In this first episode of In Focus, brought to you by Hashching, The Adviser talks to HashChing COO Siobhan Hayden about the value of fintech. The former MFAA boss delves inside HashChing’s tech-driven offering and explains how brokers can benefit from it.
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James Mitchell: Hello and welcome to a very special edition of The Adviser podcast. This is a fintech episode we've got for you today. I'm your host, James Mitchell, editor of The Adviser, and we're joined once again by our lovely co-host, Annie Kane. How are you doing Annie?
Annie Kane: Well thanks James, how are you?
James Mitchell: Very good. We've both got colds, so if we sound a bit blocked up, that's because we've got colds. We've also got Siobhan Hayden in the studio with us. Siobhan is previously the CEO of the MFAA and she's now chief operating officer, is that correct? Of HashChing?
Siobhan Hayden: That's right, COO.
James Mitchell: Cool, that's right. So yeah, welcome.
Siobhan Hayden: Thank you. Thanks for having me.
James Mitchell: First of all, obviously as this is a fintech specific podcast, tell us a little bit about your ideas of the fintech term because it's one of those terms that has popped up in recent years and it seems that it can very easily be all things to all people, that sort of thing. What does it mean to you and what does it mean to HashChing as well?
Siobhan Hayden: Fintech's definitely a buzzword. You write it into a PR release and people run with the article. So look, I think it's a technology-driven change for the industry. So that would be a succinct way of kind of encapsulating it. HashChing is an example of that. We have an online marketplace for consumers which shows pre-negotiated mortgage rates. So often what brokers do is obviously work out what the client's requirements are and start understanding those and then showing them the discounted rates available across a suite of lenders. We showcase those straight up so there's no confusion. And then to transact or to fulfil that financial requirement we instantly partner them with professional brokers.
So that's a real, I think, point of difference.
James Mitchell: Yeah and I think, because a lot of the online lending platforms or the Jousts and the unos of the world, brokers see them as a threat, but it seems like HashChing is the one fintech in the market where it's actually helping brokers. It's pairing brokers with customers using a technology.
Siobhan Hayden: The thing that confuses me, if you take fintechs out of the market, take the whole process away, what is the preferred service model in Australia for fulfilment of mortgages? Brokers. It's like 55 per cent, give or take. So if you then have a business model that then tries to disrupt the preferred service model, it's going to be pretty compelling to work. So to me it makes perfect sense to partner with brokers and it's one of the reasons I aligned myself with HashChing and feel pretty passionate about what they're doing.
Annie Kane: Quick question. You were saying there that you've got pre-negotiated rates. How do you actually go through that process? Is that a broker process? Or is that what you do as COO? How does that relationship work?
Siobhan Hayden: The interesting thing, we are an online marketplace and we have brokers, the dashboard that brokers have access to works in partnership with their current CRM. So we're industry aggregator agnostic. And what I mean by that is we have brokers from Fast, Plan, Choice, Loan Market, Mortgage Choice, Connective... You name it, we've got representatives on our dashboard. And as a result brokers in that channel can then put up the products that they are accredited on their lender panel.
So in actual fact we have a marketplace of more lender products than is ever actually available on the market currently. So that's a really interesting point. When you then throw up a rate, you obviously have to have some credentials around it or detail around it such as 80 per cent OVR, owner-occupied, so it's more of a teaser of this is a possibility if you met some of these criteria, which a lot of clients do. When a customer clicks on it, it then goes directly to a broker associated to that deal and then they can start the discussion.
Now, it may not be the most suitable or a product that is most unsuitable for a customer, but the broker has to work through the financials of that customer's requirements to work out whether that suits.
Annie Kane: So can it be that if a customer chooses, like a look of a loan and then they get assigned to a broker that the broker can then change the loan that they're going to be going through?
Siobhan Hayden: Well, I don't think it's so much a change, and it's more around understanding. If a customer comes to a broker on a Monday and says I really love that rate, that would be a fantastic opportunity. And when the broker starts having that discussion, the client then acknowledges they're wanting to go to an auction on Saturday, suddenly now rate becomes a secondary priority to turning around financial requirements and approval. And that's a discussion that brokers are well trained and well positioned to have.
So I think, you know, I've talked to quite a few brokers in the last three months and brokers inherently said to me, Siobhan, you know it seems a bit price-driven, I'm not really a price-driven broker. I completely concur. No brokers are price-driven, but customers that don't know our industry, if you're thinking on the outside, the first thing you're thinking about is I really want a great rate. Particularly if you're looking in the Sydney and Melbourne markets where you're sort of looking at a million dollar loan as your first tiptoe into the property space. So the cheaper the better.
But it's only when you start talking to a broker that you understand what features, what time frame, all the different components that then drive into the product that is finally selected.
Annie Kane: Okay so it's not like you're going to say I'm interested in this product and then be locked into that straight away, you've the flexibility to sort of chop and change depending on what's best…
Siobhan Hayden: It's more of a trigger. It's more of a trigger to start the conversation and then the conversation is unique with every particular customer. That's why I think the full digitization, that whole engagement online becomes so difficult because it's, there's so many variables. An average broker with an accreditation on a lender panel has access to nearly 500 products. How do you possibly succinctly capture that on an online format without a customer getting frustrated and opting out?
So that's the challenge. And there's another part around online models where a customer can engage, be captured by maybe a rate or a point of information or a blog that makes them think they'd like to move forward. If you then get on the phone and start reviewing that client's needs, simply only to then pass them on to a broker, that's a double handling experience. So again the thing I think about HashChing which is great is that the customer makes the inquiry and using our algorithms and artificial intelligence, we then align them to a suitable broker.
So there's no delay. It's quickly transacted. And then the broker's off and running. So it's a good lead model.
James Mitchell: What's some of the feedback you've had from brokers to date? Because I know lead generation's probably one of the biggest pain points for brokers and one of the most important aspects of running their business. This is, HashChing’s something which can help in that regard. What's some of the feedback you've had from the brokers that are using the platform?
Siobhan Hayden: A couple of things. From a lead perspective, a good sort of standard for brokers in my knowledge of the industry is sort of five to seven different referral sources. And many brokers have a Website presence of a Facebook presence and some sort of social media. What is becoming harder and harder to do as a single broker business is to have your Web presence so strong that when a customer's researching that your brand pops up. That's sort of getting beyond the reach of a single business operator.
The nice thing that brokers are sort of experiencing with HashChing is you help me be my online lead referral. It doesn't exclude them from your account that you might have a real estate agent or your kid's sporting club or whatever the other interest may be. That's where that piece comes in.
We had a consumer at the end of last year that had gone through and successfully source financed for an owner-occupied property and then I quickly saw after it settled, three days later, the consumer back into the HashChing model which surprised me. So I'm thinking they gave a great rating to the broker, so we also have ratings of consumers on brokers. And I actually called the consumer and I was like, ‘Oh, you know, great to see you coming back, it's fantastic. You gave a great rating to the broker, did you not want to go back to that broker?’ And they said, ‘No, I just really liked it, so I'm doing an investment property finance now. I just want to see who else I get in the mix.’ So that was interesting.
James Mitchell: Yeah. Sort of shopping around a bit.
Siobhan Hayden: Well just, interested to deal with anyone. It was more the experience of going through HashChing and quickly being aligned, we have lots of emails and things that update the consumer, update the broker. So I think the experience was quite nice from that perspective. The brokers, I think again uniquely, for access to our dashboard brokers get a number of leads within a month. And again, most models out there in the marketplace charge a fee for a lead. And that may or may not go somewhere. So the merger of brokers and HashChing is a successfully paid settlement of .2 of the loan amount. So we both win, shall we say, when we get a successfully settled loan.
It's in both of our interests to garner a great lead and partner with great brokers. So we have a three year minimum hurdle to partner with brokers in the industry.
Annie Kane: And you're talking now about the consumers being able to rate the brokers. What happens to that rating? Do brokers get that feedback? Is it on the website? Can consumer see it?
Siobhan Hayden: Both. And we have two statuses I suppose for brokers. When you first come on board it's a verified broker and you move up to a premium broker. To be a premium broker, you need to get ratings off customers and you need to have a 10 per cent conversion rate. So one in 10 leads or two in 20 leads and then customer's rating of at least four or higher out of five. So it's...that consumer it's an Air BnB, it's an Uber kind of transaction. Some brokers find that really great and they really, really push for their consumers to rate them. And it's not about whether the broker did or didn't source finance, it's about their professionalism, about their diligence, about how well they kept the client updated and you really get some great ratings. And then on the directory on our Website, brokers are listed at a high level. You will find them quicker, the more ratings they have.
Annie Kane: Okay I was going to say, because what does a premium broker, how does that differ from someone who's just verified?
Siobhan Hayden: They get more leads in a month.
Annie Kane: Yeah. Okay.
Siobhan Hayden: For the same amount of money per month, they get more leads.
Annie Kane: How many do they get, do you know?
Siobhan Hayden: We don't always lock down 100 per cent, but notionally a verified broker's looking at receiving two to six leads a month, depending on the campaigns we run and a premium broker is looking at anywhere between 10 and 16 leads per month.
James Mitchell: Wow, they're quite a difference.
Annie Kane: Yeah and it works out for me I guess for them as well if they can get always new people through their doors.
Siobhan Hayden: Yeah perfect.
Annie Kane: And over the phone...
James Mitchell: And there was a recent partnership I guess with something to do with identification? Is that…?
Siobhan Hayden: Yeah. VOI.
James Mitchell: That's right. VOI.
Siobhan Hayden: That's right, so a fantastic solution. So we've partnered with a business that provides a technology to one of the major lenders in South Africa. It's a Verification of Identity solution similar to a Skype call. So it's a secure computer-based call and we keep the audio and visual recording for seven years for compliance for brokers and what happens is the broker can initiate a call and it asks the client to provide them with a point of ID, normally a drivers licence or passport. Once that's uploaded, you're on a computer-based call. The screen is capturing the image of the ID and the consumer and starts to map the facial recognition across the two points.
So how many points of reference correlate between the face and the person? It then washes the information of the drivers licence across our national drivers licence database and our national fraud database and then also provides you with a geo-location mapping. So if you're in Victoria and someone's calling from Frankston, but it's bouncing off Chile, you inherently know there's a problem with this person's ID.
Now it's not a red light or green light. It doesn't say to a broker, this is great or not. It's giving the broker informed data to make a better decision, whether that consumer is who they say they are. And we're working really closely with lenders to see which lenders will be in a position to use this as a provision of safe harbour.
James Mitchell: It seems like...
Siobhan Hayden: Exciting year.
James Mitchell: Yeah. It seems like there's a lot of development happening in the VOI space and I guess the bottom line is the benefit for brokers is they don't necessarily have to target their local area anymore. They can service clients in other states and that sort of thing.
Siobhan Hayden: It's a great tool and that's really the HashChing proposition is about providing transparency and education to consumers, but great tools for brokers to engage customers that have come through the online channel.
We also have an online document capture solution which is powered by Easydocs and it allows obviously the consumer to get an email, download a link to an app, and take photos of their supporting documents that instantly upload and provide the consumer with a sort of an update, percentage complete of documents outstanding which is a great experience for them and really does save time for a broker's business. So they're all on the offer for brokers which to me makes perfect sense.
I mean, it may sound a bit funny, but when I first joined HashChing I sat there and went, if you're a broker over three years at not full capacity, the question is not do you want to join, it's almost like why wouldn't you join? It's a month by month proposition. So you get on board, do a few leads. You don't like it, you opt out. If you do like it, it's just a great way of bolstering your business. And we've got some amazing brokers.
Jeremy Fisher's a partner, a broker partner. People who are writing really, really big volumes that are choosing to partner with us. So, that's good testament as well.
James Mitchell: For sure. I just wanted to ask about that time when you decided to join HashChing, what was the attraction for you in joining the fintech space or was there attraction from, you know, were they attracted to bring you as someone who's obviously got thorough knowledge of the broking industry, how is the relationship formed?
Siobhan Hayden: Well I had a bit of time last year to relax, which was nice. I took my dog for a run and slept in and then I found myself missing the conversation to be honest. So I found myself from a business perspective in the broking perspective at Stone and Chalk and Tyra the two incubator hubs in Sydney and talking and engaging with businesses that are disrupting in our space. And I signed a number of non-disclosure agreements to look a bit deeper at business models and many of them had different variations that I didn't fully subscribe to.
HashChing, that discussion was a really refreshing one and I probably played the Devil's Advocate a little bit with the co-founders Mandeep and Atul and asked them why they would take less of a revenue piece with having to monitor and manage the process of the loan mapping all the way through to settlement, which takes more energy and time and systems, comparative to, say, an introducer site. You know, Rates Direct, Moro Finance where it just clips it straight on to a lender. And their inherent belief system, their ideology was we're trying to do the right thing by consumers and create transparency and options... And I completely got that.
And then the second part was the professional relationship with partnering in the broker network which to me was a major tick. So from a business point of view I definitely agreed and subscribed to it. I could see the scalability of our business and yeah, so initially offered a board role which was great, loved it. It was only four hours a month. I came in four days a week and found myself constantly doing stuff in the business which inherently led to Mandeep and Atul offering me the role as their COO, which is a pretty big step for two co-founders to on their first executive to work with them. I report to the board with them, which is a great endorsement I think of the skillset that I bring to the two existing co-founders. Which and it's working great.
James Mitchell: The company's still very much in its infancy and it’s been running what, a couple of years now?
Siobhan Hayden: 20 months.
James Mitchell: 20 months, yeah. So one thing I've noticed, cuz we've covered Fintechs quite a bit in both Mortgage Business and the Adviser and some platforms come and you never hear about them again. Some stick around and they're still trying to find their feet, or what that model is. I've visited some Fintechs at the Tyra hub and things like that and it seems that there are some who are very much on the tech side, but little on the financial services side and they don't have a full comprehensive knowledge about how aggregation works and how broking works, but they're sure they're going to disrupt it.
In terms of, I guess, HashChing building its knowledge of the mortgage broking space, how instrumental have you been to the founders and to the company in bringing those relationships on board, whether it's with aggregators or brokers and that sort of thing?
Siobhan Hayden: I probably should take a step back and explain the origins of the name, HashChing, which is probably a good intro into answering that question. So people often ask, HashChing? I had a broker actually call me a couple weeks ago and say you know, gosh, I think I was called by someone at HashChing about two years ago, which would have been the 20 month mark, and he said I thought it was such a silly name, I didn't want anything to do with it. I said, well but you called us back and he said well, you know, you're bloody everywhere at the moment. Advertising of course.
So HashChing. It's a merger of Hashtag, Internet-driven pedigree, knowledge, experience, and cha-ching, meaning the money side. So Mandeep was a strategist in a major bank for 10 years. Quite experienced in the banking side. And Atul, the other co-founder, very, very strong in the analytics and tech development side. So, that's the merger of the two, HashChing. I saw a thread on one of the Finance and Coffee websites which was calling us "Hashking," that's a nice name too. So that's the merger of the two.
Definitely, I've been able to complement that skill set that already exists from a broker relationship point of view, I mean we dual customer model. We have consumers and we have brokers and both of those need the right support systems and feedback mechanisms to constantly improve the product. We are a SAS business, you know, Software as a Service, so those sorts of elements, I mean I just love the broker space and people that know me well know that. So I love getting on the phone. Love trying to support broker businesses in relation to what we're doing and it's not for everybody. If you're not experienced yet enough, and you at capacity, great. We're just there to help bolster business for brokers.
Annie Kane: Do you know how many brokers you've got currently working for HashChing?
Siobhan Hayden: Yeah it's 450 odd broker-partners I think. We're growing, every day I come in there's more brokers that are registered to come on board.
Annie Kane: Do you notice any difference between sort of loans that are being written by the brokers and the loans that are just going direct to the consumers? Is there any difference?
Siobhan Hayden: The evidence, outside of HashChing, if you look at the market inherently business to the majors. In the retail channel it's around circa 80 per cent consumers…and that makes sense. There's more High Street branch environments for the majors. Through the broker channel you're looking at about 69 per cent of business going off to the majors and that's regardless of vertical ownership. So I think brokers, we all agree, inherently provide consumer with choice and competition which is fantastic. And from our perspective we see a suite of products being written across all the lenders, non-majors as well. And we also on our dashboard or on our marketplace provide credit union and mutual products as well.
Annie Kane: Okay and is it, sort of really what I was asking is sort of more like, do consumers come to HashChing because they've got more difficult finances for example, or are they you know, coming to the platform for a certain reason rather than going directly to a bank for something.
Siobhan Hayden: No, I don't think we've got...we do a different campaign. So you garner leads from more different areas and I don't think there's a subset in any particular space. We have owner occupied, we have investor, we have people with defaults at times. But I'd sort of say that's reflective of current society to be honest. We have... There is no, you often hear brokers say, there is no vanilla clients anymore. There's very few dual income earning, $200,000 deposit, looking to buy my first home with no issues. So those clients are very few and far between.
So everyone has unique circumstances and you see that again more and more on some of the blogs that brokers are a part of. Very, very difficult circumstances that are being shared amongst the broker community saying what lenders will help me do this? Or has anyone ever dealt with this issue before? I think they're a daily occurrence now. And that's probably why we have a three year hurdle. So not only dealing with a consumer directly online, if someone has asked to be called, it's great that brokers have mentors or people they can go to ask for more policy related questions, but being competent to talk about policy on that initial phone call is a really important component of being successful with an online lead.
James Mitchell: We're almost out of time, but I just want to ask one more question and that's what are your plans for the future with HashChing? It's an interesting environment at the moment. There's a huge amount of home loans being written by the third party channel. There's a lot of noise happening in the market and we're part of that, being the media.
Siobhan Hayden: Being the noise.
James Mitchell: And there is a lot of noise saying maybe housing's going to cool, but then we see in February... In Sydney in February alone almost 3 per cent -
Siobhan Hayden: Clearance rates.
James Mitchell: You know, the market's still very strong. People are still very willing to borrow and mortgage brokers are going strong. What are the plans for a group such as yourself which is sort of using technology to marry up all the processes?
Siobhan Hayden: Yeah, I think there's a deepening of the artificial intelligence algorithms that we use to allocate a broker to a particular customer that can definitely deepen. We can definitely go deeper in relation to the skillsets or specialties of brokers. So very, strongly at the moment we're residentially aligned. Obviously first time or investor property, but commercial and asset finance opportunities and being able to filter deeper on those points from a consumer point of view would be an area we can go. We're sort of growing at about 15, 30 per cent a month at the moment which is keeping us pretty busy. We launched a partnership with CGU home insurance products. So for either landlord or home insurance, we provide a 25 per cent cash back to a consumer that settles a lone through HashChing. So once again that sort of partnership for consumers to get a better value opportunity through this home financing opportunity with brokers in our network.
So it doesn't cost brokers anything. HashChing's paying for that. So that's a really nice sweetener was well.
James Mitchell: Good stuff. Alright. Well, thanks very much for taking the time Siobhan.
Siobhan Hayden: Thank you.
James Mitchell: And thanks again Annie for being a co-host.
Annie Kane: Thank you James. I apologise again for sounding like a frog.
James Mitchell: No worries. No thanks very much for taking the time and it's been good to chat all things fintech. I've been your host, James Mitchell and we will catch you next time.
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