Major bank committed to branch network as broker business falls

By James Mitchell

08 November 2016

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The CEO of a big four bank says face-to-face service through proprietary channels will continue to be an important component of its mortgage distribution strategy, despite a decision to close 173 branches.

Westpac yesterday reported an 8 per cent increase in home lending for the 2016 financial year. The major lender said its mortgage growth was supported by strong proprietary flows which delivered 56 per cent of home loans during the second half.

The latest JP Morgan Australian Mortgage Industry Report – Volume 23, released last month, highlighted that Westpac had closed 173 branches (from 1,261 to 1,088) and improved growth by increasing broker flow modestly from 47 per cent to 49 per cent.

But according to Westpac chief executive Brian Hartzer, broker-originated loans have actually fallen, and the bank remains committed to its branch network.

“We continue to think that in-person service is really important, particularly for mortgages. We’ve had good growth in our own branded distribution in mortgages this year. Brokers fell as a percentage of our originations this year,” Mr Hartzer said.

“We are seeing more of a move toward online, not so much in mortgages although that is increasing. We certainly think digital will become more and more a feature of how we run grow our business.

“But the human element will remain very important for a very long period to come in our view. That’s why we are continuing to be committed to our branch network.”

Mr Hartzer’s comments are in stark contrast to those made by ANZ boss Shayne Elliott, who earlier this year explained the significance of the third-party channel to the bank’s home lending strategy.

“Our customer base in Australia feel brokers are a good way to look at the market overall and make the best decision, so there is demand for it,” Mr Elliott told The Adviser.

“Secondly, for ANZ, what we find is that brokers are a terrific way to acquire new customers. Somebody who is not already an existing customer of ANZ is unlikely just to wander into a branch or call up the call centre and ask about a mortgage. But they do talk to brokers.”

ANZ last week reported that 49 per cent of its home loans in 2016 were originated by brokers, up from 48 per cent a year prior and 47 per cent in 2014.