ME Bank is making serious forays into the broker channel, and national broker manager Stewart Saunders wants to clear up some misconceptions.
For Stewart Saunders, much of ME Bank’s strategy for the future hinges on brokers getting onboard. ME Bank made its foray into the third-party space 18 months ago, and Saunders said the decision was driven by consumer preferences. “The broker plays a very important role for a non-major like ME Bank. We don’t have a huge retail footprint, but through the broker market we’re able to gain access to consumers without that huge capital investment,” he said.
As a non-major that’s not quite a traditional bank and not quite a mutual, Saunders said many brokers may not quite understand ME Bank’s place in the market.
“ME Bank has a very unique position in the Australian banking marketplace, and it’s often misunderstood. On the one end you have the big commercial banks which give the appeal of security, but they’re in the position where they have to prioritise shareholder returns over customer benefits. At the other end of the spectrum you have mutual banks and building societies. They deliver the customer benefits, but sometimes lack the security. ME Bank doesn’t fit in either category. We have the serious financial backing of being owned by some of the biggest industry funds, but similar to a mutual we’re built on the principle of fairness, and our profits are returned to our customers via their super,” he said.
But Saunders wants to communicate the lender’s offering to brokers. He said the channel is vitally important for the bank, with its internal research showing that more than 50% of its target customer base prefers to deal with mortgage brokers.
“ME Bank research has shown that many Australians lack financial confidence and continue to want face to face service, so ME Bank has been focusing on channelling demand by building the broker channel,” Saunders said.
With this in mind, he said the bank has heavily staked its fortunes on the broker channel. As an example of this, Saunders said ME Bank was actively winding back its retail network, a sign of its commitment to grow through the third-party.
“We’ve been in the process of closing our branch network to focus on growing our broker network and workplace banking. The decision to close branches is a good example of ME Bank being willing to take a different path,” he said.
Saunders concedes that the bank has to work hard to find its footing with brokers. In an effort to pique broker curiosity, ME Bank recently announced an initiative to offer a commission sweetener to brokers. The promotion, running through the end of the financial year, will see the bank offer 10bps for settlements from $1m to $1,999,999, 20bps for settlements from $2m to $2,999,999 and 30bps for settlements $3m and above. But Saunders claims it’s a sharp offering to broker customers, not a commission incentive, which will ultimately get the attention of the channel.
“The commission bonus campaign for us is about just motivating brokers to give ME Bank a look. We don’t see that as the primary driver of broker volumes, but it seems to be achieving the goal of raising awareness,” he said.
For Saunders, it’s the bank’s product offering that has driven growth for the lender.
“The commission campaign is only one of several that have generated significant interest for us. We’ve seen our fixed rates as the primary driver for the increase we’re seeing. March applications were up 250% on our February applications.”