Several non-major banks have revealed how they are working to keep turnaround times fast and reduce channel conflict.
Following on from The Adviser’s coverage of the ongoing delays facing the broker channel when it comes to mortgage approvals (see the June edition of The Adviser magazine for more), many banks have been revealing the actions they are taking to ensure that credit decisions are made as quickly as possible and that channel conflict is mitigated.
According to the latest Broker Pulse survey from Momentum Intelligence, which received 247 responses from Broker Pulse members between 1-10 May 2021, the average lender turnaround figure had blown out to 11.5 days for broker loans.
This marked the second highest time since Broker Pulse began in September 2019 (after December 2020, when it was marginally higher at 11.6 days).
Last week, the four major banks outlined what steps they were taking to reduce the delays being faced by the third-party channel (particularly given the fact that the proprietary channel has not been facing the same obstacles), and several non-majors have now outlined how they are working to approve broker-lodged loans in a timely manner.
86 400 – having the same proposition for broker and direct
Previously only offering mortgages via brokers, the neobank launched its first direct-to-consumer offering last week (starting with refinances).
The fintech has been among the fastest banks to approve broker-lodged loans this past year. Brokers responding to Broker Pulse stated that 86 400 was the fastest bank approving loans through the channel in April 2021, sitting at 2.9 days.
According to the lender, part of its speed of service is due to the fact that it is one of the few lenders in market to have a fully digital mortgage offering, removing delays relating to collation of paperwork.
Speaking to The Adviser last week, Melissa Christy, lending product lead at 86 400, stated that while the lender had launched a direct offering, its proposition “is the same for broker and direct”.
“That ‘fastest time to yes’ is one of the core parts of our proposition. Our strategy doesn’t change because we’ve got another channel, it just means we can help customers through different channels and they can choose the channel that suits them.
“Both direct and broker deals will still go into the same queue, and the assessment team will pick them up as they come in, so there is no difference between broker or direct.”
She added: “By streamlining the traditional process of applying [for a mortgage], we’ve created a smarter, simpler, digital alternative, which our pilot customers have loved.
“Our fast applications and approvals promise to put more Australians on the financial fast track to property ownership or a better rate on their existing mortgage.”
Adelaide Bank – bringing on more assessment staff and only operating via broker
The regional lender is one of the very few banks to solely distribute mortgages through the broker channel, therefore mitigating any potential channel conflict issues.
While the lender had been tracking around six days to initial credit decision, this increased to 10.3 days, according to the most recent Broker Pulse survey.
Speaking to The Adviser for the In Focus podcast in April, Adelaide Bank’s head of broker distribution, Raj Kapoor, outlined that broker volumes had been rapidly increasing since COVID-19 first hit.
He said: “What we’ve seen is that, over the last 12 months, the broker market has been expanding; the volume has been increasing…
“We’ve increased our assessment team from a team of 30 to 40 people to well over 150 in a 12-month period,” Mr Kapoor added.
However, he noted that training up and “upscaling” of credit assessment staff takes time, as “that sort of talent is not readily available in the market”.
The lender has therefore been offering remote learning and training to credit assessors to try and ensure consistency of approvals.
He said: “We’ve got the people in place. We now have to focus on the efficiencies, which come with technology and relooking at our risk appetites, regulatory compliance and making sure that we’re not being overzealous and causing extra boundaries and obstructions for our customers.”
AMP Bank – increasing digitisation and automation
As one of the top three banks to have remained consistent in approval time (just over six days, according to the latest Broker Pulse survey), AMP said that it had been able to maintain its time to initial credit decision due to investment in digitisation and automation over the past 24 months.
According to AMP Bank, these included:
- increasing credit assessment staff by a third;
- modifying the sequencing of rules in the credit decision engine and the inclusion of additional data feeds, which has reportedly help double its auto-approval rate this year;
- shifting from static to dynamic approval letters to give “tailored conditions” to brokers and their clients;
- reducing supporting document requirements and improving electronic verification of identity, which have raised the verification rate to 60 per cent this past month;
- embedding the NextGen.Net document management technology solution to streamline the way documents are handled; and
- enabling loan contracts to be digitally signed (which the bank revealed would soon be expanded to all documents in the loan application and settlement journey).
Speaking to The Adviser, the non-major lender outlined that these enhancements formed “part of a commitment to continually strengthen the service offering provided to customers, brokers and advisers”.
Sean O’Malley, managing director of AMP Bank, said: “Ongoing investment in our technology, processes and people will ensure AMP Bank continues to deliver fast and consistent service to our customers, brokers and advisers. We understand the importance of this, and it remains our number one focus.
“Together with offering highly competitive rates in our key target markets, we are committed to ensuring that it’s easy to do business with us.”
Noting the lender’s performance in the Broker Pulse survey, Mr O’Malley added: “AMP Bank’s top three ranking by brokers on [consistent] turnaround times is a reflection of the great service inroads that we’ve made to date.
“I’m excited about upcoming enhancements that will further embed our service offering and proposition in the market.”
ING – managing the offers in market
ING has also consistently been one of the fastest banks approving broker loans this past year, and was used by approximately a third of brokers responding to the Broker Pulse survey last month.
ING’s time to initial credit decision for brokers was 4.2 days in April, according to the Broker Pulse survey.
Speaking during a recent webinar held by aggregation group Connective last week, ING’s interim head of retail banking, Glenn Gibson, outlined that the bank had a two-day turnaround target in place and had worked to maintain consistency of service and reduce lumpy flows by limiting offers that could overwhelm its systems.
He explained: “You may normally receive, on any day, 300-400 [broker] applications. If you go out with too sharp a rate, or too sharp a service offering, a cashback, a whole range or combination of those things... all of a sudden you run the risk of those 400 applications becom[ing] 800 applications in one day.
“When you’re only staffed up for 400 applications, it puts a lot of pressure on [turnarounds]. So, what we did at ING is [put an offering] into the marketplace to get as close to that as we possibly can.”
He continued: “Trying to finesse volume through the broker channel is like a sledgehammer because you can get a lot of volume very, very quickly. But we just made sure that we forensically changed our policies and our uniqueness, so that we didn’t get too snowed under with volume.”
Mr Gibson provided the example of the bank recently adopting open banking data (instead of requiring banking statements) for loans with a loan-to-value ratio of 65 per cent and under “because we want to see what that does in terms of impact”.
“We don’t want to do anything to be detrimental to the two-day turnaround time [target],” he said.
“So, it really comes down to our big focus is supporting our brokers and giving our customers the fastest answer we possibly can.”
Suncorp – committing to channel parity
Suncorp Bank is one of the few banks to have in place a commitment to approve both proprietary and broker-lodged loans in a similar time frame.
Speaking to The Adviser, Suncorp head of broker partnerships, Troy Fedder, elaborated: “Suncorp has deliberately aligned our broker and direct processes so that customer outcomes are equal and there’s no differing time frames.
“Suncorp and our brokers have the same pricing, credit policies and consistencies to effectively minimise any channel conflict…
“If a customer wishes to engage direct or via a broker, their experience and outcome should be no different. [So], there is no differentiation in turnarounds times between our broker and direct businesses. This is a deliberate strategy.
“Just as Suncorp grows with the support of our customers, our broker partners will grow if we deliver consistency together. It’s a true reflection of how Suncorp values our broker relationships,” Mr Fedder said.
According to the latest Broker Pulse survey, Suncorp’s time to initial credit decision was sitting around 12.0 days in April.
Mr Fedder said that the longer turnarounds had been due to “exponential growth in home loan application volumes”, but added that the bank had recently moved to “deploy more team members into operations and support roles to speed up turnaround times”.
He added: “We [also] recently amended our expense verification process, requiring customers to provide less documentation in loan applications. It means a faster time to yes for our brokers, and builds on our recent introduction of Easy Refinance, Easy Add Loans and Easy Equity Loans.
“We have more work to do, but I’m committed to delivering improvements across our entire home lending portfolio to make it even easier for our brokers and their customers.”
You can find out more about what brokers think of the non-major banks and their performance over the last year in Momentum Intelligence’s Third-Party Lending Report. An overview of the non-major banks’ performance will be detailed in the upcoming July edition of The Adviser magazine. The full report can be purchased via Momentum Intelligence.
Brokers interested in joining Momentum Intelligence’s Broker Pulse panel can apply to Momentum Intelligence here. Participants of the survey will receive full access to the report and exclusive insights into the research.