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Suncorp Bank’s general manager, broking, Steven Heavey tells The Adviser about the bank’s plans for the future and the importance of the third party distribution channel
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What is in the pipeline for Suncorp Bank?
We have a lot in the pipeline this year. We are committed to improving our processes across the board. Over the last six months, we have put significant effort and energy into improving our back-end processes and we will continue on this path throughout 2013.
In addition to improving our back-end processes, we are also committed to enhancing our broker service proposition at the front end. To do this, we know we need to engage with the third party distribution channel, which is why we recently held roadshows across the nation where we got the chance to speak with our brokers, introduce them to the changes we have made to our systems and listen to their concerns about the bank.
We are always looking for ways to interact with our brokers and receive their constructive criticism. We are a small bank, so we have the flexibility needed to not only listen to criticism, but change our processes in line with that criticism.
We want our brokers to know that they are a priority for us. They are responsible for our success as a bank and they will continue to be pivotal to our success. As such, it is vital that we continue to engage with our brokers and change our systems to fit in with their needs and wants.
You’ve achieved strong lending growth in recent months – what’s behind that?
Suncorp Bank reported 5.9 per cent growth in its mortgage lending portfolio during the half-year to December 2012 and I have to say that the improvements made to our broker channel were an important contributor.
Over the past 18 months we’ve focused on building our relationships with our broker partners, improving our capability and focusing on our service offering to this important channel, with our renewed commitment certainly starting to be recognised by the market.
Our broker channel complements our strong growth in the direct channel through an expansion of our national branch network, particularly into New South Wales and Western Australia, and the growing profile of our regional bank in those markets and nationally.
Suncorp Bank has truly established itself as the genuine alternative to the major banks and we’re competing strongly with our regional peers.
What are the major challenges that Australia’s non-major lenders face?
There are many challenges facing the non-majors. One of the biggest has to be white labelling – that is a real threat to our business.
We have conducted studies which show that white labelling is not adding to the competitive market, but detracting from it. The majority of the white label products are funded by the big four, so any time a white label product is sold, it adds to the big four’s bottom line. In addition, brokers are choosing to write white label products instead of non-major products, which also takes away from our cumulative market share.
If the non-majors want to prove we are a force to be reckoned with and a true alternative to the majors, then we need to offer better service, better products and sharper pricing.
Our products need to be innovative and our service needs to be world class.
Luckily for [Suncorp Bank], as a smaller lender, we have the flexibility to be innovative and provide excellent service.
Now, with our improved back-end processes, we have the ability to cater to a lot of demand and still turn deals around within a few short days.
We are committed to not only providing faster turnaround times for our brokers, but more consistent turnaround times as well.
Do you think falling interest rates will entice buyers back into the market?
I don’t know if people are encouraged by falling interest rates. That said, we are starting to see a lot more competition around price at the moment and that will always pique the interest of borrowers.
In addition, I expect to see prices drop further as more lenders become hungrier for business. I believe this will be a huge year for competition. I believe all of the banks will compete on price and [with] every other lever they can get their hands on.
For the non-majors to compete, we need to offer more than a sharp rate.
While pricing is no doubt very important, it is also important for us to create relationships with our brokers. These relationships will ultimately drive business through our front door.
But it is not just important for us to connect with brokers; brokers also need to be connecting with the non-majors. I think the industry will become less valuable if brokers stop providing choice to their borrowers.
A lot of business is going the way of the majors at the moment and I believe it is not just the job of the non-majors, but the brokers as well to ensure this is not an ongoing trend.
