Going Solo

by AB19 Sep 2018

Demerged but not out, Aussie Home Loans has big plans for the coming two years. CEO, James Symond reveals what's ahead

When the business model that underpins an entire sector is scrutinised by a royal commission, few expect the entities operating in that space to have a great year. Aussie Home Loans CEO James Symond begs to differ.

In June, following widespread concern about vertical integration in financial services, CBA announced it would demerge CFS Group, which included Colonial First State Global Asset Management, Count Financial, Financial Wisdom, and the country’s “biggest brokerage”, Aussie Home Loans.

Despite the findings unearthed by the royal commission, for many the news was a bolt from the blue. The bank had steadily increased its share in Aussie from 33% – to 80% in 2012 and 100% in 2017 – but despite this, Symond says he wasn’t surprised by the latest twist.

“Rightly or wrongly, vertical integration is being called into question, so this is just CBA getting on the front foot. As is the nature of these types of market-sensitive announcements, it all happened very quickly,” Symond tells Australian Broker.

“The good news is that Aussie has always operated as a standalone business. Our brokers, lenders and partners continue to see this in action, and this will simply be more obvious once again when everything’s done. For our brokers and franchisees, the demerger really won’t mean much. There was little change to Aussie as CBA’s ownership grew over the last decade, and we expect similar now.”

In the months since, Aussie has recorded what Symond describes as the “strongest financial results of our 26-year history”, with its loan book approaching $65bn. A total of 14 new stores opened over the course of the year, and future targets will see 10 new stores open in early FY19 and the mobile channel increase to 500 brokers.

“We’re looking for new franchisees who want to start, or grow, a small business with the backing of an industry-leading brand. We have some great franchise territories available across the country, and we’re always looking for new mobile brokers to join the team,” Symond says.

Adding to the good news, in July Symond was elected a life member of the MFAA in recognition of his contributions to Aussie, the wider industry and the association itself, for which he served as president during the GFC.

Reflecting on recent months, Symond highlights that the company refuses to be impeded by the storms faced at this time. “With almost 27 years in this industry, if we’ve demonstrated anything it’s that Aussie thrives in a changing, and even a challenging, environment,” he says.

Industry changes

Despite the silver linings, question marks remain over much of the industry, including the what, when and why of how brokers are paid. Symond’s ideal outcome is “little or no change”, but he is under no illusion that anything could happen.

While closely engaged with the Combined Industry Forum, the MFAA, various regulators and the government, Symond’s position is, “If it ain’t broke, don’t fix it”.

“Without trail, brokers will simply have to dedicate more of their time and efforts to attracting and helping new consumers in order to sustain their businesses, to the detriment of their current customers,” he says.

“Any move to ban trailing commissions will actually risk damaging the broker sector and reduce customer access to a wide range of lenders, which could ultimately reinstate the power of the major banks and drive up interest rates for consumers. The right outcome would be no change.”

To buoy morale during this period, Aussie aims to build on the close contact it maintains with its broker network, consulting on key initiatives that will in turn support brokers in their own businesses. However, elsewhere in the industry, Symond observes strong potential for seismic shifts.

Qualifying his observations, he cites increased risk and compliance requirements along with tightening lending criteria – of which he has been a vocal critic – as the most influential changes on the horizon.

“With almost 27 years in this industry, if we’ve demonstrated anything it’s that Aussie thrives in a changing, and even challenging, environment” - James Symond, CEO, Aussie Home Loans

“So many things are shifting, and for a broker without a partner who is in sync with these changes, I think it will be challenging for them to keep up,” he says.

“Our brokers are small business owners who are doing their very best and need a supportive partner.”

Stepping up to the mark, Aussie has recruited quality assurance specialists in each state and is investing further in marketing, with a focus at the local level.

The strategy is to support individual brokers in growing their own local brand presence, with a focus on building two-way dialogues with the network. On the hardware side, the firm is ploughing time and funds into technology and systems to streamline processes.

The added strength will be crucial: Symond’s predictions for the coming months and years include a redrawing of boundaries in the aggregator space, increasing the likelihood of mergers and acquisitions.

A similar outlook is echoed in KPMG’s annual M&A predictor report. While this activity has been slowly building over the last three years, the impact of the royal commission on the wider industry landscape can’t be ignored.

“In this new world, or new normal as I call it, we will continue to see a contraction or amalgamation of aggregators in the market,” Symond says. “As the strong become stronger, I think the weak will be eliminated.”

Future strategy

Turning plans into reality, Symond promises a “serious investment spend” over the next two years to ensure the brokerage is “match fit” for its next 27 years – and beyond. This includes a board-approved multimillion-dollar investment that will roll out over the next two years to build a “safer, stronger future Aussie”.

While some of its plans are a reaction to recent developments, other elements are outlined in Aussie’s 2020 strategy, which is focused on targeting quality growth in both mobile and retail channels.

“We are investing more than ever in the future of Aussie and the future of our brokers’ businesses to ensure our brokers and team members have the technology, systems, processes and support structures they need to meet and exceed changing customer, community and regulatory expectations,” Symond explains.

In addition to the aforementioned plans, Aussie’s strategy also covers culture, as well as fostering a stronger understanding of consumer expectations and emerging technologies.

“Technology and digital are critical to our business and key elements of our future program of work. We must consider the evolution and introduction of new technologies now or get left behind,” Symond says.

To achieve this, Aussie will recruit a new executive to its C-suite in the form of a chief digital officer, who it is envisioned will become a subject-matter expert in the business, harnessing the opportunities in digital, both now and in the future.

On the customer-facing side of the business, a new marketing campaign was launched on 17 September, complete with a money-back guarantee, which Symond says backs Aussie brokers “like never before”.

“We will continue to put our money where our mouth is by telling customers that 100 bucks says that talking to an Aussie mortgage broker is worth their while. We’re so confident of the value our brokers offer that if they meet with us and don’t think it was time well spent, the $100 is theirs,” says Symond, who will personally voice the radio element of the multimedia campaign.

While the ongoing demerger means further changes are ahead, Aussie’s core values of “safe, smart and special” will remain intact, as will its vision to become the “best home loan provider on the planet”.

“Excitingly, as a standalone company Aussie will have a whole new world of opportunities for our brand and our brokers, and Aussie will become a much larger part of a smaller non-bank group,” Symond says.