Westpac Banking Corporation (Westpac) has announced that its “simpler digital mortgage process” — which will reportedly see some customers gain unconditional approval in as little as 10 minutes — will roll out later this year.
The digital mortgage process, which has been in the works for the past few years, will first roll out to the direct channel.
It will be available in the final quarter of this calendar year for “select customers”.
According to Westpac, the initial roll out will be for new and existing sole ‘vanilla’ applications (those on a PAYG income and with a loan-to-value ratio of 80 per cent or less) refinancing an owner-occupier loan to Westpac’s Flexi First Option basic product via Westpac’s website or banking app.
It will then be expanded to more customers and products, as well as to the broker channel, “throughout 2023”.
Speaking of the upcoming shift to its digital mortgage process, Westpac Group CEO Peter King said: "This innovation is about digitising our end-to-end mortgage processing to make the time from application to unconditional approval easier and faster, with no paperwork.
“We are starting by targeting new or existing owner-occupiers looking to refinance, but over time the benefits will be felt by more customers," Mr King said.
The bank’s consumer & business banking chief executive, Chris de Bruin, added: “Our customers have told us they want an easier way to refinance their home loan and more certainty about the outcome of their application.
“Historically, refinancing can take weeks and involve multiple manual processes.
“Our digital mortgage makes applying for a home loan simpler and faster for customers.”
The digital mortgage application and assessment process has been accelerated by drawing on third-party data sources and uses “advanced analytics” to perform credit checks, verify financials and undertake property valuations.
For example, it asks customers for digital consent, taps into property insight data, utilises customer biometrics (to speed up the ID process), and harnesses data-led financial verification to consider liabilities.
Requirements and objectives, which had previously been a manual process, has also been digitised into the core process for the first time.
However, Mr de Bruin emphasised that the bank would be still conducting responsible lending checks.
He commented: “From application through to unconditional home loan approval, customers are likely to experience much faster mortgage processing provided they meet the criteria. While we are speeding up the home loan process, we are still performing the right checks and balances to ensure we are lending responsibly.
“Customers who do not meet the criteria for a digital loan or have more complex needs will have their applications assessed by a lender.
“Over time, by digitising our mortgage processes, we will also accelerate approval times for wider home loan applications, including for customers seeking face-to-face service through our bankers and broker network,” Mr de Bruin said.
The full roll out of the digital mortgage comes as Westpac moves to become a “digital-first bank”. This week, it revealed an “enhanced digital strategy for branches” that will help customers bank anywhere and at any time — and eventually enable customers of Westpac’s subsidiaries (St. George, Bank of Melbourne and BankSA) to conduct cash transactions at a Westpac branch and vice versa, for the first time.
The technology enhancements to better connect the branch network are expected to be rolled out from early next year.
The banking group has already “co-located” 21 branches across Australia to bring two Westpac brands together under one premises. It said it would be “reviewing opportunities to co-locate around 100 more branches over the next 18 months”.
Mr King said: "What we are announcing today is a step towards our future banking network and service model. We have five million digitally active customers, so we're building a better digital banking experience.
"We are investing to create a digital first bank, where customers can choose to interact with us through online channels from start to finish.
“We'll also continue to support customers seeking face-to-face service through our bankers and broker network," Mr King said.
Big four focus on automatic credit decisioning
All four major banks have been working towards the roll out of a fully digital mortgage process in recent years.
CBA already has its digital mortgage — Unloan — out in market via the direct channel, after launching it in May.
Similarly, NAB's new Simple Home Loans platform, which launched for retail customers in 2021 utilises a digital end-to-end platform, with “intervention by exception”, automated data and identity verification, and digital signatures.
The platform has a median “time to yes” of around two days for the direct channel, with 35 per cent of applications being approved in less than one hour.
While it has been piloted for the broker channel, the bank has previously said it is aiming for a roll-out in the second half of the 2022 financial year, into FY23.
ANZ's version, ANZ Plus, is set to be introduced later in the year to provide a “straight-through process loan that you can get in under 10 minutes”.