Non-major's big growth spurt

by MPA27 Apr 2020

The last half a decade represents a period of massive change for the mortgage and finance industry. With record-breaking, booming market conditions in Sydney and Melbourne that saw property values soar, brokers were busier than ever between 2015 and 2017.

That is, until APRA stepped in with a raft of measures designed to slow property price growth and avoid an Australian real estate ‘bubble’.

Next came a year-long royal commission into financial services, which prompted a number of recommendations that had the potential to truly turn the mortgage industry on its head.

It may have been a challenging time, but it’s also created an opportunity for banks and lenders to pivot and innovate, and take advantage of market conditions to truly prosper. This has paved the way for second-tier banks in particular to grow their market share since early 2018.

Alice Del Vecchio, head of distribution, retail banking and wealth management at HSBC Australia, says non-major lenders continue to drive “greater competition and a unique perspective to the market”.

Alice Del Vecchio, head of distribution, retail banking and wealth management, HSBC Australia“Australia has a strong and dynamic banking system that fosters innovation, which is vitally important as consumer preferences evolve,” she says.

“For HSBC, empowering our people, continued product innovation, price competitiveness and international connectivity are key to our success in personal banking. We continue to deliver  award-winning products and great service, and our presence in 64 countries and territories worldwide also enables us to use our vast network to provide a strong and differentiated local presence for our customers.”

In the last 24 months, HSBC has made significant inroads into the Australian mortgage market, a direction that Del Vecchio says reflects the bank’s “wider ambitions to grow our presence in Australia across each of our businesses, becoming a tangible alternative to the majors”.

“We have added more broker partners and several new branches over the past two years, which has significantly increased our distribution capabilities”

“In mortgages, we have added more broker partners and several new branches over the past two years, which has significantly increased our distribution capabilities and allowed us to target a far broader customer base with very competitive rates and faster loan approvals,” she explains.

“According to APRA figures, HSBC’s year-on-year mortgage growth was 132% in 2019, ranking it fourth among authorised deposit-taking institutions in absolute growth.”

Part of this impressive growth comes down to the way HSBC supports both brokers and clients, Del Vecchio says.

“Our broker partners tell us they value our competitive interest rates, our end-to-end service model, and the dedicated and professional staff that support this channel, capable of dealing with more complex client scenarios,” she says.

“Our partnership managers, mortgage care team who triage broker applications, our purpose-built broker branch that supports onboarding of customers, and our locally based underwriters – all work hand in hand to offer brokers  faster turnaround times and a more personalised service than many of our competitors.

“And our customers also benefit by receiving the same level of service and relationship they would if they came to HSBC via any one of our branches here or overseas, or contacted us over the phone.”

In the current climate, with the COVID-19 pandemic upending the economy and completely transforming the way we do business, giving customers easy and open access to customer service has become even more essential.

As well as working closely with brokers to ensure customers are able to problem-solve their individual situations as swiftly as possible, Del Vecchio says HSBC has recently introduced several new measures designed specifically to help customers who are currently experiencing disruption to their finances.

“These include a reduction in one-, two- and three-year Premier fixed rate home loans for owner-occupiers paying principal and interest, as well as a new 12-month personal term deposit rate of 1.70% per annum for both new and existing eligible customers,” she says.

“We’re also providing the opportunity to defer home loan, personal loan and credit card repayments for up to six months, and we encourage any personal banking customer experiencing hardship to contact our team to discuss the most appropriate solution for their individual circumstances.”

While the health pandemic is the biggest issue for all Australian businesses right now, there are other challenges that are more specific to the banking and finance industry, particularly the non-major banks.

At the centre of it all, in the wake of the royal commission, is the core issue of trust, Del Vecchio says.

“Our industry is facing unprecedented change. Regulators and the government want all banks to continue addressing cultural issues and to rebuild trust with their customers, while consumers themselves want their banks to be responsive, transparent, efficient and  relentlessly focused on delivering great service,” she says.

“HSBC’s year-on-year mortgage growth was 132% in 2019, ranking it fourth among authorised deposit-taking institutions in absolute growth”

To this end, HSBC continues to evolve its offering by delivering “competitive home loans and award-winning savings products”.

“At HSBC we currently offer one of the lowest home loan rates in the country; we have great flexible savings products and a unique multi-currency account, Everyday Global, with no overseas transaction or ATM fees,” Del Vecchio says.

The bank is also focusing its efforts on digital solutions that can streamline processes and outcomes for customers – such as its recently launched new mobile banking app, and its new rewards program, Everyday Extras.

With Everyday Extras, HSBC customers who deposit A$2,000 or more into their Everyday Global Accounts each month will receive:

  • 2% cashback when they tap and pay using Visa payWave, Apple Pay or Google Pay on eligible purchases under $100, up to a maximum A$50 cashback each month
  • An additional 0.40% bonus interest on the ongoing variable rate of their HSBC Serious Saver Accounts

“A competitive landscape gives customers choice and improves the ability for all banks to provide better service to customers,” Del Vecchio adds.

“While this is undoubtedly a challenging environment, it’s also an opportunity for all banks to look inwards to their own processes and ensure they’re doing everything they can to support their customers and deliver a great service.”