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Offshore processing linked to loan approval lags

by Charbel Kadib6 minute read

The offshore processing of loan applications has been a key contributor to turnaround time blowouts, particularly in the wake of COVID-19, according to the CEO of a major brokerage.

Over the past few months, several lenders, including three of the big four banks, have reported delays in their turnaround times for loan applications.  

ANZ has publicly acknowledged its shortcomings, with its processing times increasing from an average of 10 business days in April to an average of 22 business days in May.

The lags have prompted ANZ and NAB to introduce changes to their lending processes, which have included the onboarding and relocation of staff.   

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Speaking to The Adviser, Mortgage Choice CEO Susan Mitchell attributed the recent blowouts in turnaround times to a combination of factors, including the offshore processing of loan applications, which have been tested by the COVID-19 crisis.

“You’ve got the cashback offers, the people who are looking for relief from COVID, and then you also have the fact that some of the institutions have offshored some of their processes,” she said.

“Then you have what’s happening with the COVID shutdowns around the world and how that would have affected the use of offshore resources. 

“It’s all come together at one time to blow those [turnaround] times out.”

Ms Mitchell said lenders that have taken the time to invest in their processes are “reaping the rewards”, while their competitors lag behind.

“It’s clear that institutions which have made a real investment in their systems and processes are having the best turnaround times,” the Mortgage Choice CEO added.

“I think it sends a very clear message to other players that they need to take the time and the effort to make serious investments in their processes and their systems.  

“I know that they’ll want to, it’s just they’re such large institutions, it just takes time and effort to reprogram those things.”

When asked if turnaround times should be considered by brokers when determining the best interests of their clients, Ms Mitchell said such matters would need to be clarified by the Australian Securities and Investments Commission (ASIC) in its forthcoming guidance.  

“That’s a hard question because it depends entirely on the customer’s situation,” she added.

“It could be that it’s very important what that turnaround time is, depending on the particular circumstances of a customer. 

“If they’re refinancing, it may not make as much of a difference, so it’s a hard question to interpret at this time, so I’m looking forward to ASIC releasing their regulatory guidance so we can start to see a bit more how they think about it.”

Mortgage Choice launches new workflow tool

This comes amid the launch of Mortgage Choice’s IBM workflow automation tool, which Ms Mitchell said could help mitigate external blowouts in lending processes by simplifying interactions between brokers and their clients.

The workflow tool enables franchisees and their staff to track the progress of an application “all the way through” by automating 26 possible touch points with a customer.

“As things become more and more complicated in the home loan process, you just want to know where the files are [if] you need to get back in touch with your customer when you need more information,” Ms Mitchell told The Adviser.

“[Brokers] are having many more touch points with that customer and you want to make sure they’re happening quickly and efficiently and gathering that answer and data to move that file along. 

“Anything that automates that process and keeps better track of it [can] make the experience better for the customer.”

The $2-million upgrade forms part of the group’s broader $8-million digital transformation strategy, which commenced with the development of the Mortgage Choice Broker Platform in 2018.

Ms Mitchell said this latest phase of Mortgage Choice’s strategy would provide the group with a “competitive advantage” and build the group’s resilience to economic shocks, with the market facing yet another downturn in the housing market.

“It’s important for all the different businesses in our network to be profitable, so this goes very much to their efficiency gains,” she said.

“It allows them to have their staff more engaged and it allows them to put through more business with the same number of staff. 

“It helps [franchisees] become more profitable, which will provide all of us protection from shocks.”

Mortgage Choice general manager of technology, Vincent ten Krooden, added that the automation software would also help the company meet its obligations under the best interests duty, which is set to take effect in January 2021.

“The workflow automation software helps us meet compliance requirements more reliably and, in doing so, gives brokers confidence that our processes are safe and secure,” he said.

“In turn, they can focus on doing what they do best – helping customers.”

[Related: Mortgage Choice axed from All Ords]

susan mitchell mortgagechoice ta

Charbel Kadib

Charbel Kadib

AUTHOR

Charbel Kadib is the news editor on The Adviser and Mortgage Business.

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