker response centre that acts as a source of information through the loan process, providing status updates on applications and facilitating smooth interactions between the broker and the bank,” Mr Kane says.
“Credit assessors were included in the realignment and are now aligned by state, meaning brokers deal with the same staff on each deal and these staff have expert, localised knowledge. We are pleased to see the impact of these changes in improving our ranking for support.”
NAB received some negative feedback in the product category, especially in the area of rate competitiveness.
“NAB Broker have really slipped back in the level of pricing and policy competitiveness over the past six months”, one broker said, while another said NAB was “changing the rules all the time”.
In response, Mr Kane says the bank is continuing to review its product offering across residential and small businesses, ensuring relevance and competitiveness in the marketplace.
“NAB was first to act to market regulation changes i.e. APG 223 which we needed to do to position us for the long term,” he adds.
Despite some broker unhappiness with NAB’s rate competitiveness, the bank retained its first place ranking in the overall commissions category, which Mr Kane says attributes to its focus on the importance of rewarding brokers for the long-term value and advice they provide to customers.
“Brokers not only add to our revenue but also bring new customers to the bank,” Mr Kane says.
“Our commission rates are based on customer life, starting from when a broker’s client settled their first NAB Broker loan and variations, increases, product swaps and other changes don’t reset the date.”
NAB recorded the biggest improvement in the overall technology category. Mr Kane welcomed the result, saying NAB will continue to enhance its technology proposition “by partnering with groups that carry us into the future of digitisation across the entire customer lifecycle… and that will assist us to move at the pace our brokers and customers need us to”.
Mr Kane says NAB will work on further adaptations in order to become a dominant force in the banking sector in the next 12 months.
“NAB has been a leader in the third-party lending market since its inception and we have been a key player in driving broker market share to the strong 53 per cent figure it is at today,” he says.
“Based on direct feedback from brokers around product, service and overall customer experience we have a great roadmap of key initiatives lined up for 2016 that will make it easier to do business with us, and [we] are looking forward to regaining a higher position in these rankings as brokers feel the impact of our business adaptations.”
• Overall ranking: 3
• Overall product ranking: 3
• Overall support ranking: 2
• Overall commission ranking: 4
• Overall technology ranking: 3
ANZ is committed to its relationships with brokers.
The bank has been taking steps to further improve its third-party value proposition, with a focus on expanding its BDM team, and providing more education and training for those who work closely with brokers.
These measures may have already paid off. ANZ’s ranking in the support category jumped from third in 2015 to second this year.
“We want all ANZ customers to receive a first class service, and improving the broker experience is a crucial component of this,” ANZ head of third party relationships channel Keiran Evans says.
“Our people will always be our difference and the core of this belief is that the broker to BDM relationship is paramount in helping brokers help customers. This is why we’ve again expanded our national relationship team this year.
“This ongoing support is in addition to our new entrant training and onboarding process which supports new brokers with a sound knowledge base, setting our relationships up for success from the outset. Additionally, our credit assessment team makes regular contact with brokers to talk through deals and bring our customer focus to life.”
Mr Evans says ANZ has also introduced ‘Building Credit Knowledge’ webinars, which are backed by the MFAA and FBAA who have allocated 1 CPD point per session.
“For 2016, we have also supplemented the webinar program with face-to-face sessions of longer duration to delve further into more complex scenarios,” he says. “These interactive sessions are presented by our credit professionals with support from our BDM team across the country.”
ANZ also showed improvement in the overall technology category, possibly as a result of the digital initiatives the bank launched recently.
“We are working on the back office and technological advancements are always going to be a focus for us,” Mr Evans says.
In addition to a new ‘Automated Pricing Tool’ released at the end of last year, ANZ has streamlined its existing process to provide customers with faster decisions. It has also re-evaluated its online document submission process to allow brokers to upload up to 50MB with just one click.
“The system checks files for viruses, conducts redaction of tax file numbers and also gives a higher image quality,” Mr Evans says.
“We’ve still got more technology initiatives under way, so watch this space.”
Despite being the major that saw the biggest improvement in the overall product category, a few brokers were dissatisfied with ANZ’s rate competitiveness – something Mr Evans defended.
“We believe our rates are competitive. However, it’s important to also highlight that ANZ is known for its reliability and outstanding overall end-to-end home loan experience for both the customer and broker,” he says.
“We believe these features are key components for selecting ANZ as lender of choice, alongside our award-winning Breakfree package.
“At ANZ, our consistent level of service has always been something we are proud of and stand by. In saying this, we appreciate and value the support and feedback we receive from brokers and believe there is always more we can do together.”
• Overall ranking: 2
• Overall product ranking: 2
• Overall support ranking: 3
• Overall commission ranking: 3
• Overall technology ranking: 2
CBA, which ranked second overall in this year’s Third Party Lending Report – Major Banks, has been focused on delivering a simple and easy home loan experience for brokers and their customers.
General manager of broker sales Sam Boer says the third-party channel remains a key driver of the bank’s loans business.
“We are always listening to our broker partners and use that feedback to improve what we offer,” Mr Boer says.
“We know turnaround times are critical, it’s something we are doing a lot of work on to get right.”
CBA improved its overall score in the product category this year, which came as no surprise to Mr Boer who says the bank is focused on having the best offerings for borrowers across the board.
“As Australia’s largest home lender, we offer a range of home loan products and services to meet the needs of everyone from first to subsequent home buyers,” he says.
Technology was also a highlight for CBA in this year’s report, which Mr Boer attributes to the bank including it as a key strategy to meet the financial needs of its customers.
“We are applying world-class technology to meet the evolving needs of our customers by developing applications that leverage real time capabilities, considering new ways for our customers to interact with us and using our analytic insights to offer more value,” he says.
“Recently we launched the most comprehensive property app on the market using multiple data sources to not only help buyers navigate confidently, but have a clear understanding of what they can afford.”
However, it appears CBA has some room for improvement when it comes to broker support, with brokers slightly decreasing the major’s score in this category.
“A strong support model for brokers is critical to their business,” Mr Boer says in response to the drop.
“This is why we increased and reinforced our support team across the country – more relationship managers with direct access to local credit managers, a new team of desk-based relationship managers and access to our knowledgeable broker assist team for help with loan structuring, scenarios, advice and help with credit policy… and a team of sales and process coaches to train brokers and their teams.”
CBA also fell slightly in the overall commissions category. However, Mr Boer says the bank remains committed to providing a service to meet the needs of customers and broking partners.
“We are constantly discussing how we can improve our service and product offering to our mortgage broking partners,” he says.
Mr Boer also responded to broker concerns of channel conflict across the entire banking sector, saying, “In the small number of cases where this issue does arise, we work closely with our broker partners to resolve [it]”.
Mr Boer says CBA will continue to seek out and implement broker and client feedback to ensure the needs of both parties are met.
“We are focused on further enhancing our turnaround times and providing our mortgage broking partners with digital tools and resources that can enrich the service they can provide to their clients,” he says.
• Overall ranking: 1
• Overall product ranking: 1
• Overall support ranking: 1
• Overall commission ranking: 2
• Overall technology ranking: 1
“Westpac is thrilled and honoured to have taken out this achievement – the major bank of the year for the second year running,” Tony MacRae, general manager of Westpac’s broker distribution team, says.
“As a consumer bank, we have a mission to help more Australians into their homes and being recognised like this for the past two years certainly places us in a good position to deliver upon that mission.”
It’s fair to say that Westpac has made quite an impression on the third-party channel, with brokers ranking it first in three out of the four categories overall.
Even in the commission category, where Westpac came second after NAB, it was the only major to record an increased score from last year’s report.
Mr MacRae says the bank’s success can be attributed to its focus on ensuring broker needs are always met.
“For us, it’s about listening to the broker feedback through surveys such as The Adviser’s and then acting upon it, ensuring that brokers have access to the right people and in a timely manner so that they can deliver a strong proposition to their customers,” he says.
Over the past 12 months, Westpac has enhanced its support services both in the back office and on the ground.
Mr MacRae says providing additional training to BDMs was and is a top priority, and Westpac is committed to assisting brokers throughout the loan process and helping them grow their business.
“We also thought that we needed to open further access to our credit operations team [which gives] our brokers access to the decision-makers at the right time,” he adds.
Westpac also maintained its overall first place ranking in the product category, recording a higher score than in last year’s report.
Mr MacRae attributes this improvement to Westpac’s range of “good value for money products” that cater for all customer needs, from an entry point borrower to a sophisticated investor.
Technology remains a key strength of Westpac and Mr MacRae says the bank’s current offerings are just the beginning of a larger plan.
“Westpac has got a full technology agenda over the coming years where we’re focusing on being able to move between technology platforms, whether that be desktop, mobile, iPad… we’re looking to be able to provide brokers and their customers more information, when they need it and how they need it,” he says.
Mr MacRae says Westpac has had a mobile application for several years, specifically catering to the third-party channel.
“We were the first major bank to introduce a mobile application specifically for brokers that allows them to do assessments and serviceability, and obtain all of the information they need about our products and services,” he says.
“We will be looking to expand that over the coming years and there’s always an opportunity to be able to provide more information, to allow brokers to be able to do their job anywhere, at any time.”
However, Mr MacRae maintains that the bank’s focus on technology will not distract it from being a “relationships business” first.
“We’ll continue to ensure that we’re investing in the right people, in unison with technology, to ensure we’re delivering an overall proposition for our brokers and customers.”
Mr MacRae says the next 12 months will see Westpac continue to focus heavily on offering customers the best home loan experience possible and further strengthening its relationships with brokers.
“It’s always an honour to be recognised by brokers and we don’t take it for granted,” he says.
“We’re committed to ensuring that we continue to improve our overall proposition and help brokers help more Australians into their home.”