Bank chief confirms ‘channel of choice’ for home loans

The chief executive of one of Australia’s largest banks has outlined the group's distribution strategy following a multi-million investment in its mortgage business.

In an interview with Mortgage Business, ING DIRECT Australia chief executive Uday Sareen said that mortgage brokers “have always been the channel of choice” for the non-major bank and are critical to the group’s mortgage strategy.

Brokers currently originate about 90 per cent of all ING DIRECT home loans. Mr Sareen said that while the bank’s direct channel is gaining momentum, brokers are unlikely to be writing any less than 80 per cent of the group’s flows by 2020.

“The broker channel is really at the heart of our distribution and that is something which has clearly differentiated us,” he said.

According to the AFG Competition Index, ING DIRECT has consistently received one of the largest proportions of broker-originated loans among the non-major lenders since March 2016.

AFG’s Mark Hewitt said the non-majors continued to take market share from the majors over the March quarter, particularly among those seeking to refinance.

“Their share of the refinancing market grew by 6.5 per cent with the big winners being AMP and ING,” Mr Hewitt said.

“The non-majors also gained ground with those looking to fix their interest rate. Non-majors recorded an 8 per cent lift in market share for fixed rates with ME Bank and ING leading the way.”

Late last year ING DIRECT pumped over $20 million into its mortgage back end. Mr Sareen expects the investment will significantly improve turnaround times and service levels, which are critical to a competitive third-party offering.

Mr Sareen took over the top job from former ING DIRECT boss Vaughn Richtor in June last year. Mr Richtor has since joined the Australian board of directors at peer-to-peer lender RateSetter.

In his first few months as CEO of ING DIRECT Australia, Mr Sareen says he travelled across the nation to meet hundreds of brokers face-to-face.

“It was very important for me to be accessible and meet our partners, both in terms of aggregators and mortgage brokers,” he said.

ING DIRECT is now the fifth largest retail bank in the Australian market after growing its loan book by 10 per cent to $47.8 billion over 2016.

At the end of 2016, the group held $41.4 billion in residential loans (up from $38.6 billion the year before), $3.4 billion in business loans (up from $2.9 billion) and $2.9 billion in wholesale loans (up from $2.0 billion).

[Related: ING 'fifth largest retail bank in mortgages']

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