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An Australian bank will launch a new branded home loan offering exclusively through the third-party channel as it looks to capitalise on the growing broker market.
Speaking to The Adviser, BOQ’s group executive of retail banking, Matt Baxby, explained the group’s plans to deliver Virgin Money mortgages through the broker channel in early 2016.
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“Virgin attracts quite a different customer, but it is a powerhouse of a brand,” Mr Baxby said. “A real challenger. Very successful in the UK. A lot of it resonates from Richard Branson himself being an entrepreneur, and that seems to capture people’s imagination,” he said.
Mr Baxby was CEO of Virgin Money Australia for three years before joining BOQ in 2013. The brand has a strong credit card business, but Mr Baxby said the plan was always to move into products like mortgages.
“In the first quarter of 2016 we will launch a mortgage product,” he said.
“It will be offered through the broker channel. We are working on our plans for that now. Given that BOQ has not played heavily in the broker channel in years past, and it is a key area of growth, it makes sense for us to go to market with a Virgin product through brokers.”
Mr Baxby admitted that the regional bank has not been as active in the third-party space as its competitors.
“Three years ago, less than two per cent of our flows were from broker,” he said. “Clearly the industry has moved on rapidly.”
A few years ago, BOQ announced that it was coming back into the broker channel and has since made significant inroads. Mortgage brokers now write upwards of 20 per cent of the bank’s home loan business.
Mr Baxby said that in many ways the broker channel is the “ultimate test” of whether a bank has been successful in the delivery of its mortgage offering, and a sign of that success comes when a broker sends the bank their next deal.
While BOQ sees Virgin Money as a complementary brand, it will target a very different market.
“Virgin Money customers tend to be a younger audience, about 25 to 40 years of age, who are more likely to be in urban areas, and specifically in Sydney and Melbourne,” he said.
Virgin Money Australia already has over 200,000 credit card customers.
[Related: BOQ reveals big plans for broker channel]
