When formidable entrepreneur and rebel Sir Richard Branson launched the Reward Me Home Loan to an intimate gathering of industry figures, brokers and media recently, expectations were high, and this couldn’t be helped. Why? Because every product the Virgin name is attached to seems to carry with it an air of excitement, an obvious uniqueness and an evident edginess that can’t be denied. The brand is known for two things: doing things differently, and putting the customer at the centre of every Virgin product experience it creates.
When it comes to Virgin Money’s first mortgage product, then, it’s probably no coincidence that the company put the word ‘me’ quite literally in the middle of the product’s name. And it’s strategies like this that are quintessentially Virgin – adding a personal element, and striving to create a human connection, no matter what the brand is selling.
Greg Boyle, CEO of Virgin Money Australia (VMA) explains that keeping the average customer’s knowledge of the financial services industry at front of mind was what led to a product that is all about transparency and simplicity.
“When we did the research, the customers were really clear that what they expect from a brand like Virgin is a simple proposition that breaks down that complexity and is very transparent, and also something that rewards them for being a loyal customer,” he told Australian Broker
following the launch of the Reward Me Home Loan on 26 May.
Even Sir Richard himself told the room that his own experience with a mortgage broker thirty years ago had made it apparent to him that often, financial services professionals are not crystal clear with their customers.
“That, plus a number of other experiences, made me think that the financial services industry was not transparent,” he told the room.
Which is where the theme of simplicity comes in – a word that was used over and over at the Reward Me Home Loan launch, and which forms a purposeful strategy for its introduction into the local mortgages market.
“Customers want simplicity, they don’t want complexity … When we talk about innovation, we can get caught up in all the bells and whistles and complexity. However, sometimes the greatest innovation is simplicity with some great value and benefits attached. That is what we are trying to do with this product — address that simplicity and value our customers,” said Boyle.
Staying on-theme, VMA has also made the distribution side of the Reward Me Home Loan as unfussy and streamlined as possible, by entering into the thriving Australian market exclusively through a strong, nation-wide network of mortgage brokers facilitated by innovation-focused aggregator, PLAN Australia.
And given that recent consumer research conducted by VMA shows that mortgage borrowers often feel undervalued, unappreciated and disempowered in their relationships with lenders, launching the new product through the industry’s third party channel makes sense. This is not only from a business perspective, but also because it reinforces VMA’s focus on the customer and personalisation.
Boyle explained that the distribution decision is also characteristic of Virgin’s values and its history.
“Virgin’s heritage is actually through a direct distribution channel. However, the research illustrated that it was clear that customers want a face-to-face proposition, or at least value that … The broker channel provides a great way for us to pick strategic partners who are consistent with our customer proposition and deliver that with a face-to-face experience.”
And while PLAN brokers are lucky enough to have access to the Reward Me Home Loan first, they won’t be the last, with VMA planning to open up access to other aggregators’ brokers in the near future.
As for the product portfolio, which for the time being is limited to a solo offering, Boyle is clear this is just the beginning for Virgin Money.
“The plan is to roll out a full range of banking products, starting with home loans and building out transaction accounts and deposits,” said Boyle, later adding, “It is not just a one-off. It is a key part of our broader strategy.”
Sir Richard himself, speaking at the World Business Forum in Sydney on the day of the Reward Me Home Loan launch, said that he is already putting the wheels in motion for other mortgage products.
“When we launched the mortgage product this morning I asked a lot of these mortgage brokers, did they like the product. And every one of them said, they thought it was fantastic. But then I said, ‘can you give me one thing you don’t like about it?’ and somebody said to me, ‘Well, self-employed people - you’re not taking on self-employed people - you wouldn’t be able to sign up to it!’ And I immediately got that changed,” he said.
Listening to those on the ground, he added, is the most important thing a business can do when rolling out new products and ensuring their success.
“You’ve just got to listen,” said Sir Richard.
Boyle, however, was less specific when asked about the future range of products that brokers can expect to be able to offer their clients.
“In terms of the home loans space in particular, this is just the beginning. We have strong feedback from brokers and customers that they want to do [self-employed loans] with us. That is great but we will be building out pragmatically and making sure the product is right for the segment rather than just rolling out products for products’ sake,” he said.
However, Boyle did tell Australian Broker that consumers and brokers can expect direct home loans in the near term, as well as broker home loan products.
“The Virgin brand does attract very successful entrepreneurs and small business owners as well, so your comment around self-employed does resonate with our target segment,” he said.
Value equals competitive rate plus rewards
But aside from the brand power that the Virgin name naturally brings with it wherever it goes, Boyle suggests that you only need to, again, look at the name of the product to get a clear picture of exactly how much of a difference the Reward Me Home Loan strikes from the current, extensive mortgage product range available to brokers and borrowers. As it suggests, borrowers taking out a Virgin Money home loan will be rewarded with Velocity points on settlement and throughout the life of the loan.
Of the cross-collaboration between Virgin Australia and Virgin Money, Sir Richard said, “Utilising the other Virgin companies makes a lot of sense. Velocity is something that everybody can enjoy. If you can get that on top, so you are not just paying your mortgage, why not?”
Boyle believes that offering reward incentives such as those on offer is one way that Virgin Money is filling a gap in the market.
“It fills a gap because I don't think there is anyone out there that rewards anyone on an enduring basis whilst providing very competitive rates. That was what really resonated with customer research so we wanted to try and address that,” he said.
As for what those responsible for distributing and pushing the new product think of the Reward Me Home Loan, Boyle confirms that broker feedback has been “very strong”.
“For the brokers, their feedback is that it really does fill a gap in their product offering,” said Boyle.
However, this is not the first time the industry has witnessed the mega-company launch mortgages in Australia. In 2013, Virgin Money withdrew from the mortgage market following the volatile post GFC market. So, as the Boeing representative who sold Sir Richard his first second-hand airplane to launch Virgin Australia said, this time, let’s hope it goes all the way.