Every year, The Adviser commissions Momentum Intelligence to undertake its annual Third-Party Lending Report to understand what brokers think of the lenders they are using. This year, once again, a new major bank has pushed full steam ahead, as broker sentiment towards the big four continues to evolve in line with their service offering. Annie Kane reveals more
Our annual Third-Party Lending Report (TPLR) is a true snapshot of what has been happening in the contemporary lending landscape. In 2018, the TPLR survey was conducted during the Productivity Commission and many of the comments from our broker respondents focused on how the major banks treated the broking channel during those hearings. The following year, the royal commission took place and – again – the way the lenders treated brokers had a real impact on how the channel viewed their lending partners.
This year, the survey was conducted at the height of the COVID-19 health crisis within Australia, and the way the lenders have been reacting and writing business over this time has again had a large influence over how brokers view the lenders. But, as we outline in the following pages, while behaviour at any one point in time may influence perceptions, the channel still most values lenders who can deliver on what they say they will: providing good products, with a good rate, within a short time frame.
The steam in the engine
Now in its 11th year of publication, the Third-Party Lending Report collates the findings of Momentum Intelligence’s annual survey of the lending experiences of mortgage and finance brokers in Australia.
The results of the annual survey paint a holistic picture of the performance of lenders in the third-party lending channel and provide insights to lenders on how they can improve their proposition in the marketplace, all while informing brokers of those lenders outperforming others.
In this year’s survey, conducted between 24 February and 15 April 2020, 879 mortgage and finance brokers rated the performance of the lenders that they have worked with over the last 12 months. It should be noted that, as the survey was conducted during the peak of the COVID-19 pandemic in Australia, the overall sample size reduced on previous years, as many brokers saw major increases to their workloads while they supported consumers moving to refinance their loans and/or applying for hardship provision (turn to page 20 for more).
The survey asked brokers to rate the performance of the residential mortgage lenders (both banks and non-banks) that they had used across 17 attributes covering product, support and technology.
This year, brokers were also asked for their perceptions around commercial, business and personal lending. However, the vast majority of respondents (768) were residential brokers responding about residential mortgages.
Interestingly, Momentum Intelligence found that perceptions of lenders across the board had increased from last year. As an example, the highest-rated lender last year (Bankwest) received a total score of just under 76 per cent, but this year it was just over 83 per cent.
Likewise, the big four banks (ANZ, CBA, NAB and Westpac) all scored much more highly this year than last, with even the lowest-rated major bank receiving a higher total score from brokers than the highest one did last year. This could partly be attributed to the fact that last year’s survey was conducted when the banking royal commission was fresh in brokers’ minds and therefore sentiment towards the majors (particularly when it came to broker support) was low.
Just the ticket
While Bankwest was found to be the top-rated lender across all segments for the fourth year in a row, its parent company, CBA, also ranked highly this year – coming top for the major banks.
The Commonwealth Bank of Australia’s total score from brokers was 75 per cent in 2020, a radical change from its fourth position last year, when it received a total score of 62 per cent. Its total score this year ranked it ninth of all 18 authorised deposit-taking institutions (ADIs).
The major bank, which was much maligned in the 2019 survey (following comments made during the royal commission), improved in its ratings for every category in 2020, most noticeably in the “commitment to the broker channel” rating, which rose 28 per cent on last year (following a drastic fall after certain comments made during the royal commission). However, the bank still rates lowest for this attribute out of the four majors – at 62 per cent – as it does for channel conflict (57 per cent).
Brokers rated the bank most highly for its product policy, product range, upfront valuations and web presence.
ANZ and Westpac held onto their same places as last year in the major bank ranking (second and third, respectively). While Westpac didn’t come out on top for any of the 17 attributes this year, ANZ’s business development managers were again singled out by brokers for being exceptional – ranking first of the majors for this category once again.
While CBA was charging full steam ahead of the major bank segments, it had reversed fortunes with National Australia Bank (NAB).
NAB’s products were much better rated this year, with the former major bank leader being best rated for “product pricing” when compared with the other three majors.
However, brokers told Momentum Intelligence that it had dropped in competitive edge when it came to “broker communication”, “online lodgements” and “turnaround times”. Brokers gave NAB a turnaround time score of 44 per cent this year, dropping significantly from its 2019 score of 62 per cent. This was a major contributing factor to the major bank’s fall from pole position to fourth place this year.
Indeed, turnaround times were the key point of difference for brokers this year across all lender segments. Looking at all 17 attributes brokers rate, the TPLR 2020 shows that the most important factors that brokers consider when making a recommendation to a client are:
While the majority of these are the usual deciding factors for brokers, “commitment to the broker channel” dropped off the top four influencing factors this year (placing eighth out of 17 attributes brokers consider). However, its high influence in last year’s survey was most likely due to the fact that the threat of the royal commission made brokers particularly loyal to those lenders who backed them in 2018.
As commitment to broker channel fell in priority, turnaround times increased in importance – with the research showing that it was the third most important factor brokers considered when choosing lender in the past year – up from fifth place in 2019’s report.
Many of the comments to Momentum Intelligence indicated that the cashback offers put into market by NAB led to delays in approvals and assessment times, which could account for its low score for this particular attribute.
In fact, brokers generally took umbrage with the majors for releasing cashback refinance offers without seeming to provide adequate support to service them. As the broker comments show, this was a major influencing factor this year. Given the fact that the majors were rated quite favourably this year, it would seem that if the major banks can provide the consistency in turnaround times when special offers are on, coupled with good product policy and upfront valuations (the top two influencing factors for a high rating), it would go a long way with improving broker sentiment towards them.
Turning round the turnarounds
This year, turnaround times were the main broker bugbear – with brokers telling Momentum Intelligence that the majors were suffering, in particular.
The Adviser will be publishing further analysis and the top-rated lenders of the other competitive sets (non-major banks and non-banks) in upcoming features of The Adviser magazine.
Stay tuned for the August edition of The Adviser magazine, in which we will reveal how brokers rated the non-major banks in this year’s survey, the areas in which they are leading, and where there is room for improvement.
The full comprehensive results of the Third-Party Lending Report 2020 are available for purchase through Momentum Intelligence. This interactive report is designed to be a detailed competitive analysis tool for lenders to view, compare and contrast their performance against the market.
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Annie Kane is the editor of The Adviser and Mortgage Business.
As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts.
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