Brokers have long been advocates for the non-major banks, with this segment of the lending market typically relying heavily on the broker channel for home loan distribution and therefore putting the resources and time into creating a service that delights the channel.
Over the financial year 2024, many of these financial institutions embraced a bold new vision, driven by a need to stay relevant and competitive in a landscape that requires a stellar borrower experience, and fast.
From sweeping technological overhauls to innovative new offerings and strategic rebranding efforts, non-major banks have been redefining what it means to be agile and forward thinking. They’ve taken significant strides to enhance their relationships with brokers, streamline their operations, and work to deliver exceptional value to their customers.
The moves have been largely welcomed by brokers. Looking at Agile Market Intelligence’s annual survey of the broker channel on lending experiences, it’s clear that non-majors are the darling of the broking industry. The Third-Party Lending Report 2024 revealed that Macquarie Bank was ranked first by brokers this year (though – as argued in the July 2024 edition of The Adviser – calls are being made to classify Macquarie as a major bank now), with Bankwest, ING, Great Southern Bank, and ubank all making it into the top 10 highest-ranked lenders.
So, how have they been doing it? To find out more about how the non-majors have been renewing, revamping, and even rebranding, The Adviser hosted a roundtable discussion with senior leaders from some of the top non-major lenders operating in the third-party space in July. In attendance at the non-major bank roundtable were:
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Paul Herbert,
head of lending and everyday banking distribution, AMP -
Ian Rakhit,
general manager of third-party banking, Bankwest -
Darren Kasehagen,
general manager of third-party banking, Bendigo Bank -
George Thompson,
head of home loans, ING Australia -
James Cameron,
head of broker distribution, MyState Bank -
Shane Davis,
acting head of broker partnerships, Suncorp Bank -
George Srbinovski,
head of broker distribution, ubank
Broker support
A common theme coming out of the roundtable was that each institution is implementing strategies to support brokers better, whether through faster responses, improved tools, or enhanced communication channels.
All of the lenders rely heavily on broker feedback to identify whether there are any areas they can improve on and to trial new initiatives before they roll out to the wider channel. So, having strong connectivity with their dominant distribution channel has been a key body of work in the past year.
AMP, for example, has been scaling up its broker experience team to ensure faster, more consistent support; MyState recently introduced real-time feedback so it can gain instant feedback on the broker experience; and Suncorp Bank has brought in self-service capabilities through its broker portal and brought in MyPortView, which enables brokers to communicate directly with the bank’s settlements provider in real time.
Brokers have also been instrumental in helping the non-majors review their risk appetites and lending policies.
ubank’s Srbinovski says: “At the start of the year, we wanted to look at our processes and how we could be faster and simpler while staying true to our digital core, so we brought in brokers to tell us what they liked and didn’t like. We listened very, very carefully to that as we really want to focus on and solve for their pain points. While we have a digital front-end, that doesn’t always correlate with how a broker’s process flows. So, we’ve done a lot of work around that.”
Several non-major banks launched new or improved self-employed borrower policies this year following broker feedback, with others looking at self-managed super fund lending and identifying new borrower segments.
ING’s head of mortgages says: “A new area we are seeing is related to the cost of living … particularly when trying to enter the property market. It’s arguably the hardest it’s ever been. So, we’re suddenly seeing a trend where friends or groups of people are actually partnering together to purchase property, which is quite different. We’re continuing to see that as a growth area and I think, in this environment, it will likely only continue.”
We're sudddenly seeing a trend where friends or groups of people are actually partnering together to purchase property
– George Thompson, ING Australia
Technology transformations
The speed of service that non-major banks are able to provide brokers has been another major theme this year, according to the roundtable discussion. Automation and acceleration have been the name of the game, with nearly all leaders saying that they’re working hard to automate processes further so they can build broker volumes in future.
Bendigo Bank has had a major technology overhaul, following years of investment, with its lending platform accelerating broker approvals. In fact, total broker residential settlements were up 15 per cent in 2H24 compared to the prior half, including settlements through the Bendigo lending platform.
It has also been modernising its technology offering by establishing a ‘virtual branch’, so that broker clients can be serviced by a virtual branch when they have questions.
Bendigo’s Kasehagen says: “We are actually most about customer choice. We’ve just established a virtual branch so that broker customers can be domiciled to a branch in their own right. That will allow us to give them a broker-like experience.”
Meanwhile, Bankwest’s Rakhit says that the bank recently moved its valuation tool to the Commonwealth Bank platform, which has accelerated its time to ‘yes’.
“Seventy-five per cent of our valuation responses now come from the same portal Commonwealth Bank use. This allows us to speed up the time to assessment and can unlock more potential for additional customers,” he says.
“We can now reprice in eight seconds and we will continue to give that immediacy for brokers to be able to see Bankwest’s best offer.”
Bankwest’s decision to close its branches and become a fully digital bank will also see renewed investment in the digital offering for brokers.
As well as heavily investing in digital technologies and automation to improve efficiency and service delivery, many are also now considering the role artificial intelligence (AI) has to play in lending.
AMP’s Herbert says: “Everyone is curious around AI and there are use cases available to us now around credit policy, but I think soon we will be able to leverage that capability to help augment communication back to brokers in real time around how we will treat certain loans in certain scenarios.
“Beyond that, we’re looking at how we can use AI to read and validate payslips and building fraud protection into our platform so we can protect our brokers and flag if there are any concerns about the authenticity of documents,” he said, adding that protecting brokers was part of the added value the lenders provide the channel.
A rash of restructures
But perhaps the biggest theme of note at this year’s non-major bank roundtable is the shifting structure of the lenders.
Bendigo Bank began its pilot with the broker channel in November 2023, as it moved to retire the Adelaide Bank brand (previously the only brand available to brokers from the Bendigo and Adelaide Bank Group). Bendigo completed its roll-out to brokers in August 2024, with more brokers using the lender’s simplified product suite.
Kasehagen says: “The transition to the Bendigo Bank brand from Adelaide Bank has been the main focus this year and we are extremely proud of how successful it has been and the technology we are now offering brokers…
“Some of the components of our Adelaide proposition were probably best in market in the 1990s but, since then, broker expectations have evolved. Now, in 2024, we’ve got a proposition that we think is what a customer or a broker should expect from us.”
Likewise, Bankwest announced it was moving to become a fully digital bank in FY25, with Rakhit saying the move would benefit brokers: “We are on track to close the last of our branches in November 2024, which means we will compete on a purely digital offer.
We are on track to close the last of our branches in November 2024, which means we will compete on a purely digital offer
– Ian Rakhit, Bankwest
“The benefit for our broker partners is the reinvestment will be put back into our broker proposition. It’s all designed to make the broker proposition in front of customers better and better.”
And mergers have also been on the cards at the non-major banks. Two years after being first announced, ANZ’s move to acquire Suncorp Bank officially settled in July, with approximately 3,000 employees and 1.2 million customers welcomed into ANZ Group from 1 August 2024.
While it’s business as usual for now for Suncorp Bank (with the brand expected to remain in market for the near future), it’s likely the challenger lender will benefit from the scale and resources of its major bank parent.
And – even more recently – Tasmanian-based lender MyState signed an agreement to merge with ASX-listed lender Auswide Bank in August.
If approved, MyState would continue as the parent company of the merged group, with MyState CEO and managing director becoming CEO & MD of the merged entity.
If shareholders vote in favour of the scheme and all regulatory approvals are met, it is expected that the two banks will merge in “mid-to-late” December 2024 with operational integration largely achieved by the end of FY27.
The merged group would have around 272,000 customers and a loan book of $12.5 billion, largely originated from the broker channel.
According to the banks, the merger would significantly enhance the scale and value proposition of the group, providing it with “the opportunity to accelerate its earnings and growth profile while benefiting from an enlarged balance sheet and increased funding flexibility”.
These institutions are redefining their roles and relationships with brokers, leveraging advancements to enhance efficiency, transparency, and customer satisfaction.
As we dive into this transformative period, it’s clear that these banks are not just keeping pace with change – they’re leading it.
