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In the 12 months since ME Bank entered the third party distribution space, the lender has managed to capture the business – and the respect – of Australia’s mortgage brokers. ME Bank’s national manager for brokers, Stewart Saunders, reveals all
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WHAT CAN BROKERS EXPECT FROM ME BANK IN 2013?
The year 2013 will be a big one for us in terms of growth. We will continue to build partnerships with brokers and aggregators, illustrating to the market the benefits of our low-cost banking model.
We will also look to enhance our products, policies and service on the back of broker feedback.
YOU JOINED A NUMBER OF AGGREGATION PANELS IN 2012. WHAT HAS BEEN THE BROKER FEEDBACK TO DATE?
We have been overwhelmed by the feedback we have received from the broker channel over the last 12 months. The third party distribution space has been very supportive of ME Bank’s business model and everything we want to achieve in the marketplace.
But while they have been very complimentary of us and our services, they have also provided us with constructive criticism, which we have endeavoured to act upon. Constructive feedback is very important to us as it helps us refine our products and services.
Over the last 12 months, we have made some significant changes to our products and policies. For example, our brokers told us that they would like us to have an interest-only feature – a change we have now introduced.
In addition, we have created, in alliance with NextGen and Infinitive, an electronic application portal.
Finally, we introduced capitalisation on LMI loans up to 95 per cent. We would never have made any of these changes if it wasn’t for broker feedback. We are constantly engaging in conversations with our broker partners and listening and reacting to what they have to say, as we understand that this feedback will ultimately help us to be a better lender.
HOW IMPORTANT IS IT TO HAVE STRONG SECOND-TIER LENDERS IN THE MORTGAGE MARKETPLACE?
It is very important to have a strong second-tier market. That said, what we think is even more important is a strong independent second-tier market.
Since the global financial crisis, some of Australia’s second-tier lenders have been partially acquired by one of the big four. This, in turn, has given the majors a market share of 80 per cent. The majors’ market share is simply too high and leads to unfair banking.
Having an array of independent lenders ultimately leads to greater competition in the mortgage market, which is essential to both brokers and their borrowers.
Moreover, Australia’s second-tier lenders are well received by borrowers, as evidenced by the high customer satisfaction ratings we have.
DO YOU THINK WE WILL SEE AUSTRALIA’S SECOND-TIER LENDERS GROW THEIR MARKET SHARE IN 2013?
We are currently working very hard to grow our market share by highlighting our ‘fairer banking model’ to all borrowers.
In addition, we are listening to our broker partners and acting on their feedback.
That said, we know we can’t be all things to all people and all brokers, given that we are a lender that deals exclusively with super fund members. Of course, with the clients we can help, we plan to offer the best service and most competitive deals possible.
At the end of the day, we are looking to grow our presence in the market through a variety of mediums, including advertising, industry marketing and ongoing social media engagement. In addition, we will continue to use our BDM workforce to push our barrel, engage with brokers and help them grow their business. If we can do that, we will be very pleased. We don’t have any specific market share figures that we are aiming towards; we just want to achieve our ‘natural share’ of the market.
WE HAVE SEEN A FAIR BIT OF CONSOLIDATION IN THE LENDER SPACE. DO YOU THINK THAT THIS TREND WILL CONTINUE?
I expect to see more consolidation in the market, especially within the mutual sector. Over the last 12 months, [we have seen consolidation] as some of the smaller lenders look to add scale to their operation by joining hands with some of the industry’s bigger players. This is ultimately good news for brokers and their borrowers. If the mutual sector can grow, it will only enhance the level of competition in the marketplace.
That said, further consolidation between Australia’s larger players, including the majors and second-tier lenders, would not be good for the industry. Further consolidation between the big players will only serve to stifle competition and significantly affect the broker proposition.
WHAT HAS BEEN THE BIGGEST HURDLE FOR ME BANK SINCE ENTERING THE THIRD PARTY DISTRIBUTION SPACE?
For us, the biggest hurdle has been catching up to the market. We are not only new to the broking market, but indeed the mortgage market as a whole. We are a relatively young bank. As such, some of the bigger players have a decade’s head start. But we will not be intimidated.
We will continue to communicate with our brokers, revise, review and renew our proposition. We are determined to offer a viable alternative to the majors.
