Bendigo and Adelaide Bank admits to mortgage distribution flaws

The regional bank said maintaining mortgage returns through the third-party channel is now a key area of focus after admitting an “underweight” exposure to mortgage brokers.

Speaking at the bank’s latest business strategy update in Sydney yesterday, Bendigo and Adelaide Bank’s executive of partner connection, Bruce Speirs, said the group’s current third-party proposition is very heavily skewed towards the mortgage management market, with more than 80 per cent of its portfolio originated through that channel.

“That’s a channel that’s had relatively limited growth in recent times and has been the subject of pretty intense price competition that we’ve actively not engaged with,” Mr Speirs said.

“And hence, on a relative basis, we’re underweight in terms of our broking exposures, so [while] we have almost 10,000 accredited mortgage brokers, only 1,500 of those have actively engaged with us in some form over the last 12 months.

The latest AFG Competition Index shows that Bendigo and Adelaide Bank recorded a 0.0 per cent share of broker-originated loans during the month of February. Over the last 12 months, the bank’s share of AFG’s broker-originated loans peaked at 0.2 per cent between May and July 2015.

Mr Speirs said Bendigo and Adelaide Bank’s new mortgage origination platform, LendFast which is set to be rolled out to its broker partners in the first half of the 2016-17 financial year, will improve its cost of processing per unit and provide increased capacity and flexibility with how the bank manages mortgage volumes.

“For a broker where processing ability is critically important, for us that’ll mean an ability to reduce our application processing time of between two to three days,” he said.

“It’ll also mean they’ll have greater visibility to where their particular application is up to in the process, thereby giving them a great chance of engaging with their customer through the process to deliver a better experience.”

Bendigo and Adelaide Bank’s residential mortgage portfolio grew by 3.5 per cent in the third quarter of 2016, significantly below system (at approximately 10 per cent over the quarter).

The regional bank’s national mortgage market share currently sits at 2 per cent.

[Related: Bendigo and Adelaide Bank hungry for more market share]