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Summerland Bank eyes growth through broker channel

The customer-owned bank has revealed it is overhauling its loan origination system and looking to grow its broker presence as it builds its book.

NSW Northern Rivers lender Summerland Bank (formerly known as Summerland Credit Union) has said it is looking to build on its rapid home lending growth by introducing a new loan origination system and writing more loans through the broker channel.

Speaking to Mortgage Business, the Summerland Bank chair and chief executive John Williams noted that the lender had seen a 10.8 per cent growth in loans over the year, taking its loan book to over $900 million. Approximately 95 per cent of this is residential mortgages.

The lender – which is a B Corp – reportedly saw strong growth in its residential mortgage book, with the CEO noting robust demand for its Eco loan, a product that gives home loan borrowers a rate discount for sustainable property purchases, upgrades, and renovations.

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The lender currently distributes its mortgages through its 10 branches, a contact centre for interstate customers, and via the broker channel (largely on a direct basis in order to manage flow).

Mr Williams told Mortgage Business: “We strongly believe in customers having the choice of how they want to deal with a financial institution. If the customer wants to deal through a broker, that’s quite appropriate. And with the percentage of business that goes through brokers, then if you don’t play in that market, you’re ignoring a reasonable number of customers that are potentially a good fit for the organisation.”

Acknowledging the value of the broker channel, Mr Williams stressed the bank’s commitment to maintaining high service levels for both customers and brokers. He stated: “We want to make sure that we can grow our broker portfolio, but still manage a high level of service to both the customer and the broker.”

Mr Williams said that the bank has a “strong position” for the broker channel, including a 24-hour turnaround time and is now in the process of implementing a new loan origination system with nCino; its first origination upgrade for over 10 years.

The new system will be built with open banking capabilities, which are expected to roll out in the second phase of the tech upgrade (in 12–18 months) in order to facilitate the mortgage origination process.

“It’s now time to update our system to provide us with efficiencies, but also to provide the customers and our brokers a better customer experience and a more automated solution,” he said,” he stated.

“We want to do the right thing by the broker, but we also want to do the right thing by the brokers’ customer as well.

“We value the broker channel and we want to develop relationships with brokers moving forward, too.”

Recovering from the Lismore floods

The Northern Rivers-based lender noted that while a significant number of customers had been impacted by the floods of February 2022 (from which the area is still recovering), the bank had not had any credit losses as a result of the flooding.

According to the CEO, this was because the lender had proactively contacted all customers to check on their welfare, provide assistance with their mortgage insurance claims, and help them through hardship requests.

He noted that around half of the hardship requests received for mortgage repayment holidays were due to flooded property, while half were due to people losing jobs as a result of their place of employment flooding. While the latter half were able to recover quickly as they found new employment, Mr Williams said the bank was “patient as a lender” for the borrowers whose primary place of residence was flooded.

“It took a longer period of time to work with those customers, but we were quite patient as a lender as we wanted people to recover themselves without us having to take adverse action for them,” he said.

“Our staff have been amazing, being able to do everything they needed for customers quickly, even settling loans on the day of the flood. It’s been a remarkable outcome for us as a business, for our staff, and for our customers, who have come through really strongly.”

Indeed, the bank itself is still renovating its Lismore-based head office, where two of its five floors were flooded.

While arrears rates have been rising marginally over the financial year, ticking up to 0.6 per cent, Mr Williams told Mortgage Business that he expects the arrears rate to lift more quickly in the coming months if the central bank continues to raise interest rates.

“I think customers are probably at the point of serviceability limits now and I think there’ll be starting to be a little bit of pressure come in the next few months if there are further rate rises,” he warned.

[Related: Summerland Credit Union transitions to a bank]

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