Recording double-digit year-on-year growth in its mortgage book, a streamlined Resimac is being positioned to capitalise on the next wave of market trends. CEO Scott McWilliam reveals the details to Australian Broker
The Reserve Bank of Australia estimates that non-bank residential mortgage lending has grown by around 15% per annum over recent years, putting the sector well ahead of its mainstream bank competitors.
But in 2018 things started to accelerate, with loans and advances by non-bank intermediaries up 11.4% over the year to September. It was the strongest annual growth in 11 years and put the non-banks firmly on the map for borrowers from all walks of life.
However, for the non-banks the trend is far from a simple pendulum swing from the royal commission.
By offering service, systems and approval procedures that are superior to those of their traditional bank competitors, the non-banks have been able to meet the demands of discerning borrowers. Not only does this signal that the current environment is the new normal, but it raises the bar in terms of customer experience.
“Consumers today are better informed than they’ve ever been and are therefore more aware of and favourable towards the alternatives in the market” Scott McWilliam, CEO, Resimac
“We see this as a long-term tectonic shift,” says Resimac CEO Scott McWilliam.
“As a mature, leading non-bank lender, Resimac has benefited from the consumer movement away from traditional lenders. Consumers today are better informed than they’ve ever been and are therefore more aware of and favourable towards the alternatives in the market. This is encouraging brokers to educate themselves about well-established non-bank lenders such as Resimac.”
While Resimac has certainly been in the right place at the right time a series of behind-the-scenes developments have also contributed, helping the lender to achieve double-digit year-on-year mortgage book growth in Australia.
These started with the consolidation of the Resimac and Homeloans brands in December 2018 following a 2016 merger that created one of Australia’s largest non-bank lenders with a combined loan portfolio of more than $12bn.
The new Resimac then streamlined its offerings to compete on product, rate and service, as well as customer experience, across prime, near prime and non-conforming loans.
A team restructure followed, which saw the creation of a Relationship Management Team for broker partners and the appointment of four new BDMs, with two based in Melbourne, one in Sydney, and one in Adelaide.
Next came a “significant investment” in technology, designed to “transform our business and customer experience”. For example, Resimac now offers Visa Loan Access Cards for customers with Resimac-funded loans, providing greater flexibility and more functionality for accessing loan account funds.
“There have been several highlights which have flowed from our successful move to a single brand,” says McWilliam.
“Our service position is a key performance driver of this business. In order to get all of that operating as effectively as possible, we had to remove some of the unnecessary complexity that sat in our business as a result of operating two brands.”
Digitisation has been a key enabler of the new business strategy. According to McWilliam, the goal is to leverage data and tech solutions to provide superior borrower and broker experiences and then entrench this philosophy throughout the organisation.
“It’s about building scale and productivity and delivering quality for all our stakeholders,” he says.
“We are also very happy to deliver against these objectives via acquisition or partnership with other parties that we believe are highly successful in their areas of speciality, and who offer something we know our customers want.”
On that note there have been several developments in recent months.
The first is a partnership with Athena Home Loans, the fintech determined to help borrowers pay off their debt, rather than take on more.
In a mutually beneficial arrangement, Resimac is providing funding support to Athena and in return will enjoy access to the fintech’s state-of-the-art digital customer experience. According to McWilliam, the deal will “fast-track some of our priorities”.
Then in July of this year Resimac acquired a 15% stake in the Adelaide-based fintech, Positive Group. Specialising in asset finance solutions, this deal will likely support Resimac’s diversification from mortgage lending, as well as the enhancement of its technology in asset finance and, as a result, the customer experience.
“We are excited about what we can achieve together,” McWilliam says. “The Athena Home Loans and Positive Group deals are great examples of how we are willing to partner with external parties in order to realise our strategic objectives.”
A number of factors have converged to create the goldilocks environment in which Resimac currently thrives. However, McWilliam’s focus is now on positioning the business to build on its winning streak, regardless of external factors.
Central to this is responsible lending. While banks have moved away from their reliance on indexing and profiling – which was previously depended on to form a view on individual living expenses – Resimac assesses loan applications based on the applicant’s own circumstances, enquiring about actual spending habits and living expenses.
“Yes, the landscape has changed, but it has changed more for others than for us because we believe we have been consistently adhering to our responsible lending obligations,” McWilliam says.
“As a result, we have not had to materially change our policy because it is consistent with our responsibilities. It really has been a case of the market getting closer to us than us getting closer to the market on this,” he explains.
Resimac is just one of a number of non-banks to be in the right place at the right time, but the lender is far from resting on its laurels.
McWilliam expects that demand for non-bank home finance will continue to grow in 2019, adding to existing demand for mortgage solutions.
Operationally, the rest of the year will see continued investment in the service proposition for brokers, as well as broker education that will focus on improving the customer experience pre- and post-settlement.
“Resimac will continue to provide a competitive value proposition down the broker channel, and we are confident that we will continue to grow our market share. As for the broader mortgage market for the rest of 2019, there have been some positive signs recently in relation to borrower activity, and we have an optimistic view about the future of the sector,” McWilliam says.
The focus on customer experience will continue well into 2020, along with investments in technology, process efficiencies and talent. Further, McWilliam reveals that there is also talk of expanding the product range beyond home loans.
“Our goal is to not only become a more diversified, leading non-bank lender but to broaden our proposition over time to become a leading financial services company,” he says.
While the details are under wraps for now, an educated guess can be made as to what that expansion could entail. Given the recent partnerships and heightened market demand for personal finance solutions, commercial, equipment and even personal loans could be on the cards.
What is clear is that the strong focus on digital distribution – whether direct to market or via the third party channel – will remain, and McWilliam and the growing Resimac team will certainly have their work cut out for them.