The outgoing CEO of CBA, Ian Narev, has said that the bank has “a bet each way” on mortgage distribution, backing both broker and direct channels.
At the Morningstar Individual Investor Conference in Sydney on Friday (6 October), the outgoing CEO of the Commonwealth Bank (CBA), Ian Narev, was asked what the “ongoing role of mortgage brokers” was, given that the big four bank owns a 20 per cent share of Mortgage Choice and all of Aussie.
In response, Mr Narev said that it was hedging its bets.
“We bought a third share in Aussie Home Loans in 2008 and, as people will know, we bought the remainder of it over time and finished. We now own 100 per cent [of it] as of August.
“The fundamental view we have got is two-fold on mortgage brokers. Number one is, they play an important role in the mortgage market for customers. There is a group of customers currently, and always will be, for whom the proposition of brokers is very important, which is: 'I am making one of the biggest decisions of my life and I want to be able to go to somebody who is going to be able to give me help in working out which is the best home loan for me.'
“Our view was, that is going to be a critical part of the mortgage market into the future, and therefore we should be part of it while keeping Aussie entirely independent.”
However, Mr Narev noted that the direct channel was also of importance to the bank (he has previously said that the “preference” was for customers to go through the proprietary channel).
Indeed, The Adviser broke a story earlier this year in which a branch of the bank was found to be actively trying to refinance broker customers by offering reduced rates.
Mr Narev told the conference: “Beyond that, we have said we want to make it as attractive to our own customers as we possibly can to do their mortgages directly.
“So, we are putting lenders in the branches, we are upgrading our technology, we are making sure our pricing works because we actually want our customers to do business with us directly.
“So, in a sense, strategically, we are having a bet each way.”
Mr Narev concluded: “We are acknowledging the importance of the broker segment to customers and participating in it, both through ownership and cooperation, and we are trying to make the experience for our propriety customers as good as it possibly can be.”
The bank has around 1.8 million mortgage customers and has been pushing out a range of technological innovations in recent months, including a new interest-only simulator for broker customers.
It has been through a period of major upheaval in recent months, following allegations of “serious and systemic non-compliance” with anti-money laundering and counter-terrorism laws and changes to its senior management.
As well as the departure of Mr Narev next year, it was recently announced that the chief executive and managing director of New Zealand–based ASB Bank (a subsidiary of the Commonwealth Bank), Barbara Chapman, will retire in 2018, while Annabel Spring, the head of the bank’s wealth business, will leave at the end of the year following the sale of the bank’s wealth business.
[Related: CBA CEO apologises to brokers]