Homeside - Bringing home the bacon

A survey of brokers conducted each September by leading finance research house RFi revealed major changes between 2009 and 2010 in broker preferences and perceptions of the lender.

“If lenders have done something significant in the year to either particularly please or particularly displease brokers, it comes through quite strongly in the results,” says RFi director Alan Shields.

“NAB has been working on their service levels; they certainly tweaked their pricing; and they have one of the most competitive home loans in the market and I think that’s all helped the perceptions of brokers.”

In September 2009, when asked which lender they preferred to use the most, just 1 per cent of brokers surveyed named Homeside; in September 2010, that figure had risen to 7 per cent.

In 2009, only 2 per cent said Homeside provided the best mortgage product for refinancers; 12 months later, it was 12 per cent, indicating a swing of a massive 10 per cent.

These are major changes. “Typically, we don’t see very big movements, so a 6 per cent increase is significant,” Mr Shields says.

“Between September 2009 and September 2010, the proportion of brokers nominating Homeside as one of their top three lenders by volume increased by more than 20 per cent.

“They’ve definitely done something that has awakened good feeling among the broker segment.”

A SUSTAINED EFFORT

According to NAB Broker general manager John Flavell, Homeside’s gains are not just down to structural and procedural changes made over the past 18 months.

“It’s really been setting our business up to operate at our potential,” Mr Flavell says, “not just what we’ve done over the last 12 months, but over the last two or three years.”

He emphasises that Homeside loan customers enjoy the same benefits as customers across the broader NAB group.

“About 18 months ago, [NAB] started removing a swath of fees for retail banking products, including dishonour and exception fees for credit cards. We’ve continued to remove, consolidate and reduce fees and charges and Homeside customers have got the benefit of those changes as well,” he says.

“One of the most significant changes we made, however, was giving brokers the ability to identify customers that represented the lowest risk and to differentiate on price accordingly.

“A lot of lenders talked about it and a lot of lenders want those lower risk customers. Well, we said we wanted them and that we’re prepared to turn around and reward them for their low-risk profile. That proposition’s only available to customers through brokers.

“So, great customer proposition, but a great proposition for the broker as well.”

According to Mr Flavell, another great proposition – this time delivering benefits direct to the broker – is Homeside’s ramped trail structure. “We launched it in July 2007 and last July we paid 30 basis points trail to brokers for the first of their customers,” he says. “For every month that passes, more and more customers will receive 30 basis points trail and then from 1 July 2011, those customers will qualify for 35 basis points trail.”

BROKERS AS BUSINESS PARTNERS

Mr Flavell says he wants Homeside to be “easier to deal with”, adding that the lender has reviewed its policies, aiming to remove superfluous requirements “that didn’t add a whole lot for risk mitigation but which did add extra clumsiness to the front end”.

“Just to give you an idea, our checklist with supporting documentation requirements was five pages long; after we made changes [in May 2010], it was one and a half pages long. The broker response was very positive.”

Another well received change, he says, was removing the need for ATO assessment notices, despite a domestic and global credit environment that requires greater diligence.

Many changes have been made based on direct feedback from brokers.

“What they’re giving us feedback on has shifted from the application and getting it to unconditional [approval] more to documentation and funding, and also making changes and variations for existing customers. There’s things we can do like simplifying our documentation – one document pack rather than two; having plain English that’s easy to understand; or enabling the broker to print the document in their office if they want.

“We try to aid the process as much as possible,” he says. “We enable our four-star brokers to order valuations online themselves prior to lodging the application. That means before you expend all that energy, you know what the property’s worth. The other thing is that when you lodge the application you’re not waiting four or five days for the valuation to come back.

Despite Homeside’s achievements in recent months, the lender is not resting on its laurels. “I’m not comfortable where our service offering is,” says Mr Flavell. “I want to step it up significantly. I want to be known for delivering good, consistent service 100 per cent of the time. We’re not there yet.”

EYES ON MARKET SHARE

According to Alan Shields, while lenders can make major product and policy changes, it is a broker’s relationship with their BDM that is the key to the way the lender is perceived.

“I think when we look at our stats and analyse what drives satisfaction with different lenders, the thing that makes the biggest difference overall is the support the broker receives from the lender’s business development manager,” he says.

“If Homeside is making moves to improve the support that the BDMs are providing, then that will have a big impact.”

Focusing on “the people side” is important to the NAB group overall, says Mr Flavell. “Mortgages are complex transactions and there will always be instances when you’re going to need to speak to somebody or seek additional information.”

“If you need more than two lines to state your requirement, we say pick up the telephone and have a pro-active discussion with the broker. Often that one call up-front can just answer so many questions, saving 10 days downstream.

“If in two or three months time I sat down with a group of brokers and asked them for feedback, they’d say, You guys are calling me all the time, we’re having dialogue, we’re resolving things and we’re getting a great result.

“We’re also making sure we’ve had the resources on deck to meet demand, so we put the resources in place ahead of time and [over the past 12 months] we were aggressive in our budgeting. We’re very bullish and this next 12 months is about consolidating what we’ve got, but continuing to grow.

“I think that realistically, with our offering and our capability and our proposition, we should be getting 25 per cent market share.”

“What makes a broker happy,” says Alan Shields, “is being able to do their job in an easier way. Support from the BDM is critical. My impression is that NAB and Homeside have been doing a lot of work around that.

“They were making a conscious effort to get the brokers onside last year and it certainly seems to have paid off with the results.”