Responding to comments made by the third-party heads of four mutual lenders, who questioned the online "bidding" model, Joust managing director Mark Bevan explained why price is important to Australian borrowers: “Every survey that's ever been undertaken will reveal that price is very important to a very large number of customers.”
The mutuals were early adopters of the Joust model, which launched last year and has since provided more than $650 million in home loans to more than 1,400 Australians.
People’s Choice Credit Union, IMB Bank, Victoria Teachers Mutual Bank and many other customer-owned mortgage providers are currently on the Joust platform. Beyond Bank was initially distributing loans through Joust but was unable to reconcile with its emphasis on differential pricing.
“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.
Joust now boasts a panel of 16 lenders including St George Bank, BOQ and Pepper Money. Founder Mark Bevan said that more than a third of the lenders on the panel are happy to undercut their first and third-party channels.
“Some banks remain resistant to differential pricing by channel and by risk and by customer value,” he said. “These banks won’t be able to enjoy any success with Joust.
“However, banks who understand their cost of acquisition are embracing differential pricing and enjoying excellent results on the Joust home loan platform.”
Mr Bevan warned that if lenders don’t “come to terms” with differential pricing, they will be “clinging to the hope that the Australian home loan market remains opaque and confusing so they can compete”.
Banks are now starting to distinguish between Joust and other online models — such as LoanDolphin, uno and HashChing — as the all-encompassing “fintech” label gradually loses its lustre.
“What lenders can now see is that Joust is actually about a lower cost of origination,” Mr Bevan said. “We understand that some customers want advice because home loans have become more complex. But we also know that plenty of people don’t require advice.”
Mr Bevan pointed to CommSec’s disruption of the stock-broking industry in the 1990s as proof that Australians are willing to make major financial decisions without the help of a broker.
“Plenty of people buy $100,000 worth of shares without needing any advice just by doing their own research. Now they can do that through CommSec for $30.
“Twenty years ago, they had to front-up to a stockbroker who would tell them to buy ten thousand BHP shares for an astronomical fee,” he said. “We are all about removing unnecessary costs from the mortgage value chain.”
Joust has been active in the mortgage markets of South Australia, NSW and Victoria and is eyeing an overseas expansion.
Meanwhile, Mr Bevan confirmed that the group has appointed advisory firm Moore Stephens to kick off a capital raising that is expected to be completed by the end of the year.