Battling the mortgage mumbo jumbo

by Melanie Mingas10 Oct 2019

As many as 79% of homebuyers say the buying process is harder than ever, but Aussie Home Loans is on a mission to reverse the trend. Chief customer officer David Smith and GM of distribution Brad Cramb reveal the details to Australian Broker

When Aussie Home Loans launched in February 1992, Australia was only five months out of a year-long recession during which GDP fell by 1.7%, employment soared above 11% and home loan interest rates hit 17.5%.

When the brokerage opened its doors, it did so while promising, “We will save you”.

“It was about saving people from the lack of choice and lack of competitive prices available in the market,” says chief customer officer David Smith.

It was a bold claim, but it won the hearts of millions, and the famous tagline is still in use today. However, in the current climate it has taken on some additional relevance.

“Our mission is today is ... about saving customers from complexity, confusion, or feeling like they’re on their own” David Smith, chief customer officer, Aussie Home Loans

“Our mission today is no different to what it was then. It’s about saving customers from complexity, confusion, or feeling like they’re on their own. We will save them from perhaps getting ‘expert’ advice from people who aren’t necessarily experts, as well, of course, as the more traditional approach of we will also save our customers some money by finding the right deal in the marketplace for them,” Smith adds.

In creating its mission statement, Aussie has conducted extensive research around consumer sentiment and aspirations. The latest, which surveyed 2,000 people in July of this year, concluded that a significant confidence divide exists between genders, generations and even those who have and have not purchased property in the past. For example, 68% of first home buyers lack confidence when it comes to property purchases, and 79% believe that buying a home is harder than ever.

Other research concluded that 70% of people describe the home buying process as negative and 29% are even delaying their purchase because of the perceived difficulty of the process. A mere 20% from the sample planned to buy in the next year.

Further, when it comes to the role of the broker, the application process is viewed as the “hardest and most stressful part” of the home loan journey, and proactive broker communication is highly valued by customers.

The results form the backbone of a brand campaign launched earlier this month, which urges consumers to “battle the mortgage mumbo jumbo” by talking to an Aussie broker.

It is the first campaign since Aussie recruited CHE Proximity to handle its branding and communications as well as broker-to-customer marketing.

“We are really honing in on those customer insights, and we are going much more multichannel with our media strategy to get an even greater reach with the brand through this campaign. Bigger scale, better targeted,” says Smith.

It isn’t the first such campaign. In September 2018 the brokerage enticed customers with a money-back guarantee: if you’re not satisfied with your Aussie broker experience, you will get $100. Confident in the promise, CEO James Symond personally voiced the radio ads.

Adapting and responding
Setting the future agenda for the business, Aussie is also in the midst of launching its latest three-year strategy, covering a period that will include further legislative changes, the next broker remuneration review and potentially a new government. Given the unprecedented level of change that has occurred over recent months, who knows what else could be added to the schedule.

Regardless, Aussie’s focus is to sustain a customer-led business.

Taking a top-down approach to the task at hand, Aussie will focus on meeting the needs of its brokers and franchisees. However, in today’s operating environment banks and financial organisations aren’t compared to their industry competitors but to the fast, easy, personalised service promoted by ride-share, food delivery and travel apps.

“Unlike the neobanks, many incumbent institutions need to update longstanding technologies and systems to meet these demands. This can be a challenge for financial services and banking in particular, especially when the mortgage market is more difficult than ever. However, it’s also a major opportunity for progressive companies like Aussie,” says Smith.

The same message was shared by ANZ’s CEO, Shayne Elliott, when addressing Aussie’s annual broker conference in mid-August, and it will form the basis of a series of upgrades to Aussie’s broker platform as well as its loan products.

For example, having identified how customers feel about the application process, new technologies and online tools for brokers are now under development.

“A standardised and systemised way for brokers to manage their business is key,” says Brad Cramb, general manager of distribution.

“Understanding how and when to make contact as dictated by customer need is something we speak to our brokers about often. The best brokers operate with standardised processes and systems which are built around customers.”

The lender panel is also constantly adapting to market trends. This year, in response to local broker feedback, two new lenders joined the panel, Keystart and Homestart, in WA and SA respectively.

“Our focus shifted from growth to sustainability. Our primary goal became doing the right thing by our brokers and stores” Brad Cramb, GM of distribution, Aussie Home Loans

Competitive advantage
With the government now fast-tracking Commissioner Hayne’s recommendations, several key pieces of legislation are expected over the coming months, and Aussie has invested an “unprecedented amount of money” in creating a competitive advantage for its brokers and customers.

Elaborating, Cramb says the funds have been channelled into “quality assurance through systems, processes and people”, such as the broker Quality Dashboard. Supporting this, a Broker Excellence Program has been developed for ongoing education and PD.

“Aussie is built on small businesses, and we’re passionate about supporting this growth. We’ve developed support structures that will play well into this changing future and help our brokers grow their businesses and develop customers for life.

“Aussie is riding the wave of change,” says Cramb.

Over the past 18 months considerable work has been put into the risk and compliance framework to help brokers demonstrate that they are working in the customer’s best interests.

“Without this kind of broker support, it’d be pretty lonely and hard to operate out there,” says Cramb.

With its vertically integrated ownership under the spotlight, the royal commission fallout hit Aussie particularly hard, and its network has contracted to almost 10% as a result, counting 900 brokers currently.

However, an “evolved” recruitment, induction and onboarding approach has been implemented, and in the first half of FY19 Aussie exceeded its target to open 10 new stores. 

While recent attention has fallen on renewals and resigns, footprint growth is the next focus, with a pipeline of interested franchisees and a map of market growth pockets, which will see an emphasis on the eastern seaboard and South Australia, where Aussie’s largest store is located.

The next piece of the puzzle will involve a reallocation of resources to support “more tenured stores and brokers”, allowing them to scale their businesses.

“Our focus shifted from growth to sustainability. Our primary goal became doing the right thing by our brokers and stores in helping them grow and continue success in a time of uncertainty,” says Cramb.

Despite the challenges, in the months following the royal commission Aussie Home Loans recorded its strongest financial results in its history, with its loan book approaching $65bn. The book’s next phase of growth will no doubt be supported by the launch of two white label loans: Aussie Activate and Aussie Elevate.

“We understand that we had to evolve, and we’ve been undergoing this period of change and progression for the past 18 months. We used this time to reset, not rebuild, because what Aussie has built is distinct and successful. We’re looking forward and see the opportunities to grow across the country – we’re open for business,” says Cramb.