Banking on a smart future in lending

by Antony Field09 Nov 2020

The team at 86 400 revelled in their momentous achievement at the AMAs last month, but far from resting on their laurels they have their sights set on the future, with plans to add to their broker network and launch new home loan products.

Australian Broker caught up with the bank’s lending product lead, Melissa Christy, and national manager broker distribution, George Srbinovski, to discuss the impact of the AMAs honour and how 86 400 aims to build upon its success after setting up a year ago.

“Everyone at 86 400 was thrilled to be named Fintech Lender of the Year,” Christy says. “It’s been a big year for us. I think our win can be attributed to us giving brokers and customers a better experience.”

She also points to 86 400 being the first and only neobank, or smartbank, which operates purely online, to launch mortgages and deposits in its first year of operation.

“I also think that having a different offering to all the other lenders has helped us stand out in the market,” Christy says.

“We don’t deal with paperwork and therefore don’t ask for supporting docs from applicants. We use data right throughout the lending process. We are the first lender in the broker channel to do this.”

86 400 doesn’t have physical branches. Customers bank online via a mobile app, which features spending data, prediction of upcoming bills, an Energy Switch service on power bills, and offset savings accounts. The bank has 110 staff, all based in Australia.

Christy says she doesn’t believe traditional banks will transition to smartbanks because they have a broad, complex offering and a significant legacy to overcome.

“I think we’ll see larger banks become more digitised over time and improve their offerings to compete.”

86 400 at a glance86 400 has faced significant challenges this year due to COVID-19, but Christy says that by providing a “truly digital experience”, including applications, verification and document signing, no changes in process were required.

“Having access to multiple funding sources in your first year helps ensure that you can keep writing business through the pandemic” Melissa Christy, lending product lead, 86 400

“This pandemic has been disruptive, particularly for purchases in Victoria,” she says. “It has proven our ability to constantly shift the way we do things, such as working from home, video meetings with brokers and vendors, and affirming our digital process is contact-free.

“Having access to multiple funding sources in your first year helps ensure that you can keep writing business through the pandemic.”

Srbinovski says 86 400’s digital process is different to what brokers are used to, so it can be harder to win the first deal.

“After they do complete their first deal, we see the second and third come through much quicker, and they’re really happy with the experience,” he says.

Melissa Christy, lending product lead, and George Srbinovski, national manager broker distribution, 86 400Melissa Christy, lending product lead, and George Srbinovski, national manager broker distribution, 86 400

Achievements over the last 12 months include partnering with a wide range of aggregators and broker groups (86 400 is now working with six out of 10 brokers nationally), introducing tiered LVR variable rate pricing and building a great BDM team.

“Turnaround times to unconditional approval have been achieved in under two hours, which is helpful when an applicant purchasing has been let down by their current provider without an answer before going to auction,” Srbinovski says.

“We have had an amazing response from brokers wanting us on their aggregator panel, which helped us get AFG and Connective on board.”

The bank now has 13 aggregator partnerships for distribution, including AFG, Connective, Vow Financial, Specialist Financial Group, Purple Circle and, most recently, Mortgage Choice.

The federal government’s planned changes to the Credit Act, due to come into eff ect next March if they pass Parliament, will alter responsible lending obligations by shifting the burden of responsibility from lenders onto borrowers to provide accurate fi nancial information about their ability to repay a loan.

But Christy says the changes won’t affect 86 400’s model or approach. “Understanding a customer’s financial position is critical to help them make the right decision about how much and when they borrow,” she says. “However, it will give us the opportunity to further simplify our offering and deliver even faster turnaround times.”

The COVID pandemic and ensuing fi nancial hardship has also led to more people seeking out specialist loans, but 86 400 has no plans to enter that space.

“We will look to expand eligibility in the near future, given today we only cater for up to 80% LVR and PAYG borrowers,” says Christy.

Major changes to the 86 400 mortgage process will be launched this month that will provide “even better” customer and broker experiences and speed up decision-making, she says. Other improvements being worked on include changes to the customer app that will help people save and pay off their home loans faster.

A new home loan product will be revealed this month, and the bank is adding another 500-plus brokers to its accredited broker list.

“We’re also in conversations with several others – so watch this space,” says Srbinovski.