A number of bank executives have shared their experience with online broker models and digital platforms that effectively auction borrowers to the lowest bidder.
Over the last few years, the Australian mortgage market has witnessed the emergence of online broker models like Joust, LoanDolphin and uno.
These fintech operators, which effectively act as brokers between lenders and borrowers, have been met with mixed emotions from the third-party banking community.
At a recent roundtable event in Sydney hosted by Mortgage Business’ sister publication The Adviser, and in partnership with MSA National, mutual lenders shared their own views on digital mortgage platforms.
“We dealt with Joust for a period; however, as we did not differ on price (through Joust, broker or first party), the model really didn’t work for us, and thus there was minimal uptake,” Beyond Bank head of third party Darren McLeod said.
“The thing with these bidding sites is that we have one product and one price," he said. "Whether you go to a branch, a mobile lender or a broker, you get the same deal. It’s up to the customer how they choose to deal with us.”
Mark Middleton of Teachers Mutual Bank said that service is just as important as rate — something that is often overlooked by online distribution models.
“You might get a rate that is 10 basis points cheaper, but is it the right product for the customer?” Mr Middleton said.
On its website, Joust describes itself as a “revolutionary live auction platform” where “lenders can see each other's bids in real time and you watch on your mobile as they drive rates down to win your business.”
CUA chief operating office Andy Rigg took issue with online broker models that focus solely on price.
“Other models, like LoanDolphin, for example, place it to the uniqueness of the deal," Mr Rigg said. "So, if the borrower needs something specific, it will match that requirement, rather than just going on price.”
Meanwhile, Bank Australia’s head of third-party distribution Richard Irving said that, while there is a place for these models and they do drive competition, he is cautious of anything that undercuts the other existing distribution channels.
“We refuse to do anything that will have differential pricing between our channels. You are in a race to the bottom if you are going to start undercutting particular channels.”