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CELEBRATING 20 YEARS

MPAMAGAZINE.COM.AU ISSUE 21.04

CONSISTENT AND TENACIOUS The non-major banks discuss the work they’re doing to build a strong relationship with brokers

PROPERTY INVESTORS Huge opportunities for investors – with a helping hand from brokers

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ASSET FINANCE Returning business confidence paves the way for financing SMEs

WOMEN IN BROKING Industry plans to thwart the decline in female broker numbers

1/04/2021 12:37:12 PM


Bank of the Year, after year, after year. And we couldn’t have done it without our broker partners. Thank you for your ongoing support. Find out more at businesspartners.suncorp.com.au

Banking products are issued by Suncorp-Metway Ltd ABN 66 010 831 722 (“Suncorp Bank”).

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1/04/2021 12:52:51 PM 18/1/21 1:10 pm


APRIL 2021

CONNECT WITH US

CONTENTS

Got a story or suggestion, or just want to find out some more information? twitter.com/MPA_Australia facebook.com/Mortgage ProfessionalAU

UPFRONT 02 Editorial

Brokers see record market share off the back of high loan demand

14

28 FEATURES

PROPERTY INVESTORS

After a short-lived decline in 2020, the value of investor loans reached a record high

COVER STORY

BIG INTERVIEW

CORY BANNISTER

La Trobe Financial's chief lending officer reflects on the last year and the opportunities it has opened up for non-banks

10

Financial comfort for borrowers grows, but some are still struggling

06 News analysis

Borrowers continue to enter the property market, while arrears are rising

08 Opinion

As the number of women in broking drops, one industry female has high hopes

FEATURES 46 AFG technology

NON-MAJOR BANKS ROUNDTABLE

Five of the non-major banks met for the annual panel discussion to share their views on turnaround times, channel conflict, the impact of COVID-19, and more

04 Statistics

The aggregator introduces a new brand refresh and CRM offering

50 Leadership

38

FEATURES

WOMEN IN BROKING

There’s a push to increase female representation in the broking industry as numbers fall

A workplace expert explains why ‘self-leadership’ is so important

PEOPLE 54 Brokerage insight

With 26 years of experience, the founder of AKORIN Finance prides herself on helping the community

56 Other life

A keen photographer, mortgage broker Andrew Tan explains what he loves about being behind the camera

42

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ASSET FINANCE

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FEATURES

Business confidence is increasing, making financing SME asset needs a great proposition for brokers

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1/04/2021 12:54:30 PM


UPFRONT

EDITOR’S LETTER www.mpamagazine.com.au

Brokers proving their worth

W

hatever else 2020 was, whether it was ‘unprecedented’, a ‘challenge’, or an opportunity to ‘pivot’, it was also a very confusing year for everyone. In March when the pandemic took hold, there was a lot of caution in the market as Australians began to follow social distancing restrictions and put off any future plans. After a couple of months, however, the country got a grip on the COVID-19 virus and confidence grew. ABS figures showed that, by the end of the year, in a usually subdued month in terms of settlements, new housing commitments reached a record high in December. The trend spilled over into 2021 too: the total value of owneroccupier loans in January was just over 52% higher than 12 months before.

With the high demand for loans and a confusing lending market, it’s no wonder that brokers saw a record market share

APRIL 2021 EDITORIAL

SALES & MARKETING

Editor Rebecca Pike

National Sales Manager Claire Tan

Journalist Maria Hoyle Contributors Michelle Bihary, Melissa Christy Production Editor Roslyn Meredith

ART & PRODUCTION Designers Cess Rodriguez, Marla Morelos Traffic Coordinator Kristine Jamir

Global Head of Media Marketing Lisa Narroway

CORPORATE Chief Executive Officer Mike Shipley Chief Operating Officer George Walmsley Managing Director Justin Kennedy Chief Information Officer Colin Chan Human Resources Manager Julia Bookallil

EDITORIAL ENQUIRIES

tel: +612 8437 4784 rebecca.pike@keymedia.com

SUBSCRIPTION ENQUIRIES

tel: +61 2 8311 5831 • fax: +61 2 8437 4753 subscriptions@keymedia.com.au

ADVERTISING ENQUIRIES claire.tan@keymedia.com

That doesn’t mean it was plain sailing in the market, though. Banks changed their credit policies and lending appetites as thousands of Australians struggled with job losses and reduced working hours; they unleashed record-low interest rates and cashback offers to draw in new customers; and the government announced several initiatives like the First Home Loan Deposit Scheme and HomeBuilder grants. With the high demand for loans and a confusing lending market, it’s no wonder that brokers saw a record market share, settling more than 60% of all home loans for the first time in the July to September 2020 quarter. While this dropped back to 59.4% in the following quarter, it was still a record for the period and 4.1 percentage points higher than the 2019 equivalent. This rising market share could be an indication of the troubling turnaround times the industry has seen of late and the role brokers have to play. “The challenges brought on by the historically low interest rates and the number of consumers now choosing brokers over banks go hand and hand,” outsource financial relationship manager Lucky Gamboa told MPA in March. Brokers need to focus on the best interests duty and avoid sending customers to banks with lengthy turnaround times just because of an enticing new deal. Instead, they need to signpost clients to deals that will be right for them in the long term. Great advice is what separates brokers from the pack – and in times of confusion, there’s no greater opportunity to prove their worth.

Rebecca Pike, editor, MPA

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Key Media Australia (Mortgage) Pty Ltd Regional head office: Level 10, 1–9 Chandos St, St Leonards, NSW 2065, Australia tel: +61 2 8437 4700 • fax: +61 2 9439 4599 www.keymedia.com Offices in Sydney, Auckland, Denver, London, Toronto and Manila

Mortgage Professional Australia is part of an international family of B2B publications and websites for the mortgage industry CANADIAN MORTGAGE PROFESSIONAL neil.sharma@kmimedia.ca T +1 416 644 8740

Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as the magazine can accept no responsibility for loss.

www.mpamagazine.com.au

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It’s that phone call to say, “I care and what can I do to help?” that sets this group apart from the rest. Bernadine Geary STYLE FINANCE GROUP

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1/04/2021 9:20:53 AM


UPFRONT

STATISTICS PARENTS STRUGGLING WITH HOME LOANS

FINANCIAL COMFORT GROWS Australians’ financial comfort increased to record levels in the six months to the end of 2020. However, while their confidence in their ability to cope with a financial emergency was 16% higher in December than it was one year before, one in five households said they had little confidence that they could maintain their lifestyle if they lost their income for three months.

1 in 5

homeowners struggle to pay their mortgages during parental leave

50%

of parents recommend buying a home before having children

CONSUMER DEMAND FOR CREDIT SOFTENS

59%

While demand for credit in the last quarter of 2020 was down by almost 22% compared to one year before, Equifax reports that demand was declining at a slower rate towards the end of the year.

of parents wish they had considered financial changes before assessing how much they could borrow

  DECLINE IN CONSUMER CREDIT DEMAND, DEC QTR 2019–DEC QTR 2020 Overall consumer credit applications down -21.9% Credit card applications reduced by -31.7% Personal loan applications dropped -28.1% Buy now, pay later applications trending down -1.5% Auto loan applications decreased by -2.8%

28%

of parents return to work earlier due to financial stress Source: CUA

4

Mortgage applications increased by +19.3%

-35

-30

-25

-20

-15

-10

-5

0

5

10

15

20

Source: Equifax Quarterly Consumer Credit Demand Index (December 2020)

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LOAN CONDITIONS TOP FRUSTRATION FOR SMES

Key components of Household Financial Comfort Index, 2012–20 Living expenses

Income

Savings

Only 11% of SMEs surveyed by ScotPac said they did not have any frustrations with their current funder. However, their biggest frustration was around the conditions of loans.

Ability to cope with a financial emergency

7.25

TOP FUNDING FRUSTRATIONS OF SMES

7.06

6.75 6.25

6.06 5.76 5.61

5.75 5.25

Conditions of loan

84%

Have to provide property security

80%

Lack of flexibility

74%

4.75 4.25 Dec 12 Jun 13 Dec 13 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 Jun 18 Dec 18 Jun 19 Dec 19 Jun 20 Dec 20

Note: Scores out of 10

Rising indebtedness without a clear recovery path

64.5%

Funder is hard to deal with Source: ME Bank’s 19th Household Financial Comfort Report

DEBT TO REMAIN A BURDEN Mortgage deferrals declined towards the end of 2020, but analysts at S&P Global expect some of these borrowers to face longer-term debt-serviceability pressures.

PRIME RMBS

Major banks

3.18

Nov 2020 2.10

Dec 2020 1.96

Source: ScotPac SME Growth Index

JUST 6% GEN Zs SAY BUYING HOME EASY TO ACHIEVE DO YOU BELIEVE HOMEOWNERSHIP IS ACHIEVABLE FOR YOU?

AVERAGE LEVEL OF COVID-19 ARRANGEMENTS (%) Oct 2020

Average

Gen Z

Yes, it’s easily achievable for me

Non-bank originators

4.13

3.85

3.82

Yes, but it will be challenging

Regional banks

4.05

2.89

3.17

Not sure

Other banks

3.73

2.82

1.55

No, it’s not achievable right now

6%

Millennials

3.12

2.78

2.73 Source: S&P Global quarterly report

No, it will never be achievable

Gen X

Baby boomers

21%

57%

18% 20%

4% 7%

8% 6%

6% 3%

28%

17% 22% 17% 16% 24% 19% 16%

34%

Source: Bankwest

www.mpamagazine.com.au

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68%

38%

19% 20% 17%

16% 8%

Pre-boomers

35%

14%

14%

Non-bank financial institutions

56%

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6/04/2021 9:05:25 AM


UPFRONT

NEWS ANALYSIS

Record prices, rising arrears While a third of Australians are struggling to meet their home loan repayments, many more are entering the property market, pushing up demand and housing prices

SOCIAL RESTRICTIONS may have eased and the property market may be booming, but the impact of COVID-19 can still be felt. According to research from Finder, nearly one in three home loans is in arrears, meaning around 899,000 mortgages are behind on payments by at least 30 days. Almost one in five mortgages (18%) are in arrears by 30 days or more, 8% by 60 days or more, and 5% are considered “seriously delinquent” as they are behind by 90 days or more. “COVID-19 put a lot of households in a precarious financial position,” said Finder home loans expert Sarah Megginson, who pointed to unemployment as one reason why people are struggling to keep up with their loan repayments. The Australian unemployment rate, while dropping, was at 5.8% seasonally adjusted at the time of going to print. The fact that the unemployment figure is falling is not the positive that it seems either. The under­ employment rate increased to 8.5% in February. It is considerably higher for females, who have been more affected by job losses during COVID-19. According to official figures, in May 2020 almost 98,000 fewer university-educated women were working than at the start of the pandemic. This compares to 37,000 fewer young men. Despite that, men are much more likely to be behind on their mortgage repayments than women – 80% of female

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homeowners are up to date with their repayments, compared to just 59% of men. Megginson said many were also concerned about what would happen once JobKeeper was wound back at the end of March. “With some homeowners now only a few missed mortgage payments away from potentially having their homes repossessed, this is no doubt a scary time,” Megginson said. The JobKeeper program has supported more than 3.5 million workers in the past year. According to the ABS in February, more than half of those receiving the support were on the higher payment of $1,000. Of those receiving JobKeeper payments,

Treasury warned that around 150,000 Australians could lose their jobs now that JobKeeper has come to an end. In an interview with MPA last year, S&P Global director, structured finance, Erin Kitson, said the real figures for both unemployment

“With some homeowners now only a few missed mortgage payments away from potentially having their homes repossessed, this is no doubt a scary time” Sarah Megginson, Finder 73% reported receiving less income than they earned with their usual pay. With 29% reporting that they were mainly using the funds from the scheme for their mortgage or rental payments, it’s no wonder people are nervous about what will happen now. At a Senate committee meeting in March,

and mortgage arrears were probably being masked by the JobKeeper stimulus and mortgage relief measures. Not everyone is struggling with mortgage repayments, however. At the other end of the spectrum, thousands of Australians are actually joining the property market. New

www.mpamagazine.com.au

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AUSSIE HOMEOWNERS STRUGGLING TO PAY MORTGAGES

Are you behind on your mortgage repayments?

8%

5%

18% 69% No, I am not behind Yes, I am 30 days or more in arrears Yes, I am 60 days or more in arrears Yes, I am 90 days or more in arrears

Source: Finder survey of 446 Australian mortgage holders, February 2021

home lending ended 2020 at record levels, and interest rates are at an all-time low, meaning people can borrow tens of thousands more from the banks without a spike in monthly mortgage repayments. RateCity.com.au reports that the average

buyer than they were at that time. That’s because the average owner-occupier interest rate has since dropped by 1.42%, according to the RateCity.com.au database. But the falling mortgage repayments are pushing up property prices, said RateCity

“The reality is thousands of families have already, or will soon, find themselves priced out [of the market], particularly in hotspots such as Sydney and Melbourne” Sally Tindall, RateCity.com.au homebuyer’s mortgage repayments have dropped since the previous housing peak in October 2017. Analysis of owner-occupier interest rates by RateCity and property prices by CoreLogic show that mortgage repayments are now $140 less a month for the average new home-

research director Sally Tindall. “Ultra-low interest rates have put a rocket under the property market, and it’s showing no signs of slowing down. “While low rates are driving current prices north, predictions of up to 20% property price rises over the next couple of

years are pushing people to panic buy, Tindall said. “First it was toilet paper, now it’s property. People are rattled because they don’t want to miss out. “The reality is thousands of families have already, or will soon, find themselves priced out [of the market], particularly in hotspots such as Sydney and Melbourne. “While the RBA is unlikely to raise rates to keep a lid on the market this year, the regulator could respond by putting caps on risky lending for some borrowers.” Mortgage rates look set to rise, however. ANZ has predicted that fixed interest rates will creep up. In a research note, ANZ economists Felicity Emmett and Adelaide Timbrell also said they expected property price rises of around 17% across the capital cities in 2021. “The first half of 2021 is likely to be stronger than the second half,” they wrote. “By June ANZ Research expects prices to be rising at a more moderate pace given the end of government programs like JobKeeper and HomeBuilder and a lift in fixed mortgage rates.”

www.mpamagazine.com.au

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5/04/2021 5:27:22 PM


UPFRONT

OPINION

GOT AN OPINION THAT COUNTS? Email rebecca.pike@keymedia.com

Sky’s the limit for women Reflecting on 25 years in the finance industry and how far it has come in terms of gender diversity, 86 400’s Melissa Christy says there’s more to be done THE BANKING and finance world is typically male-dominated. However, in the last 25 years that I’ve been working in this space, it’s been incredible to see stereotypes being smashed and more women taking on leadership roles. When it comes to inclusion, the banking and finance industries have come a long way – but this is only the beginning.

have realised that people can still be efficient and effective when working from home – and perhaps in some cases, even more so than when they're in the office. Being a working mother, I am grateful for the extra time I now get with my kids before and after school. I can do the school dropoffs, pick-ups, help with homework, get them to after-school activities and get all my work

and everything, including career changes and movements. They’re able to provide a secondary view of the benefits of either moving away from a company or staying with them. But, most importantly, they help guide you through your professional journey. Finding someone who embodies these qualities is the key to finding lifelong mentors. If you don't have a mentor, I encourage

Opportunities for women My vision for the future of the industry is to see more women working in it, with a greater balance in the female to male ratio. This can only be achieved if women are given the chance to showcase their skills and provided with the right support and guidance from those in leadership positions to begin with. Offering encouragement and mentorship to the young female generation and those entering the industry is key. When I started in banking, having strong female leaders was really empowering and inspired me to follow in their footsteps. My bosses encouraged me to not be afraid of succeeding, to take risks and chase opportunities – and this is the mindset I encourage those starting out in the industry to adopt and run with. Take whatever opportunities big or small that come your way and show your peers that you’re more than capable. The influence that female leaders can have on the younger generation is huge, and its potential to be a driving force in balancing the male to female ratio in the industry shouldn’t be underestimated.

Embracing flexibility post COVID One silver lining from the pandemic has been the increased flexibility it has afforded working professionals, and the opportunities that stem from this. Industries as a whole

8

When I started in banking, having strong female leaders was really empowering and inspired me to follow in their footsteps done from home or in the office. Having that flexibility means it’s easier to manage all of my responsibilities, not just my work ones. The world is finally moving past the standard 9am–5pm working day. These changes will be a catalyst for even more in the future, and I hope it encourages more people to embrace them.

you to start looking for one – perhaps one of your current managers who inspires you, or a former boss you’ve always admired and enjoyed working with, or someone in a part of the industry you want to move into. Invite them for coffee and to catch up. Learn about their career journey, challenges and experiences; ask questions and be curious.

Why everyone needs mentors

The only way is up

When I first joined the banking industry, it was important to me to have strong women who supported and encouraged me. My first boss was female, and the first general manager I worked under was also female. Both were incredibly supportive and provided impactful opportunities on day-to-day tasks and projects when I was just starting out. Having these two mentors by my side, I developed a frame of mind that I could achieve whatever I wanted to in this industry. For someone who had just started out, this was exactly what I and many other women needed. Mentors are there for advice on anything

Women have come so far in the finance industry. I look forward to seeing where we are in the years to come as we continue to grow together – with the support of our mentors and role models – and take advantage of the opportunities at our feet. With the growth of fintech, I believe there are endless opportunities for women to make their mark, as I have been able to do at 86 400.

Melissa Christy is the lending product lead at 86 400.

www.mpamagazine.com.au

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12/11/2020 8:56:16 AM 1/04/2021 9:26:10 AM


PEOPLE

BIG INTERVIEW

CORY BANNISTER: SEIZING THE OPPORTUNITIES Tightening bank appetites, the economic impact of COVID-19, and regulatory changes have all presented challenges over the past year, but La Trobe Financial’s Cory Bannister sees a strong future for brokers and non-banks

LOOKING BACK on 2020 as a year filled with uncertainty, complexity and challenge, La Trobe Financial’s chief lending officer, Cory Bannister, also reflects on the opportunities it provided. Quoting ex-British prime minister Winston Churchill who said “never let a good crisis go to waste”, Bannister says La Trobe Financial prides itself on seizing those opportunities and finding solutions. “History has shown that during times of challenge, ideas are born and progress is made, and, to that end, we have been working extremely hard on a number of exciting initiatives that we will roll out in 2021,” he says. Thankfully, the non-bank was prepared for some of the changes COVID-19 brought. It had already deployed a remote loan writing technology platform and strategy before the lockdowns began in March 2020, meaning that it could remain online and open for business throughout. Furthermore, with 100% of its staff based in Australia, the lender did not experience the business interruptions that affected many others with offshore sites. Bannister says the international border closures have actually fast-tracked many

10

businesses’ abilities to become “borderless”. “Due to COVID-19, we’ve mastered video conferencing technology, and everyone from your children to your grandparents can ‘Zoom’,” he says. “We feel this is a great opportunity for brokers to expand their business reach, accessing clients in other states based on referrals for their business capability.

provides an opportunity for both brokers and non-banks to offer solutions to struggling Australians. He believes broker market share will receive a major boost, as history tells us that complex and confusing environ­ments provide tailwinds for brokers. He also anticipates that the market share of the non-banks will head back up to 10% and beyond.

“[Non-banks] will play one of the most important roles in the mortgage lending space over the next three years” “The video conferencing phenomenon has also aided non-bank financial institutions [NBFIs], who have traditionally relied on relatively small – in comparison to the major trading banks – sales forces and marketing budgets. NBFIs can now do this much more efficiently, which we are certainly excited about.”

Non-banks will play important role With the recovery from the pandemic expected to take some time, Bannister says this also

“The reverberations from this critical event are likely to be felt for at least the next two years as government stimulus stops, international travel remains on hold, and we all adjust to a new normal,” says Bannister. “However, we know that Australians are incredibly resilient, and often they just need a helping hand through difficult periods – this is where we anticipate a further increase in demand for non-bank loan funding.” But that’s not the only factor pushing more

www.mpamagazine.com.au

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1/04/2021 9:32:36 AM


PROFILE Name: Cory Bannister Title: Chief lending officer Company: La Trobe Financial Years in the industry: 21 Career highlight: “The ability to work with and alongside an incredibly diverse and talented group of brokers and staff at La Trobe Financial, who are like-minded in their pursuit of making a difference to others.” Career lowlight: “There is no specific ‘lowlight’ present in my mind; however, there have certainly been plenty of challenges to overcome. The GFC is a great case in point: whilst it was incredibly challenging, some of the things we learned throughout that period were incredibly useful when the coronavirus hit.”

www.mpamagazine.com.au

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1/04/2021 9:32:52 AM


PEOPLE

BIG INTERVIEW

borrowers to non-banks. As we move forward, Bannister says one of the biggest trends he expects to see in 2021 has already been unfolding for two years: the persistent tightening of bank acceptance criteria. This has caused much consternation, confusion and uncertainty for brokers, not to mention frustrating approval delays for customers. Again, there are opportunities here, as he says this is driving more business to brokers and validating the broker proposition. “Today’s ‘specialist’, ‘underserved’, ‘overlooked’ and ‘non-standard’ borrowers were

documents, DigiDocs for mortgage documents, and tech upgrades, including the Supporting Docs capability on ApplyOnline. The lender also augmented its automated Valuation Hub, enabling brokers to order valuations through the broker portal. The portal itself also now includes live tracking, providing brokers with “up to the minute” updates on loans, as well as direct access to a 150-strong team of credit analysts. “We are all in on broker, and that’s why we are laser-focused on ensuring the broker industry is successful, and that we continue to

“We are all in on broker, and that’s why we are laser-focused on ensuring the broker industry is successful” likely to have fitted bank acceptance criteria of the past decade,” Bannister explains. “Currently, the major banks are pursuing a much narrower and borrower-specific segment of the market. We expect this focus will only intensify should the proposed change to responsible lending guidelines be passed as per the recent government draft. “This will be positive for our natural borrower cohort; however, it leaves a large segment of the mortgage market overlooked. We are terrifically positioned for this segment of the market and expect NBFIs will play one of the most important roles in the mortgage lending space over the next three years.”

All in on the broker channel The third party channel makes up 97% of La Trobe Financial’s originations, and the non-bank has continued to focus on ensuring the approval-to-settlement process is as streamlined as possible. In supporting brokers over the past year, it has ensured a 100% digital service, with digital VOI through IDYou and ZipID, DocuSign in place for loan

offer a superior customer experience for them and their clients,” Bannister says. He adds that he is looking forward to the year ahead and getting back to what the lender does best: “helping brokers and their clients find financial solutions when they need them the most”. On top of the economic challenges and changing bank appetites, brokers also have regulatory changes to deal with. The best interests duty was introduced at the start of the year, and there are also potential changes to responsible lending obligations. Bannister expects the impact of these changes to be neutral, explaining that in the case of BID the majority of brokers are already operating to a standard that meets the requirements. If anything, he says, the impact on the industry will be positive and a catalyst to move brokers up to more than 70% market share. “Brokers can now say to their customers, ‘I must act in your best interests as I am obliged to by law’, and this is something the banks simply cannot say,” he says. As La Trobe Financial continues to support

WHO IS CORY BANNISTER? Cory Bannister has spent over two decades at La Trobe Financial since joining the business in January 2000. Across that time, and in addition to his leadership of the Real Estate Credit Division, he has served in senior roles across the business, including in the Collections and Credit Fund teams. Under Bannister’s stewardship, La Trobe Financial has been the recipient of multiple lending awards, including Best SMSF, Best Non-Residential, Best Non-Bank Lender from Money magazine, and Best Non-Bank Lender Asia Pacific four years in a row. Now chief lending officer in the Real Estate Credit Division, Bannister is responsible for approximately $1bn per month in loan originations. He is one of Australia’s leading authorities on non-bank, specialist credit, having led the asset origination strategy and credit business at La Trobe Financial since 2015 as deputy lending officer. In that time, he has overseen the increase in annual origination volumes from $3.2bn p.a. to $11.8bn p.a. in FY20. Bannister is chairman of the Origination and Credit Committee, a member of the Executive Committee, Chairman of the Large Loan Sub-Committee and a member of the Asset and Liability Committee. His standing in the industry is confirmed by his recent repeat recognition in the MPA Mortgage Global 100, which honours the industry’s highest achievers across the US, Canada, Australia, New Zealand and the UK.

the broker industry through these changes and any future challenges, the non-bank recently hired 18 new credit analysts and has been working on new initiatives to be released later this year. “We would also like to take the opportunity to thank brokers for their ongoing support over many decades, but particularly over the past year. Together we have made a tangible difference to many,” Bannister says.

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*$4,000 cashback offer where the home loan amount is $750,000 or more and $3,000 cashback offer where the amount is less than $750,000, for new purchase and refinance applications submitted from 18 January 2021 to 30 April 2021 and settled by 31 July 2021. This offer is available to Australian residents aged 18 years and over who refinance or purchase a home with a new eligible home loan product under the following Eligibility Requirements: Home loan application must be submitted within the Promotional Period (point 1 above), Lending must be new to Citi (variations or refinances of existing Citi loans are excluded from this offer), Repayment type can be principal and interest; and/or interest only, Available on owner occupier and investor loans (excluding Construction loans, Company applicants and Trust applicants), Minimum refinance and or purchase home loan amount $350,000, Eligible Citi home loan products: Basic Variable, Standard Variable, Offset Variable and Fixed, Applications are subject to credit approval. Only one cashback offer per eligible home loan capped to one cashback offer per applicant. Where a home loan has more than one applicant and one applicant receives the cashback, all applicants are deemed to have received the cashback offer. Citi reserves the right to verify, validate and disqualify any Eligible Customer if the customer is engaged in any unlawful or other conduct deemed inappropriate by Citi, that jeopardise the fair and proper conduct of the Promotion. Provided these Conditions including Eligibility Requirements are met, Eligible Customers will receive the cashback amount transferred electronically into their new variable loan account, or where fully fixed into their nominated direct debit account, for applications settled: by 30 April 2021 payment after 10 May 2021; by 31 May 2021 payment after 10 June 2021; by 30 June 2021 payment after 10 July 2021; and, by 31 July 2021 payment after 10 August 2021. This offer is not available in conjunction with any other promotion, and Citi reserves the right to vary or withdraw these Conditions at any time.

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INDUSTRY ROUNDTABLE

NON-MAJOR BANKS

CONSISTENCY IS KEY

AFTER A year of virtual events, meetings and interviews, MPA was at last able to hold an in-person roundtable in mid-March, featuring a panel of non-major banks. Five representatives of the non-majors and two mortgage brokers came together for a discussion of the most important topics impacting the broker industry right now. Questions covered the poor turnaround times brokers have experienced over the past year, the introduction of the best interests duty, the relationship between the

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non-majors and the third party channel, and how this lender group supported brokers and borrowers during COVID-19. While a few of the 2021 panellists are regular members of the annual roundtable, there were some new additions this year. Kathy Cummings has joined these discussions before, but this was her first time representing the Bank of Queensland; Gofran Chowdhury was a last-minute replacement for Citi, and this was Troy Fedder’s first panel as the new head of third party at Suncorp.

Glenn Gibson from ING and Ian Rakhit from Bankwest rounded out the five nonmajor bank representatives. This year the banks were joined by Craig Forman, mortgage broker and director at CANE Financial, and Darren Little, mortgage broker and CEO at Smartmove. Having two mortgage brokers on the panel provided an interesting insight into how the industry had responded to the non-major banks over the past year, and it also encouraged a level of accountability from the banks.

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At MPA’s first in-person roundtable since March 2020, after a year in which brokers and customers needed more support than ever before, the non-major banks discussed what they had done to cement themselves as strong partners to the broker industry

The brokers were open about having to stop using particular banks over the past year, and the struggles they had encountered. Thankfully, they seemed very pleased with their relationship with the non-majors and the work these lenders had done to support their borrowers. Turnaround times was unsurprisingly the biggest conversation point of the day, with SLA times blowing out considerably throughout 2020 as interest rates dropped to an all-time low, the government released

several loan schemes and incentives to support borrowers, and banks offered cashback deals to entice new customers. Both brokers talked about the long wait times they had had to face and how this was going to impact them under the best interests duty that was implemented in January. In response, MPA asked the banks about their own experiences in this area and how they had worked to overcome these challenges. Naturally, the conversation also turned to the topic of technology and the introduction

of new systems and processes that were intended to help speed things up. Read the full report over the following pages on what the non-major banks and brokers had to say about the challenges and positives of the past 12 months. MPA would like to thank all of the panellists for taking time out of their busy schedules to be part of this important discussion. The next MPA roundtable will feature a panel of aggregators. Look out for a comprehensive report in the June issue.

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INDUSTRY ROUNDTABLE

NON-MAJOR BANKS THE PANELLISTS

Gofran Chowdhury Head of banking and wealth Citi

Kathy Cummings General manager, broker Bank of Queensland

Troy Fedder Head of broker partnerships Suncorp

Glenn Gibson Interim head of retail bank ING

Ian Rakhit General manager, third party Bankwest

BROKERS

Craig Forman CANE Financial

Why have the non-major banks been such a strong proposition over the last year? The strength of the relationship between brokers and the non-major banks over the last year is evident from the results of MPA’s latest Brokers on Banks survey. Non-majors led the way, while the major banks fell down in the rankings as their service levels blew out in their efforts to deal with their increased workload. Joining the panel from Bank of Queensland, Kathy Cummings, general manager, broker, said there had been a “perfect storm” that helped the non-majors become such a valuable offering. It started with the royal commission and subsequent regulatory changes. “All of the aggregators and brokers started to become aware, and think about the way they approached their businesses, and the dominance of the majors suddenly was a bit of an issue,” she said.

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Darren Little Smartmove

“Then you had COVID-19, and they’re all out competing against each other with discounts and the rest of it, but it created a volume spike. So, I think everybody started to look for another alternative apart from just the majors.”

majors to re-evaluate their own businesses, he explained. Rakhit added that brokers were Bankwest’s main distribution channel. Over the years, as the bank has closed branches, it has invested in the broker channel, he said.

“It’s proactive engagement [that’s needed], but the ability to answer questions immediately on the spot and brokers not having to wait, it’s a powerful proposition” Glenn Gibson, ING Bankwest’s general manager, third party, Ian Rakhit, said he thought the value proposition of the non-majors was the competition they provided. When the major banks made changes, whether to prices, credit policies or other aspects of their operations, it forced the non-

“Even then somebody else comes in and trumps you with some proposition, or pushes you to re-examine your credit policy,” Rakhit said. “That’s why I think we win collectively. I think that’s why brokers win, because we’re here for competition and we can’t bank every customer. So we bank the

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INDUSTRY ROUNDTABLE

NON-MAJOR BANKS

ones that we’re able to; we try and do it efficiently with the right staff and everything else. So, I think we’ve got a lot to be very proud of in terms of our offer.” Suncorp also uses the third party channel as its main source of distribution, said the bank’s head of broker partnerships, Troy Fedder. Brokers account for three quarters of all its home loans, and he believes there is absolute alignment between the non-major banks and brokers. Fedder said Suncorp had been making sure the bank prioritised brokers’ needs over the past year. “We fight hard; we have to earn the right for the business. I think that that hopefully is the perception of all non-majors. There is that desire to grow and desire to really be better for our brokers and our customers,” he said. While growth in the non-major market is important, Citi’s head of banking and wealth management distribution Gofran Chowdhury said the non-majors had not “opened the floodgates” like the major banks. Citi focuses on being consistent for brokers, he said. The bank no longer has any retail branches, so brokers make up the majority of its distribution. “They’re our business partners, and for us to support them we need to have consistency,” Chowdhury said. “Because if we chase rates, customers will leave each time there’s

BROKER QUESTION

Q

In your bank’s five-year business strategy, how do you plan to be supporting brokers in 2025?

Kathy Cummings, BOQ: At BOQ we’ll continue to push towards better efficiency, faster turnaround times, better customer outcomes, and keep giving the fire to the majors so they know we’re here. At BOQ we’re also embarking on the digital platforms, giving more tools to brokers and customers. Troy Fedder, Suncorp: I see 2025 as even brighter than 2021. We see a positive trajectory for brokers to continue to take quite a lot of the share of the total home loan market. At Suncorp, it’s around how do we invest to make sure we support the broker proposition, whereas others might have a digitisation view that may take away from brokers. We would support digitisation that just makes it better and easier for brokers. Glenn Gibson, ING: From an ING perspective, we realised the future is self-serviceassisted or face-to-face. And our choice is brokers will be our face-to-face. Gofran Chowdhury, Citi: I think in 2025 we also want to acknowledge that technology is the ticket to the game. Without technology, you will not have business. We’re very fortunate because we don’t want to invest in the direct channel, so the broker channel is the channel we seek to prosper for the next five years. I think the biggest thing we see is, for complex things you would still go to a person, and for us that person will always be the broker. The simpler things are gathering information, and that’s where digitisation should play a big part. Ian Rakhit, Bankwest: Bankwest and brokers together have worked hard to build that relationship, and I would expect to maintain a strong reputation with brokers for as long as we remain genuinely committed to listening, understanding and working with them to address their needs. We want to be known as the best broker bank in the country, and we can only achieve that by working closely and collaboratively with brokers to deliver the services, tools and support they want and need, to make their jobs and dealing with us as easy as possible.

“Brokers are our business partners, and for us to support them we need to have consistency. Because if we chase rates, customers will leave each time there’s a new offer” Gofran Chowdhury, Citi a new offer to get the best rate, so it needs to be something more.” Agreeing that consistency is important, ING’s interim head of retail bank, Glenn Gibson, said he felt the non-majors had showed a level of maturity over the past year that he had not seen before. While other

18

banks went out with offers and marketleading rates, the non-major banks held back and had confidence in their service levels. “Brokers have always wanted consistency: consistency of answers, of price and in particular service,” Gibson said. One of two mortgage brokers joining the

roundtable, CANE Financial director Craig Forman said there were huge opportunities for the non-majors now that brokers were writing up to 60% of all home loans. Non-major banks don’t have the branch presence of the majors, but as broker market share goes up, this supports the non-major banks’ distribution. And brokers are willing to help the nonmajors, he said. Forman praised the way the non-majors had worked over the past year. “Your turnaround times are sensational compared to the majors,” he said. “The rates are good and competitive. The BDMs, while they don’t necessarily have the brand aware-

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“Your turnaround times are sensational compared to the majors. The rates are good and competitive. The BDMs are ... much more tenacious” Craig Forman, CANE Financial ness that their major bank counterparts do, are often much more tenacious. I love the fact that they’re out there to try and get your business.” The second broker on the panel, Darren Little from Smartmove, said the last year had brought about some great offers for customers, but the journey to get them was too long. This was where the consistency of the non-major banks’ made a “real difference”. “You’ve held a really consistent experience,” Little told the non-majors. “You’re not the sharpest in the market-

place from a rate perspective, but it’s the customer experience. We’ve got to place our customers where they’re going to get an amazing experience, so then they will refer the next customer.”

Why is it important under the best interests duty to have a strong non-major bank proposition? As the conversation turned to customer experience and turnaround times, Suncorp’s Fedder raised the question of what the nonmajors offered brokers under the new best interests duty.

Little said that with the new regulation it was important to have a conversation with the customer about their requirements. Where customers needed good experience and quick turnaround times, that was where the non-major banks came in. “I think the days of bumping 60 to 70% of your business through a bank is not a reasonable thing under best interest,” he added. “That’s where I really see the people around this table. I think there’s a really massive opportunity if you get your service right and your credit. You’re not going to have your time in the sun all year round, but there’s certain times of the year you’re absolutely in the game and it’s fantastic.” Reflecting on his experience of lodging deals over the last year, Forman added that there was at least one major bank in particular that he could not do business with. For him, turnaround times were essential. “Two of our biggest three lenders are

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INDUSTRY ROUNDTABLE

NON-MAJOR BANKS BROKER QUESTION

Q

What is your view on turnaround times for brokers versus going direct to bank branches?

Troy Fedder, Suncorp: Suncorp doesn’t differentiate service level between direct and broker. That’s a consistent policy. When you take a customer view, it’s very hard to argue that you should provide a differentiated service. Our credit policies are the same, and our pricing is the same, so there’s just consistencies across the board that minimise channel conflict almost completely for us. Ian Rakhit, Bankwest: We have no differences. First party, third party, same price, same product, same back-end processing, and long may it continue. Kathy Cummings, BOQ: I think it’s pretty much the same. There are some things you can probably get done a bit quicker in a branch in one of the franchise locations. Other than that, it’s exactly the same: same processing, same credit teams, same everything. We’ve actually introduced and signed protocol documents to eliminate channel conflict. I’m always a very strong advocate of ‘the customer chooses’.

“You’ve got all the aggregators saying to us they really want that competition from the non-majors. Now is our time” Kathy Cummings, Bank of Queensland actually in the room today, which is amazing for us,” Forman said. “We are very well positioned to deal in the non-major market. Turnaround times has become our biggest requirement. Rates can change, but clients settling on time is our biggest priority.”

Turnaround times are the most pressing issue for brokers this year, according to MPA’s latest survey: 90% said they had worsened over 2020. What challenges have you faced, and how have you dealt with them? As discussed in the first part of the roundtable, turnaround times have been a major

pain point for brokers and a huge focus for the banks. Asked what the non-majors’ experiences were like in this area over the past year, Rakhit admitted that Bankwest had faced some challenges. This was in part due to the grants offered in 2020 for construction, a sector in which Bankwest is quite a strong player. He said Bankwest had considered how to navigate the increase in demand with the uncertainties of COVID-19. It chose not to recruit, but instead threw its existing resources into its challenges. “We had BDMs working seven days a week because we knew: put all the efforts in now, help us get all the docs on the deal, help us get everything right, and we’ll get over

Gofran Chowdhury, Citi: Our approach to managing conflict is not to have another conflict. The only channel we have is the broker, and so that’s the best way to manage the conflict: let’s not have one. Glenn Gibson, ING: Exactly the same. It also helps in my world that in my role I’m responsible for brokers and the direct channel. It’s very hard to have a conflict with yourself.

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INDUSTRY ROUNDTABLE

NON-MAJOR BANKS

the hump, and thankfully we did. We didn’t miss a single settlement,” Rakhit said. Once those initial challenges were behind it, Bankwest began recruiting again in February to ensure it had a strong processing team. It is also focusing on valuations and looking at how it assesses documents. “We are document-heavy and are very thorough in our responsible lending commitments, which we know can be burdensome in some instances but is also important to ensuring the financial wellbeing of customers,” Rakhit said. “We’re always looking at how we can simplify the lending process for brokers and customers, while balancing this need with our commitment to lend responsibly.” The loan processing team is also an important part of BOQ’s proposition. Cummings said the bank has processing teams in Sydney, Brisbane and Perth, which has given it the ability to manage demand and keep

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turnaround times low. “It forced all of us to realise the opportunity, grab hold of it and start investing back into the business,” she explained. “That’s what has happened, and you’ve got

banks could pull to improve their time to decision: increase resourcing or improve processes. Suncorp recruited more staff at the end of 2020 and is also looking at ways that it can use data and automation to

“You’ve held a really consistent experience ... We’ve got to place our customers where they’re going to get an amazing experience, so then they will refer the next customer” Darren Little, Smartmove all the aggregators saying to us they really want that competition from the non-majors. Now is our time.” Fedder said he agreed and saw a real desire for the non-major banks to grow. He believed there were two levers that

improve turnaround times. The bank introduced Easy Refinance in December, which allowed customers to refinance with minimal documentation, using existing credit information. “That richer access to data, I think that’s

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INDUSTRY ROUNDTABLE

NON-MAJOR BANKS BROKERS’ EXPERIENCE

Q

Have turnaround times improved or worsened over the last year?

Response

%

Improved significantly

1.56%

Improved

5.73%

No difference

2.08%

Worsened

19.79%

Worsened significantly

70.83% Source: MPA Brokers on Banks 2021

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an interesting opportunity there, because it allows an improved customer outcome, improved broker outcome, improved time to decision,” he said. “The word ‘consistency’ keeps getting used today, and we know in the best interest duty it remains a critical component. Non-majors should have an advantage to be more nimble and to move faster in this area than some bigger players.” Being nimble can be a challenge, however. Chowdhury said Citi had found it quite difficult as a global bank to be nimble, but the bank had partnered with fintechs, and with innovations like open banking and finance apps, he was optimistic about its future. Like the other banks, Citi has also focused on increasing its head count and investing in

its processes, Chowdhury said. “The other thing which we also saw was there was a lot of competition in attracting talent to the organisation. We know the quality of our BDM and mortgages team is one of the key benefits of working with Citi, so we made sure to focus on retention, and ensure Citi is competitive so we keep our high-performing team.”

Why do you think brokers have such a strong value proposition? Reflecting on the last year, Fedder said one of the positives that came out of the uncertainty caused by COVID-19 was the value that brokers provided, particularly in refinancing. As Australians spent more money on their homes last year and sought to take up one of the many offers on the market, brokers were ready and able to support them. “There have been trigger points that we’ve seen in the last year that have prompted customers to seek where the best home loan is,” Fedder said. “One of the observations for me is we’ve probably never seen the broker proposition more valuable than in the last year. What an incredible example of where we’ve had customer needs looked after in the last year through refinancing and the better outcomes we’re seeing as well.” On the broker side, Little said he had spent much of the last year on the phone to customers. In the first week when the restrictions hit, his team made 652 calls. Those efforts at the start of the year to work on those relationships paid off down the line when referrals began coming in. “I’m really proud now to see where our customer base is with repayments,” Little said. “It was more about, how do we get this deal through and keep in contact with them. I look at the banks and you guys have helped dramatically with that.” Forman said that for his business it was all about reassurance. The team at CANE Financial looked through their backbook to see how they could help customers, and that often meant helping them realise that the

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INCREASING TURNAROUND TIMES

“I think it was the Friday to the following Thursday and then all the banks said, right here is our deferral program. If it wasn’t for brokers at that time, it could have been quite different.”

Lender turnaround times by quarter*

Turnaround time to unconditional approval

How has your relationship with brokers been over the past 12 months as things have changed?

30 25.2 23.9

25 22.5 21.0

Days

21.2 20.4

20

19.6

19.7

20.1

22.7

19.8 18.8

16.3

15 FY18 Q2 FY18 Q3 FY18 Q4 FY19 Q1 FY19 Q2 FY19 Q3 FY19 Q4 FY20 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY21 Q1 FY21 Q1 * based on the average number of days from submission of the loan application by the broker to the lender providing formal approval Source: AFG Index, January 2021

offers on the table were not always what they seemed. “A lot of them coming for rebates actually realised that by staying with their existing bank, and by us getting price discretion for them, they were getting a better deal than the rebates being offered anyway,” he said. That building of relationships and spending time on the phone is something that Gibson praised. He said that when COVID-19 hit, everybody focused on caring for others. ING BDMs began a call program that was about nothing more than calling brokers and asking them how they were. He said he had also seen brokers do the same thing with their customers. While many brokers had always worked that way, he saw more of this last year. “It was a big shift, because, when you think about it, it’s very transactional what

As restrictions were implemented across Australia, the usually face-to-face way of working with mortgage brokers had to change, and the industry began learning to do things differently. Cummings said that BOQ, like all the other banks, had to switch to a virtual business. “If we didn’t work with them virtually, we didn’t work with them at all, particularly Melbourne; they spent more time in lockdown than they did out,” she said. “You had to come up with a way for everybody to work virtually, and we found that the productivity levels just went through the roof actually.” The banks began running virtual events like PD days and webinars, but also events that were a little more light-hearted. Citi ran virtual cupcake nights, champagne and caviar nights, cheese and wine nights, etc. “We saw a lot of brokers do the same thing.

“Our industry is full of sole operators, and we’ve got a duty to look after them. Just because everybody’s coming back to the office, it’s not over” Ian Rakhit, Bankwest we do,” Gibson said. “A lot of the good brokers already do it as a relationship. But I think last year, a lot more brokers moved into building those relationships.” Rakhit also praised brokers for the way they worked last year, saying that as banks ironed out their deferral processes it was brokers who took the calls. “That was critical because that helps our switchboards,” he explained.

They were talking on LinkedIn, reassuring clients, and also not just looking at property but giving them more assurance around our economy,” Chowdhury said. “At one of the events we hosted we brought one of our investment strategists to present to brokers and their clients. That let us both help brokers and go beyond to look at their clients and help answer some of their questions too.” Beyond supporting simple communication

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INDUSTRY ROUNDTABLE

NON-MAJOR BANKS NON-MAJORS’ MARKET SHARE BY STATE

28.63%

48.39% Northern Territory

Queensland 51.61%

71.37%

Major

34.78%

31.20%

Non-major

45.02% Western Australia

New South Wales

65.22%

54.98%

37.33% South Australia

Victoria

68.80%

62.67% Source: AFG Index, January 2021

between non-major banks and brokers, Gibson said COVID-19 had also provided them with an opportunity to help brokers in other ways. For years brokers had asked about things like electronic signatures and other digital tools to make things easier. Now, the banks were almost forced to adopt them. “All of a sudden we had the green light to deliver on initiatives to interact with our brokers and customers the way they want to. I think that moved, and it won’t move back,” Gibson said. Broker support was also ramped up as a consequence of BDMs not being on the road as much. Gibson said that instead of BDMs doing 15 calls a week, they could do 15 a day, because they didn’t have to travel. Now it was up to the banks to work out what was the optimal solution going forward. “That service model fundamentally changed last year, so it’s now going to be a case of what’s the right mix going forward,” Gibson added. “It’s proactive engagement which is absolutely needed, but the ability to answer questions immediately on the spot and brokers not having to wait, it’s a powerful proposition.” Picking up on the topic of BDMs, Rakhit

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said a lot of BDMs had struggled over the last year with being stuck in front of a computer. While their interactions may have increased, being on the phone wasn’t the same as being there in person. To support its BDM teams as well as brokers who were going through the same

Fedder agreed that the mental health challenges had been “very real” for a lot of people. Suncorp had done some work over the past year in terms of mental health programs, and Fedder praised aggregator groups and lenders for the important role they had played over the past year.

“We’ve probably never seen the broker proposition more valuable than in the last year. What an incredible example of where we’ve had customer needs looked after” Troy Fedder, Suncorp thing, Bankwest diverted a lot of its resources towards mental health. “There’s still a concern for me just generally in the industry, with BDMs and brokers and how people are feeling after this,” Rakhit said. “If you’re in a big office and you’ve started to bring them back in, that’s great. But our industry is full of sole operators, and we’ve got a duty to look after them. Just because everybody’s coming back to the office, it’s not over.”

“Collectively at the table there were a number of programs that supported industry mental health,” he said. “Whilst there was pleasingly continued good business outcomes in terms of activity and flows, I think one of the biggest learnings was how the industry got together in a different environment, largely to support each other. That’s a good reflection of the industry as well.”

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FEATURES

PROPERTY INVESTORS

Navigating the complex market for investors For those looking to invest in property, the past 12 months have been somewhat of an uneasy road: the impact of the pandemic on demand and rents prompted a lot more caution in this segment. But with the return of strong growth towards the end of 2020, the future looks bright for brokers looking to assist investors WHILE THE uncertainties of 2020 saw a massive drop in lending to investors last May, it was short-lived, and the value of loans to investors continued to rise throughout the rest of the year. January 2021 saw more than $6.6bn in investor loans settled, the highest value since 2018. Due to the high levels of owner-occupier lending, however, the market share of new loans to investors has dropped. Bluestone’s chief customer officer, James Angus, says investment has declined to just 25% of all lending due to COVID-19’s impact on vacancy rates and rents, down from 40% at the start of 2020. “COVID has certainly impacted the investment market, and there have been some significant changes for investors,” Angus says. Bluestone has reduced its investment loading to 0.15% from 0.50%, increased its LVR to 85% on fully verified investment loans paying principal and interest on prime and near prime loans, and removed its cap of

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four investment properties per customer. Angus adds that “many lenders have become more cautious. Rental income has been reduced, and lenders are more selective

they have the capacity to do so, with some taking advantage of loan deferrals that enable them to extend support to tenants. “The past 12 months have resulted in

“Given Australians’ historical cultural attachment to investing in bricks and mortar, it is likely many will again consider investing in the housing market” Aaron Milburn, Pepper Money about locations due to rising vacancy rates and falling rents, etc”. Explaining the investment lending figures seen over the last year, Bankwest’s general manager of home buying, Peter Bouhlas, says momentum has started to build as economic conditions improve and consumer confidence returns. He says there’s been a general trend of investors retaining their existing assets where

general uncertainty across the world, and it’s not clear as to when life might resemble ‘normal’,” Bouhlas says. “That uncertainty impacted the financial and property markets and also affected consumer confidence, which in turn disrupted the property investor segment. However, there have also been positive influences on the market, such as federal and

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state government initiatives, and historically low interest rates leading to consumer confidence rebounding.” Pepper Money’s Aaron Milburn points to regulatory intervention, tightening lending criteria and uncertainty around possible taxation changes as impacting the investor market in 2020. But there are positive signs, he says, and the non-bank is working to assist property investors by offering 24-hour loan assessments, full-doc and alt-doc options for income verification, and a cascading credit policy to assist a wider range of customers. “Most of the activity in the past 12 months has focused on the owner-occupied space, particularly first home buyers, given the lower interest rates and government incentives on offer,” Milburn says. “Investors are starting to come back to

the market now that there is more certainty in the economic outlook and for job prospects across the wider market.”

Rates aren’t everything for investors As a newer bank to the home loan market, 86 400 has seen a “great response” to its offerings since its launch into lending in November 2019. The fintech provides 100% paperless home loan applications, with rates from 2.39% for a two-year fixed principal and interest investment loan. But rates aren’t everything, says national manager of broker distribution George Srbinovski. While customers have been flocking to the market for all-time-low rates, investors are also looking for quality service, particularly post-settlement. 86 400 offers an app that allows customers

to connect multiple external bank accounts in order to get better visibility of their money. “Investors might have multiple home loans in financial institutions, multiple accounts in different financial institutions, so showing them where all their money is going from all their accounts in one place helps them feel more in control,” Srbinovski says. In terms of returns, the reduced demand for rental properties in cities like Sydney and Melbourne has resulted in a drop in yields in areas where there were already concerns about a potential oversupply of high-risk unit developments. Mortgage insurance provider Genworth has seen its new business in investment loans trending down, while owner-occupier properties have remained strong. Genworth has also found that it’s not just experienced investors who are in the market

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FEATURES

PROPERTY INVESTORS

INVESTOR SENTIMENT POSITIVE AMID COVID-19 In August 2020…

67%

of investors believed it was a good time to invest

8%

of investors applied for a mortgage payment pause

22%

of investors were considering regional markets

“Our support model ensures we’re there when and where brokers need us, whether their customer is an investor or owner-occupier” Ian Rakhit, Bankwest for property; it has seen growth in the number of first home buyers purchasing investment properties. According to the Genworth First Home Buyer Report 2020, 12.5% of first home buyers entered the market with an investment property. “With increasing house prices and the challenge of saving a deposit, an investment property provides the opportunity to enter the property market and start growing financial wealth,” says CEO and managing director Pauline Blight-Johnston.

Ongoing challenges continue Despite the growth seen in the investment market, there are still factors that are impacting and will continue to impact investors. For example, Angus says the biggest risks to property investors are the increasing vacancy rates and falling rents.

30

While there is more certainty in 2021 than there was in 2020, many of the impacts are still being felt, and it is still not clear when things will return to ‘normal’. “People’s housing preferences and needs have changed because of COVID, and with flexible working becoming more prevalent, a lot of people are choosing to live away from traditionally strong rental markets. Because of this, rents are falling across most capital cities and particularly in the inner-city unit markets,” Angus says. Understanding the uncertainty, Bouhlas says the last 12 months have highlighted the fallacy of attempting to anticipate the future. He adds that while it is unclear when the impacts of 2020 will become more predictable, Bankwest remains “cautiously optimistic” about continued economic recovery. “Stimulus packages and cashback initiatives

36%

said Queensland offered the best prospects

17%

said COVID-19 made them consider moving to a new location Source: PIPA Annual Investor Sentiment Survey 2020

from the federal and state governments, historically low interest rates and rebounding consumer confidence are all positive signs for the year ahead,” he says. “The evolving state of the global pandemic could also present variables that impact the property market, such as vaccine rollouts and the opening of borders resulting in migration and Australians returning from abroad, which could drive demand.” Milburn agrees that property investors need to look out for risks associated with the ongoing fallout from COVID-19 and the oversupply of apartments. He says rental yields and the opportunity for capital growth are other things to consider. But he also remains positive about the future and says the recovery of investor demand is likely to build momentum over the course of 2021.

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FEATURES

PROPERTY INVESTORS

“The economics for property investing is stronger in light of record-low interest rates, rising capital values and improved rental growth prospects,” Milburn says. “Given Australians’ historical cultural attachment to investing in bricks and mortar, it is likely many will again consider investing in the housing market.”

Getting advice from the right people “Investments are complex,” says Srbinovski. On top of all the risks associated with vacancy rates and rental yields, there are so many lending options for property investors. Srbinovksi says that like with investing in anything, there is always a certain amount of potential risk, and it needs to be calculated and understood before making a decision. Mortgage brokers can help their customers talk through their investment plan and find the right solution. “It’s a really busy market with lots of options out there; a lot of banks, big and small, have a lot of products to cater for a wide range of investors. So, getting to know your customers and their situation is most important before giving recommendations on property investment,” he says. Agreeing that there are many strategies out there for borrowers, Blight-Johnston says no one single strategy is perfectly suited to meeting everyone’s needs. Choosing the right strategy will depend on income, deposit, life stage, time availability, skill and attitude to risk, among other factors. She says that before investing in property, or adding another property to a portfolio, investors must understand what they can afford, the deposit required, and balance the projected income and long-term financial benefits. They must also learn about the tools that can be used to help them purchase a property, like lenders mortgage insurance. “It is important that investors are aware of the options available to them that can help

32

INVESTMENT LOANS STAY STRONG Despite May 2020 recording the lowest value of investor loans since 2002, a total of more than $29bn in investor loans were written in the first six months of 2020.

40 35

$39.7bn $34.4bn

30

$28.8bn

25

$31.1bn

$31.8bn $29.1bn

20 15 10 5 0

Jan–June 2018

July–Dec 2018

Jan–June 2019

July–Dec 2019

Jan–June 2020

July–Dec 2020 Source: ABS Lending Indicators

“Getting to know your customers and their situation is most important before giving recommendations on property investment” George Srbinovski, 86 400 them to improve their financial situation,” Blight-Johnston says. “A broker can save an investor significant time, effort and stress as they guide an investor through the property buying journey.”

In the best interests of investors Working with brokers to help borrowers, Bluestone has focused on its broker support and turnaround times. Angus says the group has hired six new BDMs in the last few months to boost its service levels further and is currently at one-day turnaround times for new

applications. “And I challenge any organisation to beat an average phone wait time of nine seconds for broker support,” he adds. Brokers with property investor clients should understand that “to invest well takes careful planning”, Angus says, adding that it’s important to make sure investors have met with a qualified professional to determine the best investment approach for their personal long-term goals. Brokers also have the best interests duty to bear in mind too. “To consider the best interests duty, brokers need to gather adequate

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FEATURES

PROPERTY INVESTORS

MAJORITY FEEL CONFIDENT ABOUT INVESTING Do you believe now is a good time to invest in residential property?

21% No

67% Yes

12% Unsure

Source: PIPA Annual Investor Sentiment Survey 2020

“COVID has certainly impacted the investment market, and there have been some significant changes for investors” James Angus, Bluestone information about their clients’ investment needs and know enough about each lender they are accredited with so that they can determine whether or not that lender is a good match for their investor clients,” Angus says. Explaining how Bankwest is supporting brokers, general manager of third party Ian Rakhit says the bank offers a digital process allowing customers to sign their contracts digitally from any device. Its time to settlement has reduced from about 13 days to less than seven working days for new loans and 24 hours for increases to existing loans. In response to the active housing market and high refinancing levels, Bankwest also increased the number of staff in its processing team, while adding an initial review as applications land to advise brokers of outstanding information required. Bankwest offers the ability to lend where there are four securities on one title and also

34

offers three-year and five-year interest-only terms for construction. These policies are in place to support brokers and their investor customers, and the bank also prides itself on its relationships. “Developing and maintaining strong relationships with brokers has always been central to our broker model, and that is reflected in our BDM and BSM support teams and our case-ownership model, which ensures a single point of contact for brokers for all applications,” Rakhit explains. “That familiarity with each application is important, because every customer comes to a broker with their own unique needs, and our support model ensures we’re there when and where brokers need us, whether their customer is an investor or owner-occupier.” In terms of the conversations brokers should be having with their customers, Milburn reminds brokers that BID applies equally to those who are buying a home,

refinancing an existing property, or looking to invest. “If investors will be relying on the rental income to manage loan repayments, then a broker should be discussing how to build up a buffer, have contingency plans in place or renter’s insurance in the event their income source ceases for a period of time, or a shortfall arises,” he says. “A broker could also provide timely information on the extra costs associated with managing an investment property so that the customer is prepared, and knows they can afford the ongoing commitments.”

Going beyond a good interest rate Providing a new home loan offering that is still growing, 86 400 has also focused heavily on ensuring fast turnaround times. Srbinovksi says the bank knows how important that is to brokers, and impressing them with its service is crucial. He advises brokers dealing with property investors that they should ensure they have a good understanding of how the loans work and about the long-term goals of their clients. Coming back to the best interests duty, while price is often a really important factor for a lot of customers, Srbinovksi reminds brokers that it is not always the biggest factor.

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FEATURES

PROPERTY INVESTORS

BIGGEST CONCERNS FOR PROPERTY INVESTORS

29%

Gaining access to lending

18%

Australian economic conditions

12%

Job security

9%

COVID-19

9%

A big correction in property prices

9%

Long periods of rental vacancies

7%

Falling rental yields Source: PIPA Annual Investor Sentiment Survey 2020

36

“A broker can save an investor significant time, effort and stress as they guide them through the property buying journey” Pauline Blight-Johnston, Genworth “Financial situations for investors are generally a lot more complex, so they need to consider a broader financial strategy in becoming a property investor,” Srbinovski explains. “That could mean a conversation with their financial adviser or accountant to help understand the whole financial picture to get a result which works in the customer’s best interest. ‘So, it’s going beyond just having a chat with the customer and getting a good understanding of the entire picture.” When it comes to LMI, Genworth has a comprehensive program to support its broker network, offering training and education for brokers so they can understand how LMI works and where it might be applicable. While many associate LMI with helping first home buyers onto the property ladder by reducing the deposit needed, it is also an incredibly important tool for investors.

LMI offers a property investor the opportunity to buy their property with a deposit of just 10%, meaning they can enter the market sooner and borrow more to purchase a property in a good location where property values are rising beyond that. What’s more, it also allows investors to claim back the cost of the insurance as an expense against the property and receive a tax deduction, as well as giving them the ability to save on upfront costs with the option to capitalise the LMI premium into the loan amount. “Brokers play an important role in providing guidance and key information to people who are looking to buy a home or invest in property,” Blight-Johnston says. “We work closely with our broker network to ensure they have the resources and assistance they need so they can advise their clients when lenders mortgage insurance may be appropriate for them.”

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FEATURES

WOMEN IN FINANCE

Closing gender gap a win for everyone A new report shows that women continue to be under-represented in financial broking, but industry awareness of the gender disparity is growing. MFAA executive coach Jane Counsel and Mortgage Choice CEO Susan Mitchell talk to MPA about the size of the issue, and the initiatives that are driving change

IN AN industry that’s about crunching the numbers, the numbers have been stacked against women brokers for some time. The level of female broker participation has been steadily slipping over the past few years, and 2020 marked a new low, with rates dropping below 27% for the first time. In the five years since the MFAA began collecting data for its Industry Intelligence Service report, the male–female recruitment split has slid from 65% male/35% female to 70%/30%. “This is a concern for the industry because retention is our biggest challenge for females,” says Jane Counsel, MFAA executive coach and diversity and inclusion consultant at Executive Central. The recently published edition of the report showed a welcome blip, with female recruitment hitting a three-year high during the pandemic in the period April to September 2020; however, concerns remain regarding the overall downward trend. Counsel was engaged to work with the MFAA to deliver its first member survey on diversity and inclusion. She was already an adviser on the MFAA’s Community Panel, which promotes

38

sustainability initiatives to members. The diversity survey identified a number of opportunities for MFAA members to create a more inclusive industry for women and to boost diversity. Its findings were published in the first Opportunities for Women (OFW) report in 2018. Since its inception, says Counsel, the OFW initiative had made a measurable impact by “shining light on the realities of the different

industry experiences of men and women”. While the OFW’s recently released third report reveals that the representation of women continues to fall, the good news is that recognition of the problem is growing. “Back in 2018, 72% of male respondents did not think women were under-represented in the industry; that has now fallen to just 50%, which is a great example of the increased awareness this initiative is creating in the

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ASPIRING TO CHANGE Mortgage Choice launched its Aspire program in 2020 to educate, empower and engage female talent across its broking and financial planning networks. Aspire aims to support women in reaching their goals and overcoming challenges by equipping them with invaluable tools and resources. In 2020, Aspire hosted two pivotal events: first, a series of in-person events pre-COVID, as part of International Women’s Day and hosted in each state, with more than 200 women attending nationally. The agenda included presentations and discussions on insights from the MFAA’s Women in Broking report and a peer panel discussion. Then in 2020 Aspire held a series of digital masterclasses with high-performance coach Kate McKenna, designed to equip participants with tools to build resilience, maintain energy, as well as empower and develop a high-performance mindset. Following Aspire’s creation, Mortgage Choice also became a founding member of Tilly Money (owned by Switzer Financial Group), a platform dedicated to enhancing women’s financial knowledge and skills.

industry around the issue,” says Counsel. While the OFW report shows the number of women recruited as brokers has dropped by about 20%, brokerage Mortgage Choice doesn’t see this reflected in employee statistics across its franchise network. However, that’s because there’s such a high percentage (80%) of women in administrative and marketing roles. It’s in broking that there’s a gap. “Just one in three (31%) of our loan writers are women, and one in four (26%) franchise owners,” says CEO Susan Mitchell. “To address these gaps, we are making significant endeavours to grow the number of women in broking and in business ownership. This is being driven especially through our Aspire initiative, which launched in 2020. I’d also add we are one of the few ASX-listed companies with a female CEO and chair.”

The stress factor So, why are women so woefully lacking in the sector – and why, when they are hired, are they not staying on as brokers? Counsel points to the fact that women still carry the burden of childcare – only made worse during the pandemic. “There has been a lot of research done that demonstrates women’s workloads at home increased

during COVID, and they are continuing to carry the burden at home,” she says. On top of this societal factor, the need for additional compliance following the banking royal commission has only increased the complexity and workload of brokers, says Counsel. Mitchell says it’s important to note that the total broker population has decreased year-onyear, so it’s not only women who are leaving,

decreasing earnings have also played a role. This is backed up by the OFW survey, which found that the combination of a growing workload due to increased compliance post the royal commission and the challenge of being primary carers was fuelling the female exodus. There was also a perceived ‘boys’ club’ element in broking.

Finding solutions Counsel sees support mechanisms as crucial to making broking a viable and attractive career choice. “It is something the MFAA is supporting through initiatives such as our peer-to-peer support program, the work-life balance e-book we are developing, and investigations into developing a pathways program into the industry which will help attract more female brokers,” she says. “As an industry we need to move beyond just talking about the challenges women face and start to collaborate on more innovative solutions around retention.” One such solution would be to hear from experienced and successful women about how they navigated the challenges, Counsel says.

“Women are a major customer segment. If we don’t have representation of women as brokers, how can we truly say we understand their needs?” Jane Counsel, MFAA although recently the proportion of women leaving the industry has been higher than the number of men. She believes several factors are causing the decline: women’s increased responsibility as primary child carers; their desire to step back from full-time jobs and/or business ownership; retirement; and the stress of the job – something both men and women have highlighted. Increased regulation and compliance and

Industry leaders can also make an important contribution to closing the gender gap, she points out, by showing zero tolerance of non-inclusive behaviours and calling them out. Other steps would be greater innovation in female recruitment, more guidance and support to help women navigate common challenges around balancing family and career, and working to “make this industry inclusive to everyone, particularly in how we

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FEATURES

WOMEN IN FINANCE

hold industry events and in the diversity of the role models we promote as successful”. Mitchell says industry leaders can help by underlining the business potential of broking over the next decade. “Booming property markets, more diverse customer bases, stronger process automation and more efficient compliance are just some starting points to the conversation,” she says. It is also vital to send the message that mortgage broking is an industry that progressively tackles its issues. “The industry must communicate both internally and externally that it is not a boys’ club, and there is equal opportunity for women to reach the highest levels.”

From broker to business owner Mitchell believes the industry needs to provide women with the right guidance to transition into broking careers and make the leap into business ownership. She says Mortgage Choice is having some success

DIVERSITY AT ANZ Having women in the workforce is about more than just gender equality for major bank ANZ; it is about accessing the talent, markets and economic opportunity that gender equality brings. “It makes sense for our workforce to reflect the communities we serve,” says general manager of retail broker Simone Tilley. “This will help us unlock opportunities through better serving our communities and female customers.” ANZ has developed programs such as Notable Women and Employee Networks that are aimed at building confidence within its female workforce. It also maintains a number of partnerships to support gender balance. Tilley knows it is important to encourage and support women not just at the bank but also in broking. ANZ’s Doyenne Program creates a platform for female brokers to lift representation of women in the media. Its education program includes new-to-industry training for recruits, as well as ongoing training tailored to supporting women brokers across the life cycle as they develop in their career. “Mortgage broking can be a rewarding career as evidenced by many successful female brokers in the industry,” Tilley says. “Through a number of targeted initiatives such as Industry Influencers, Champions of Diversity and ANZ’s own Doyenne Program, the industry has raised the visibility of these successful female brokers. If we continue to focus on empowering and encouraging women who are already in the industry, this could boost the numbers.”

“The industry must communicate ... that it is not a boys’ club, and there is equal opportunity for women to reach the highest levels” Susan Mitchell, Mortgage Choice in this area: 33% of its new franchisees in 2021 are women – four percentage points above the current industry average for female recruitment. And as an employment choice, becoming a broker has a lot to commend it. While COVID-19 has massively impacted sectors that have traditionally attracted women, like service industries and tourism, the mortgage and finance sector is flourishing, which must surely prompt thoughts of a career change. OFW research has also shown that the lack of a gender pay gap in broking, along with the flexible hours it offers and the ability

40

to run your own business, are very appealing to women, says Counsel. Mitchell points out that while running a small business is hard work, there are considerable payoffs. “The best mortgage brokers are those that also see their role as financial educators,” she says. “They will help people make one of the largest, if not the largest, financial decisions of their lifetime – to buy their first home. Or it may be to help someone start on the property investment ladder, among many other scenarios. It can be an incredibly fulfilling career.”

The benefits of parity By boosting female participation, everybody wins, because the industry needs women if it is

to truly reflect its client base. “Women make up half of Australia’s population. It is important the mortgage broking industry takes steps to move closer to this ratio to better reflect the community it operates in,” Mitchell says. Market research consistently shows that women are either making or influencing the majority of financial decisions in households, Counsel adds. “They are a major customer segment. If we don’t have representation of women as brokers, how can we truly say we understand their needs and can build trusted and sustainable relationships with them as clients? For too long women have felt they are misunderstood and that they have been marketed at, not marketed to. This industry is missing a major growth opportunity if we continue to lose female brokers.”

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ANZ Financial Wellbeing

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FEATURES

ASSET FINANCE

Creating pathways to finance for SMEs Emerging this year with a renewed sense of business confidence, SME owners are looking ahead to growth and expansion opportunities. MPA talks to Westpac and Specialist Finance Group about how mortgage brokers can help

BUSINESSES ACROSS Australia struggled last year through restrictions and lockdowns, and as confidence fell, lending to businesses also declined. In April 2020, two thirds of SMEs reported a drop in revenue as around one in four either temporarily or permanently shut their doors, according to ACA Research’s COVID-19 SME Sentiment Tracker. The outlook improved much faster than many expected, however. Across most of the country, shops, pubs and other venues began opening their doors after just a couple of months, and confidence began to soar. While there were other sporadic outbreaks and Victoria in particular saw strict restrictions return, the SME Sentiment Tracker showed that almost half of SMEs were trading at pre-COVID levels. There has also been growth in the number of SMEs intending to hire, and a redirecting of funds away from help with cash flow towards growth initiatives, including investing in new plant and equipment. Banks and lenders are also experiencing increased demand. Greg Pell, Westpac Group’s national general manager, specialised lending and transactional banking, says while there is still some level of uncertainty out there,

42

businesses are ready to start growing again. Westpac Group has seen customers across mining, manufacturing, wholesale, transport and construction industries take advantage of record-low interest rates and incentives to invest in business equipment.

portfolio already comprises between 20% and 40% of self-employed customers, all of which will have an asset finance requirement at some point. “Whether it’s a car, truck, office equipment or machinery, these businesses can utilise asset

“The gap with many SME businesses is having this need [for asset finance] identified and the right pathways to bring the finance to them” Greg Pell, Westpac Group “The past 12 months have been extremely challenging, but our customers have shown resilience and the ability to adapt to the changing economic conditions,” Pell says. “Business confidence is high, with optimism evident in all the states and across many sectors. The economy has considerable momentum, with activity rebounding rapidly as restrictions are eased further, the vaccine is rolled out and a tailwind from policy stimulus.” As more businesses seek finance, the opportunities for mortgage brokers to expand their own offering grows. Pell says a broker’s

finance. The gap with many SME businesses is having this need identified and the right pathways to bring the finance to them,” Pell says. Offering asset finance is different to providing a home loan, however, and brokers need to be aware of that. The loan cycle spans days rather than weeks, and as the product is for business purposes it’s usually a less emotional purchase. Pell adds that an asset or piece of equipment is usually required as soon as possible to start generating an income. It’s not a completely different ball game, though. “The fundamentals of knowing your

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customer, understanding their business, and genuinely wanting to provide help is no different to what is required of a mortgage broker,” Pell says. The biggest pain points for brokers over the last year have been turnaround times and channel conflict, but he says Westpac has worked on a service that fully supports brokers. Its online origination platform enables brokers to quote, submit applications and generate loan documentation for their customers. The major bank has also recently reintroduced matrix lending policies as the economy strengthens post COVID-19, allowing for decision turnarounds of just hours from lodgement for eligible customers. It has dedicated teams to process and make decisions on asset finance applications. “Our business bankers understand the role of a broker and that customers can and will engage their services,” Pell says. “We certainly respect the customer’s choice to utilise the channel that best suits their business.” Technology has been crucial in not only speeding up turnaround times but making it easier for brokers to diversify. Specialist Finance Group gives brokers the ability to navigate asset finance products through its CRM SFGConnect and apply directly to lenders, in much the same way as they would apply for a home loan. At the same time, the group’s head of aggregation, Blake Buchanan, warns brokers against thinking that they need to be good at offering every type of product. “Diversification has been a buzzword in the industry for more than a decade now, and often this gets interpreted as brokers needing to be masters of residential, asset and commercial finance, among other things,” Buchanan says. “In practice, though, very few in the industry have had the capacity to be experts in all of these fields simultaneously.”

WHY SMES NEED FINANCE Purpose of SME finance needs, Aug 2020–Feb 2021* August

September

October

November

December

February

*No survey in January

67% 47%

Cash flow/working capital

Fund growth in new markets

Fund growth in Australia

Purchase plant, machinery or equipment

Fund export growth

Fund merger/acquisition

60% 75% 62% 71%

15% 5% 8% 14% 11% 10% 13% 14% 14% 17% 10% 15% 12% 30% 20% 13% 20% 17% 7% 6% 9% 6% 5% 7% 6% 13% 6% 4% 5% 6% Source: ACA Research’s COVID-19 SME Sentiment Tracker

In fact, some of the best brokers he knows mainly “stay in their lane” but offer a diversified service through other means. Buchanan says many brokers partner up with specialists in other areas, employ or subcontract to specialists, or have referral partnerships with companies that specifically cater to asset and commercial finance.

Nevertheless, having asset finance in their arsenal is invaluable to a broker, he says. With brokers cementing themselves as the channel of choice for customers, and asset finance transactions going “hand in hand” with other transactions, it “makes sense” that a broker can source solutions from a wide range of products and policies.

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FEATURES

ASSET FINANCE

MORTGAGE BROKERS MOVING INTO COMMERCIAL Number of mortgage brokers also writing commercial loans 5,000 4,500

4,486

4,539

4,000 3,500

3,668

3,617

3,481

3,670

3,000 2,932

2,500

2,647 2,374

2,000 1,500

1,673

1,641

1,000 500 0 Apr 15- Oct 15- Apr 16- Oct 16- Apr 17- Oct 17- Apr 18- Oct 18- Apr 19- Oct 19- Apr 20Sep 15 Mar 16 Sep 16 Mar 17 Sep 17 Mar 18 Sep 18 Mar 19 Sep 19 Mar 20 Sep 20 Source: MFAA Industry Intelligence Service Report, 11th Edition

“It is our, the lenders’, and the brokers’ obligation themselves to educate brokers around these offerings so that they are not only aware of the products and policies but empowered with the knowledge and skills to identify and act on these opportunities,” Buchanan says. Brokers probably already have potential asset finance customers in their books, which can often be undervalued or not tapped into in a meaningful way. Buchanan says in reaching out to existing clients, “the first step is the easiest”: simply let them know you can help them in this area. “Be clever with your discovery of your clients’ needs, and identify opportunities to assist where appropriate. This might mean scheduling follow-ups with your clients outside of your normal cycles to suit their timeline for asset purchases as an example,” he says. When taking on asset finance customers, brokers need to be aware of all their financial

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offering them, or have a trusted partner who can assist. “The days of brokers having one asset provider available to them and sending all of their deals there does not meet the standards of today’s tests or expectations, so education and access to providers is crucial when dealing across the financial spectrum,” he says. That education is paramount, particularly for mortgage brokers looking into asset finance for the first time. There are plenty of resources that Specialist Finance Group’s brokers can access, both digitally and in person. Its lending partners have also engaged with its broker network across many different types of events to ensure they are up to date and have access to the right information. Sharing a story about the value of diversification, Buchanan recalls a broker whose client was seeking residential refinance to free up some cash flow for their small bakery business. While the broker was unable to help with the refinance due to the client’s

“The days of brokers having one asset provider available to them and sending all of their deals there does not meet the standards of today’s tests or expectations” Blake Buchanan, Specialist Finance Group commitments and have a thorough understanding of their present and future plans to ensure any solution offered is in their best interests. Much the same as with a mortgage, a broker offering asset finance will need to compare the products available and select the most appropriate solution for the borrower. Buchanan encourages brokers to educate themselves on all the different types of asset finance products on the market and be across the range of different providers that are

exposure, they asked more questions and were soon able to find pain points in the client’s business. The broker then helped the business owner buy a new oven so they could double their bread production, resulting in a great financial outcome for the business. “Brokers need to not just scratch the surface with their enquiries but be prepared to deeply understand their client’s situation and be educated enough in different areas to identify and further assist their clients,” Buchanan says.

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FEATURES

RELATIONSHIP MANAGEMENT

Future-proofing brokers’ businesses Mortgage aggregator AFG is underlining its decades-long commitment to brokers with a brand-new suite of technology designed to help fuel their growth – and future-proof their businesses for whatever lies ahead

John Sanger, COO, AFG

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MAKING LIFE easier for the home loan applicant, clearing any tripping hazards on the path to their new front door – that’s the job of the mortgage broker. A job done so well that last year they hit record market share, settling over 60% of residential mortgages. So brokers are taking care of business – but who’s taking care of them? While brokers are hitting an all-time high, there are some stumbling blocks they could do without. A MyState bank survey late last year identified their chief concerns: speed and frequency of change around credit policy procedure; turnaround times; and meeting varying lender requirements throughout the application process. Smoothing the broker’s way – so they can get on with the job of helping Australians into homes – is something aggregator Australian Finance Group prides itself on. So, when two years ago AFG embarked on a major technology overhaul, naturally it turned to its 3,000-strong broker network to ask: ‘what do you want most from the tools?’ The answers are distilled into AFG’s exciting new array of technological initiatives – Suite360. This includes the recently launched Customer360, a digital fact-finding tool brokers can use to engage with customers that captures information and uploads loan

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Sponsored by

application documents. Added to this, there’s the soon-to-be-launched customer relationship management platform that AFG COO John Sanger thinks brokers will be “delighted with”. “I think we are going to solve a lot of industry-wide challenges with the technology,” he says. “We have led with ‘what is the job to be done, how can we solve it differently?’ Yes, it is a technology platform, but it’s designed with what we believe is the best practice in customer experience and user experience.” The new digital initiatives come hot on the heels of a brand redesign and new logo and website. AFG worked with award-winning Sydney creative agency The Works to develop the refreshed brand architecture and messaging. The new tech and new look were timed to coincide because it’s more than just a brand update; it’s also, crucially, a fresh look at how brokers need to work to get better customer outcomes. The refresh, says Sanger, “is a strong reflection of who we are as a business and our commitment to partnering with our brokers for their business growth”. And while the branding and technology, created with tech partners Oracle on enterprise-grade platforms, is brand new,

HIGHLIGHTS OF THE NEW CRM What AFG’s new customer relationship management platform offers users The ability to get more done in less time • It avoids double-ups and double entry of data, with all application management and collaboration tools in one platform. • It gets through more applications with flexible workflows and keeps deals moving down the pipeline with automated back-channel messages from lenders. A seamless digital experience for customers • It provides a more personalised customer experience, with a single, holistic view of customers and all their data. • It allows for a streamlined application process, integrated digital signatures, electronic credit checks and bank statement retrieval. Advanced reporting and collaboration tools • Custom analytics dashboards and reports draw insights from customer data, customer loan data, workflows and business activity. • A top-down view of your business allows your team to collaborate more effectively and meet deadlines. Compliance built into every step • BID decision reasoning prompts are built in, and customer notes are automatically captured. • A full system audit trail and other built-in tools help find the right loan options that meet customers’ needs and objectives.

“Whereas a lot of the industry CRMs are about getting the deal done, we have centred it around managing the whole life cycle of the customer” John Sanger, AFG they’re just a fresh chapter in a decadeslong story. “For 26 years AFG has been standing side by side with our brokers. We are building on some very rich history here. But we are also looking to the future and innovating,” Sanger says. Over those hundreds of hours of interviews with brokers, mining their experience and canvassing their concerns, what did

AFG discover? There have been some key insights, he says. To start with, brokers are seeking more efficiency; they want to spend less time processing and more time with customers. They also want help with navigating their compliance and best interests duty obligations. They need to meet increasing customer expectations, especially those of millennials

looking for a more digitally led experience. Lastly, they want help with managing their businesses more effectively – more visibility of the deals, more oversight of compliance, better team collaboration. Delivering on these needs – and replacing 15 years of core technology – was no small task, says CIO Matthew Faries. “It’s a whole new underlying technology – a purpose-built application for brokers. There is an expectation that brokers analyse customers’ scenarios a lot more than, say, 10 years ago. Our job is to provide tech that enables them to get more data and find the best outcome.” What AFG has come up with is a CRM that ticks off the four main findings of its research. Firstly, it offers a streamlined application

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FEATURES

RELATIONSHIP MANAGEMENT

process. “We are confident of saving hours more time with, for example, digital signatures and less double entry of data – this is a big one for our industry,” says Sanger. The second benefit is that the best interests duty is comprehensively embedded into the application process. There are compliance prompts at every step to make it easier for the broker to navigate. Thirdly, the CRM is more centred around the customer, with a highly comprehensive customer record, including details like existing loans and residential and employment history. “Whereas a lot of the industry CRMs are about getting the deal done, we have centred it around managing the whole life cycle of the customer and everything in between.”

tech streamlines the application process, it’s by no means a one-size-fits-all. “One thing I love about this industry is each broker group is a small business, and they can each carve their own value proposition. Some are extremely relationship based and face-toface, others are quite digital. We have had a comprehensive process of broker engagement and testing throughout the development to make sure the platform supports all those different business models.” It’s also about being able to cater to an increasingly complex market, says Faries. “We’ve recognised there is a need for us to be able to support the more complicated deal types, whether it’s with multiple splits or multiple people from different households – so

“We have a lot of new features and functionality in the roadmap over the next 12 months and beyond” Matthew Faries, AFG Finally, for brokers with several people in their team, task management and collaboration is enhanced. “As the application moves through the process, the system can automatically create tasks and assign them to individual team members, who can easily see the tasks they have outstanding.”

Seamless solution Across the industry, brokers might use tools for specific jobs, but they are not well integrated back into the main platform, says Sanger. “They have had to implement a number of other workarounds and other tools and systems where they are copying data from one and pasting it into another one. Often this also means having to pay for multiple software subscriptions. With our new tech, they will work in one platform to manage customers, manage applications and see the deals move through the pipeline.” However, he emphasises that while the new

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they all come together within one application, and that data gets represented accurately all the way through to the lender.”

Analytics and learning As mentioned, the CRM is just one – albeit impressive – offering in AFG’s Suite360. Others include a rich analytics platform for brokers to see how their businesses are performing and find ways to improve, as well as an awardwinning learning and development platform. This is a reflection of a growing commitment to what Sanger calls “the growth mindset” – with more brokers eager to take up learning

opportunities, especially during the pandemic. These are in addition to the existing – also award-winning – platform SMART, which gives brokers a full suite of automated marketing tools and website in their branding. “We’re working on further enhancing the marketing offering and how they can better integrate into the end-to-end customer communications for brokers,” Faries adds.

Watch this space The CRM has delivered on the brokers’ wishlist, but it doesn’t stop here. “We are testing the product with brokers now, but there’s quite a roadmap. We have a lot of new features and functionality in the roadmap over the next 12 months and beyond,” said Faries. “The plan is to see how the platform is received and prioritise feature development based on broker feedback as we go.” AFG will continue with its research, design and validation to identify and solve problems in the here and now but with one eye on the future too. “Things change quickly, the expectations of our customers change quickly, and we have to keep up with that,” said Faries. It’s not just about building technology, says Sanger. “It’s a mindset around ‘how do you continue to deliver great customer experiences’ .” He points to that record broker market share as confirmation of the value brokers bring to customers. “It highlights how brokers have helped Australians manage their finances in troubled times. Our business is helping our brokers grow their business, giving them the right tools to get the job done and delighting their customers.”

ABOUT AFG Australian Finance Group was established in 1994 and has grown to become one of Australia’s largest mortgage broking groups. With a network of 3,000-plus brokers and a team of over 200 nationwide, AFG helps offer customers a choice from over 70 lenders across more than 3,800 finance products.

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FEATURES

LEADERSHIP

Investing in self-leadership Workplace resilience expert Michelle Bihary explains why it is important to lead ourselves well in order to be effective in leading others

SELF-LEADERSHIP is a game-changer when we want to be the best version of ourselves. It helps us think, learn and relate to others effectively, optimising our skills, talents and potential. Self-leadership is leading ourselves from the inside out. It’s the influence we use to shape our behaviours and thoughts to live and work in alignment with our values, aspirations, strengths and talents. Emotional intelligence expert Daniel Goleman highlights the value of self-leadership: “Exceptional leaders distinguish themselves because of superior self-leadership,” he says. Every time we speak to ourselves, we are building an internal relationship that can support or undermine us. Why is self-leadership important? There is a critical link between how we lead ourselves, how we perform at work, and our capacity to contribute to a thriving, healthy workplace. Poor self-leadership has a detrimental impact on our brain functioning, cognitive and psychological agility, relationships, career and wellbeing. Underperformance, being hard to work with, and energy-draining, rigid, negative, closed-minded, impatient, competitive or

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FEATURES

LEADERSHIP

even toxic beheviours are often the results of poor self-leadership. Common ways people lead themselves poorly include perfectionism, overly focussing on weaknesses and limitations, ignoring strengths and skills, being harsh or toxic towards themselves, and neglecting their own needs, goals and values. The seven key reasons it is wise to invest in self-leadership include:

1

You can’t lead others if you can’t lead yourself

If you’re not leading yourself well, you won’t be effective in leading others. Our relationship with ourselves is the foundation for how we relate to others. If we don’t

pressure and have the energy to engage fully in both their professional and personal lives.

3

Positive impact on others, relationships and teamwork

When we lead ourselves well, we’re empowered and take greater responsibility and ownership of our energy, our presence and our behaviours, resulting in more proactivity and positivity. We’re also more consistent, reliable, we have better boundaries and are more empowered in meeting our own needs and so are less demanding of others.

4

Energy and mojo Positive self-leaders invest in building and optimising their mojo.

Poor self-leadership has a detrimental impact on our brain functioning, cognitive and psychological agility, relationships, career and wellbeing appreciate our strengths, skills and talents, we’re unlikely to be able to appreciate them in others. If we can’t trust ourselves, we’re less likely to trust others and more likely to micro-manage.

2

Sustainable peak performance

Leading ourselves well helps us maintain our mental and emotional bandwidth – our capacity to be present, adaptable and agile. Self-leadership guides us to use self-awareness and self-care to optimise our energy, wellbeing and vitality. If we’re not leading ourselves well our potential may be squandered through neglecting to optimise our strengths and skills. Self-leaders understand the critical value of good self-care practices, ensuring they perform well under

52

They have the physical, mental and emotional energy necessary to meet their professional and personal demands. They don’t waste time on energy-draining behaviours like unnecessarily harsh self-criticism, shaming, selfblaming, self-sabotaging or destructive habits that rob them of fulfilment.

5

Capacity to adapt and learn

Strong self-leadership provides the foundation for openness to learning. Active self-leaders invest in lifelong learning. Self-awareness is a core component of self-leadership, ensuring an appreciation of strengths, values, preferences and talents. Self-leaders welcome opportunities to learn and grow, and see mistakes and failures as opportunities for learning. Self-leaders are not hijacked by their egos; instead they bring

a growth mindset, continually looking for ways to be enriched by the wisdom and skills of others.

6

Agency and autonomy

Feeling that everything is outside of their control is a common experience of poor self-leaders; they tend to focus their time and attention on what they can’t control, rather than what they can. Being pushed around more by what is outside of our circle of influence makes us feel powerless and overwhelmed. Self-leaders prioritise a mental focus on what they can influence and at the same time acknowledge what they can’t control.

7

Determined by your values

Your values are non-negotiable; they are an important part of who you are and how you navigate the world. Strong self-leadership is when you are clear about what you value, and so your values, intentions, behaviours and actions are in harmony. Living up to everyone’s expectations can create internal conflict as others’ values and expectations are not always going to align with our own. Self-leadership is a skill set that needs to be continually developed. Building self-leadership helps us fulfil our potential and make a positive impact on others around us. It leads to greater organisational success through empowering people to regain control of their direction and goals, and ensures that their best selves show up on the job.

Michelle Bihary is a people leadership and workplace resilience expert

www.mpamagazine.com.au

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PEOPLE

BROKERAGE INSIGHT

AKORIN Finance: A one-stop shop After 26 years in the financial sector, Katie Scholes took a leap into broking to provide a more personalised service. Six years later, she has solid referral partners and is focusing on giving back to the community IN 2015, after eight years as a commercial manager at ANZ, Katie Scholes was approached by two property developer clients with a proposal to go into business together: her role was to take care of commercial lending for land subdivision finance and then look after all the finance for clients buying within the project. Six years on, Scholes’ property developer business partners have retired, and she is the sole director at AKORIN Finance. The brokerage’s business comprises around 70% residential lending and 30% commercial, with the latter made up primarily of asset finance and cash flow lending.

“With changes due to COVID, there seem to be a lot more people at home in Adelaide and all looking for property” Scholes has worked in financial services for more than 30 years. She spent 18 years as a residential lender at various credit unions before joining ANZ, and says her experience in both residential and commercial lending has helped her provide a holistic service. “Residential lending was a great way to start lending. Moving to ANZ expanded my

GIVING BACK TO SPORT AKORIN Finance has partnered with The Free Throw Foundation to raise funds for and support kids in South Australia who want to play basketball. Brokerage director Katie Scholes says she used to play state basketball herself and had a scholarship at the South Australian Institute of Sport. “I was lucky enough to travel overseas to play through America; my parents always found a way to get me wherever I needed to be,” she says. “To find out that we have kids who miss out due to financial barriers, I had to get involved to help. The discipline and teamwork you learn from sport is character-building and sets you up for life. You certainly don’t realise it at the time. “Being able to give back to the sport I played all of my life is very humbling. The Free Throw Foundation is the one I am most proud of. I have just stepped down from the board there but am still one of the major sponsors. I would love for the entire board to be made redundant, having removed all financial barriers from the sport, but I can’t see that taking place.”

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knowledge into the commercial side of banking. The two complement each other, and I wanted to be a one-stop shop for my clients,” she says. Over the past year, Scholes used COVID-19 as an opportunity to touch base with her current client base and ensure that everyone’s circumstances were reviewed. Clients who needed support were directed to the right areas of the banks, and the team at AKORIN made sure they knew they weren’t alone. Scholes says she went from sales to managing clients’ fears overnight, but once confidence returned to the Adelaide market the business switched back to sales mode. “The Adelaide market is booming at the minute,” she says. “With changes due to COVID, there seem to be a lot more people at home in Adelaide and all looking for property. We also have a large number of first home buyers making the most of the additional grant.” When it comes to attracting new clients, Scholes says she has a good circle of influence, including accountants, financial

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AKORIN FINANCE AT A GLANCE Founder: Katie Scholes Location: Adelaide Year founded: 2015 Services: 70/30 split between residential and commercial lending Number of employees: 2

“It’s important that my clients never feel like a number. They are part of the AKORIN family; they can ring whenever they have a question” planners, real estate agents and sporting clubs, who she works with closely. The benefits go both ways: they give her referrals; she refers clients back to them. Keeping close to her existing clients, Scholes says she reviews their loans each year and sends them birthday cards. “It’s important that my clients never feel like a number. They are part of the AKORIN family; they can ring whenever they have a question,” she says.

As the business looks forward, Scholes believes the biggest challenge for the industry will be the conversation around broker remuneration. In the wake of the royal commission, a review into this is due to take place in 2022. Scholes says the introduction of fee-for-service for brokers would be “detrimental” to the industry. “I feel we have good competition and fair and equitable outcomes for our clients the way it is currently set up,” she says.

The ethos of the Scholes’ business is “good old-fashioned service”, and she says its focus is to maintain this through whatever challenges it faces. “As long as we have our clients’ best interests at heart and front of mind, we will succeed. This has been, and will continue to be, our focus moving forward,” she says. As a former state basketball player, Scholes is also passionate about giving back to the community by supporting sport. AKORIN Finance is the major sponsor of the Southern Tigers Basketball Club and recently partnered with the Reynella Wine Flies Football Club as sponsor of its girls’ program. The partnership Scholes is most proud of, however, is the work the brokerage does with The Free Throw Foundation, which raises money for children in South Australia to play basketball. “We’re helping to remove the financial barrier families face with kids in sport. We fund fees, uniforms and assist kids who make state teams and can’t afford to go,” she explains. “I don’t want any kids in SA to miss out on playing the game I played all my life, so being able to assist financially to the program is very humbling to me.”

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PEOPLE

OTHER LIFE

2018

TELL US WHAT YOU GET UP TO Email rebecca.pike@keymedia.com

2019

2020

Tan's work featured at the Centre His images appeared in the Exhibited his work at the for Contemporary Photography In the Shadows exhibition Linden Postcard Show

THROUGH THE LENS Melbourne-based broker Andrew Tan expresses his creativity by telling stories with his images AFTER READING a magazine article in his teens about National Geographic photographers and photojournalists, mortgage broker Andrew Tan says he fell in love with photography. He received his first SLR camera back then and has been taking photographs ever since. Inspired by photographers such as Man Ray, Helmut Newton, Henri Cartier-Bresson, Dorothea Lange, David LaChapelle and, more recently, Stephen Shore, Tan says he produces photographic art that focuses mainly on street photography and images of urban spaces and architecture. “For me, photography is important because it’s a form of art. It allows me to express my creativity, to create an image and add my interpretation to it,” Tan says. “I enjoy it because it allows me to explore my imagination with my camera, to tell a story and share a moment.” Over the years Tan has entered several competitions. He was a finalist in the ‘In the Shadows’ exhibition at the Victorian Archives Centre, and his work was featured in the Linden Postcard Show 2020 and published in the Ballarat International Foto Biennale photobook Mass Isolation Australia.

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“ Some of my favourite photographs are proba bly those taken in Japa n. Japa nese architecture intrigues me, especially with the shapes a nd cultural settings of the photographs”

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