The digital lender, which is marking its first anniversary of being a bank (after receiving its full banking licence from the prudential regulator in July last year), has outlined that it has seen rapid growth in its products since launch – particularly its digital mortgage products.
The neobank currently offers variable and fixed-rate home loans for PAYG owner-occupiers and investors.
Speaking to Mortgage Business, 86 400 CEO Robert Bell commented that since launching mortgages via the broker channel last November, it had grown its book rapidly.
This growth came from its expanding reach in the third-party channel and due to the fully digitised nature of the product.
Mr Bell explained: “We are very different to the other neobanks in that we started building transaction accounts, savings accounts and mortgages all at the same time. At the time, people thought we were mad to try and build all that technology at the same time. But we did it and it meant that we were the first and only neobank to launch a digital mortgage.”
Mr Bell noted that having a mortgage that could be written digitally by brokers (removing the need for in-person meetings or collection of physical paperwork) had been a particular benefit when social distancing rules were brought into place due to COVID-19.
The bank has reportedly seen a surge in borrowers looking to refinance during COVID-19, particularly customers from larger banks.
Mr Bell noted that these borrowers were typically seeing their rates drop by 40 basis points “because they were being charged a ‘loyalty tax’ because they’d been with the same big four bank for six or seven years”.
“That is a big difference to someone’s monthly cash flow and how much interest they’ll pay over the life of the loan,” he said.
Having moved through its pilot phase late last year, the mortgage side of the business is reportedly now “primed for growth”, with 86 400 expected to soon announce a “major new partner” that it hopes will “supercharge” its progress towards its target of growing its loan book to $2 billion by the end of 2021.
Looking to the future, Mr Bell told Mortgage Business: “In terms of the mortgage product, at this stage it is really about revamping the existing offering.
“Everything we’ve done is designed around helping Australians take control of their money, so we’ve got a lot of exciting things we can do, with data to do that.
“Going forward, we expect us to be doing things like finding the hidden fees that they’re paying at the other banks that they really shouldn’t pay, or finding interest rates that they’re paying too much on at their other banks, and helping them switch over. Just giving them better insights into where their money is going.”
[Related: Neobank launches to the public]
Annie Kane is the editor of The Adviser and Mortgage Business.
As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts.