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Australia’s largest lender has confirmed that it wants to grow its broker flows and is actively working to build trust and update its offering.
The Commonwealth Bank of Australia (CBA), the nation's largest lender, is actively recalibrating its broker strategy, aiming to reverse a recent decline in broker-originated home loans.
Despite brokers facilitating over three-quarters of all Australian home loans, the volume of new mortgage business being sent to the major bank has bucked market trends and been on a downward trajectory over the past year.
The drop comes as the bank has repeatedly stated its focus on proprietary lending - and as it launches new digital-only offerings that have cheaper interest rates than available through both the branch network and third-party channel, drawing criticisms from the industry for channel conflict.
The reduction in broker business also comes following years of souring sentiment from the broker channel, with industry baulking at calls from the bank's CEO for a change to broker remuneration during the banking royal commission - and for more recently suggesting that there was “undue concern” about easing caps on banker commissions given that “brokers that don't have any of the [same] controls” on their remuneration.
However, in conversation with The Adviser’s In Focus podcast, Baber Zaka, CBA's new general manager of third-party banking, said that the bank is actively working to increase broker flows and rebuild trust.
"It's definitely our strategy to grow," Zaka stated.
"My specific role, I've been tasked with actually growing our market share in this space."
While CBA's proportion of broker business from the entire mortgage market share has remained relatively constant over the past two years, Zaka acknowledged it's "not where I want to be."
“I do still want to grow that and I'm being metricated on that frankly,” he said on the podcast.
Zaka outlined that another reason for falling broker flows was due to a surge in refinancing activity, an area in which CBA has not traditionally held a strong competitive edge.
He indicated that a key strategy moving forward was to better market CBA's advancements in the refinancing space and make it a smooth process for brokers.
He clarified that while the bank still wants to grow in proprietary and digital lending, it also wants to grow in the third-party channel as part of “an overarching goal to expand volumes across all segments”.
“We're not saying that we only want to grow in the prop channel and we don't want to grow in broker. We want to grow in both of our channels and we also want to grow in Bankwest and we also want to grow in our digital.
"It's not saying that we're prioritising one or the other," he said.
Reducing channel conflict
While speaking on the In Focus podcast about his new role, the general manager of third-party banking said that one of his priorities in his new role is to “build trust” in the bank and “lose some of the arrogance”.
Fundamental to gaining trust with the broker channel was reducing channel conflict, he said, adding he wanted to limit opportunities for the branch network to poach from the broker channel.
“In this day and age, when we're digitising stuff, there should be less need to go into a branch if you're a broker customer. So, on the one side, how can we actually minimise the processes to actually stop any chance of the conflict occurring in the first place? And the second part is: how do we actually build the guidelines and training to ensure that it doesn't happen, even if they are in branch?” he said.
Zaka said he was “really passionate” about making sure the bank’s processes were “built in such a way that, should there be channel conflict, [it] can investigate it and consequence-manage, as appropriate”.
“You can't stamp [channel conflict] out completely because it does come down to some poor behaviours sometimes. But what we can do is try to minimise that impact,” he said.
Improving the broker offering
Looking forward, Zaka said he wanted to continue to engage with a wide spectrum of brokers (both supporters and detractors), to understand how the bank can further improve its broker offering.
He outlined that the major bank had made several changes to its service offering and policies based on broker feedback in recent months, including changes to its tier offering and updates to HECS debt and construction policies, which he said were directly influenced by insights from the broker community.
CBA’s GM for third-party banking said that the big four bank was also actively exploring new policies to accommodate evolving customer needs, such as those with income from boarders and the growth of multi-party homeownership.
The bank is also focusing on improving efficiencies for brokers through enhanced settlement status updates, the integration of AI into chat interfaces, and a comprehensive training hub that offers 24/7 access to resources.
For top-tier brokers, bespoke analysis of their businesses is also being offered to help identify areas for efficiency improvement.
Zaka stated: “What I've been focusing on is really just building the relationships - whether that's with our aggregator partners... but also with brokers - and really getting that feedback bottom up…
“Because that's going to really shape how we actually grow going forward. We can't do in isolation,” he said.
“We want to be a trusted partner, just not just on a transaction level, but as a business partner across your whole business.”
You can find out more from Baber Zaka on CBA’s broker strategy in the full episode of The Adviser’s In Focus podcast.
Tune in to The broker strategy of Australia's biggest bank, sponsored by CBA, here:
[Related: CBA proprietary flows continue to dominate]
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