Westpac - Falling behind the pack

Brokers who participated in the study placed Westpac last in all categories across the product, technology, support and commission rankings.

The report also recorded declines from the 2011 rankings in all but three of its sections, with Westpac demonstrating only slight increases in the areas of remuneration, credit assessment staff and broker interaction.

Overall, the lender’s ranking declined by 3.78 points, putting it a long way behind the other three majors.

So, when it comes to broker sentiment, why has Westpac fallen so far behind its peers and, more importantly, what does the lender need to do to regain its lost ground?

The results in this year’s report may not have come as a surprise to Westpac.

The bank has been clear on where it stands on segmentation, aiming to write a higher volume of business through a smaller pool of brokers. This approach to distribution was reinforced when the bank unveiled its new Platinum tier, which sits alongside Westpac’s Advantage Plus segment.

But segmentation policy alone should not be enough to cause broker sentiment to fall so significantly. CBA was ranked top by brokers in the 2010 and 2011 reports and while the bank slipped to third place in this year’s report, it remains within striking distance of ANZ and Homeside.

But based on feedback from the brokers who participated in the report, it is clear that Westpac has lost ground to its competitors across the board.

For example, Tony Hanna, a broker with Ezy Loans Finance, said he’s “not a big fan of Westpac... primarily because they aren’t competitive rates-wise.”

In a market in the grips of a fierce price war any lender with a home loan that includes a high standard variable rate is likely to suffer. Westpac was the major with the highest rate – 7.46 per cent – as The Adviser went to press.

Westpac’s poor performance, however, was not confined to the product and pricing categories.

In the survey responses, brokers also criticised the bank for its turnaround times, channel conflict, inefficiency and communication.
In an interview with The Adviser earlier this year, Maxon Finance’s Maxine Farmer explained why she is reluctant to use Westpac: “I find them very inefficient, so I don’t use them. The client needs to come first; I don’t care what bank it is.”

Channel conflict has long been a source of division between brokers and banks and those lenders perceived as pinching broker’s customers are always going to be unpopular.

Westpac suffered in this category of the report and a common theme within broker feedback pointed the finger at Westpac for ‘client poaching’.

Marc La Galle of Aussie in Manuka said the bank was “troublesome to use” and that the branch network had been known to poach deals.
Westpac clearly has its work cut out for it if the lender is to change the way it is perceived – but there is no reason why sentiment towards the bank cannot be improved over the coming year.

One of the problems Westpac faces is not so much that it is losing broker support but that the other big banks are increasing their lead – particularly NAB.

Westpac can take heart from Homeside’s rise as it has demonstrated how quickly broker support can be won if the right strategies are put in place.

In 2010, Homeside was in the bottom position overall, with just 44.35 points and the lowest score of the major lenders across almost every category. In 2012, the lender’s comparable score is 58.64 – an increase of more than 30 per cent and enough to capture top spot.

Despite the increasing gap between Westpac and the other majors, however, it is clear the bank still enjoys the approval of some brokers.

Robert Wu, a Nova Vista broker and Platinum Broker with Westpac, believes that of all the banks, Westpac has the fastest loan processing.

“They have simplified the procedures used when they process the loan,” says Mr Wu. “For my part, I think the quickest loan processing of all the banks is by Westpac.”

Mr Wu also dismisses the belief that Westpac’s practice of bringing borrowers into bank branches creates conflict and poaching.

“Westpac’s branches and third party channel don’t fight each other for mortgages,” he says. “Westpac actually tries to integrate the third party distribution channel and the branch to work together.”

Speaking to The Adviser earlier this month, Tony MacRae, Westpac general manager, broker distribution, stressed that Westpac remains committed to its third party distribution channel.

“Brokers continue to be a key part of Westpac’s overall strategy and they currently deliver up to 42 per cent of the mortgages written across the banks’ channels,” Mr MacRae said.

The bank also plans to reaffirm its commitment to the channel by launching a new package that will be exclusive to brokers.

Speaking to The Adviser at Westpac’s Broker Roadshow in March 2012, Mr MacRae said the bank was looking to strengthen its value proposition through its new product package.

“We are working on introducing a package that is specific to the broker channel and we want to roll it out later in the year,” he said. “It’s just another way of showing how important this channel is to us and how committed we are to this channel moving forward.”

The question now is whether brokers accept that sentiment as genuine.