: Yes, absolutely it is. The corporate that is Auswide Bank right now has a complexity and a sophistication that has grown, and we reached this point over the years. It has required us to evolve into this new banking corporate structure. Wide Bay Australia has had 50 years of success, and through its heritage has been primarily a branch-banking story … but that’s evolved over recent years and today it’s a multichannel strategy.
Because the organisation has taken this strategic footprint, the Auswide Bank move really supports that and marks, I guess, a new dawn in the evolution, and marks a level of corporate sophistication that exists now and will, I believe, develop further and further over time. What I’ve felt is that Wide Bay Australia has been a well-kept secret, in that it has a wonderful banking platform that’s been tried and tested over 50 years.
It’s really important that my people, when they’re having conversations further away from Southeast Queensland, are not having to spend the first five minutes of every conversation covering the ‘what are you?’ question that comes from stakeholders, because Wide Bay Australia doesn’t give away much. So the [re]branding certainly allows us to move the conversation from ‘who are you?’ to a ‘why should I choose Auswide Bank?’ question, which is really where we need to be engaging with our stakeholders.
MPA: Plenty of lenders compete as ‘non-banks’. How will the move to Auswide Bank make it easier for brokers to recommend you?
: The bank piece is what the end customer relates to more and more. The broader community probably doesn’t understand what a building society stands for, as much as they did 20 years ago. And they probably don’t understand what a credit union stands for, or a non-bank lender. The bank piece enables the broker to position with confidence; everyone understands what a bank is and does. Our introduction as the tenth listed Australian bank means that we can position ourselves as an alternative with a fresh approach, and I like to think of it as a break from the expected.
Most of the brokers who partner with us, further away from Southeast Queensland, the first thing they have to cover is who we are and what we do, so having Auswide Bank there instead of Wide Bay Australia certainly does help that conversation.
MPA: Do you think the Financial System Inquiry made brokers and consumers more aware of what non-major banks can offer?
: In terms of what the consumers and the public may perceive from the FSI, I think it’s very early days there, and I don’t really believe there’s enough information and enough debate in the public arena. I think what the FSI has done has generated a lot of conversation among people in the industry itself. So for us it’s been hugely important, because we recognise and applaud the need for us in the financial services community to look further afield and plan for the next 20–30 years, and what a great platform to do it that represents.
The key for us is getting outcomes from these recommendations, moving from the recommendation stage to tangible outcomes. I probably have a view that closing the gap in terms of capital responsibilities between the two groups that exist at the moment, the ADI’s internal risk ratings and the rest, would be a good thing … but until that actually happens we’re still competing, and I’m competing today in a playing field that’s not level.
MPA: Regional banks tend to pride themselves on the personal touch, but how will you realistically provide this outside Queensland?
: Expansion beyond Queensland is through our third-party distribution channel, and outside of Queensland is exclusively driven through third-party distribution. We have designed a model which emphasises the personal aspect of how we do business. So what we have is a broker support model that is very personal; I would almost call it a little bit old-fashioned because it is a high-touch model, because there are functions in the support model which touch the broker, which are a little different to how most lenders do it.
We have a broker relationship manager function, a relationship management function, and their role is to frequently engage with their brokers – as they have a set portfolio of brokers – and to be scenario experts for the brokers. In other words, very accessible to them, providing policy guidance, and providing a quick yes or a quick no, and, very importantly if it is a no, providing information on how you can restructure the no into a yes.
Now that level of guidance to some extent has disappeared from the marketplace, because the third-party channel has become so big; 50% of mortgages in Australia are generated through that channel. It’s a volume game, and most lenders just played the volume approach; however, I’m looking to put a level of expertise behind this engagement.
I’ve got a number of levels that sit behind the BRM to make sure the loan flow goes well. I’ve got assessors that manage that loan flow, and I’ve got in-house credit assessment. And that’s important because I’ve got a head of third-party credit who essentially sits right beside the assessment team, and they work out the credit complications very quickly and communicate well. And all of that plays out into a high-touch approach; that is my ultimate advantage, and there is quite a large segment of brokers out there who like and look for that personal touch.
MPA: Low rates and extra commission offers have long been used by non-majors to gain market share. Will Auswide be following the same path?
: I’m really keen to use this personal broker support model as my key point of differentiation and surround it with product niches. What I do in the commission space is I’ll offer a very fair market level of remuneration structure. So that’s how I’ve been operating for two years, and I’m at a level now where we’re really competitive and good value. We do pay trail from day number one; that is good from a cash flow perspective for brokers, but my key focus here is on service and product.
In terms of rates we are, and will continue to be, offering very good value for our rates. Presently we’ve got offers on the less than 80% LVR category, and a special offer for the category of loans that sit between 80% and 90% LVR, and there’s extra incentives as well. So I think we’ve got that covered really well.
MPA: So no stunts on the horizon?
: No, I don’t like that because that’s short term stuff. I’m more about being consistent. We’ve driven g
ood growth through our model over the last two years, and we’re looking to improve our execution and keep that growth trajectory. In fact, we want to increase our growth trajectory, and that’s what I think is going to happen.
MPA: Which specific products differentiate you from other non-major banks?
CN: I like to talk about what we’re doing with our fixed rate products, because we club a 100% offset and a redraw with a fixed rate, and that is a very flexible loan. What it means is that clients, customers with good cash flow, can effectively drive down their interest rate by using the features of offset and redraw, and it gives really good control to them … This is an advantage of us being smaller; we can do this and make these decisions, whereas some of the bigger players don’t need to look this far out of the box.
MPA: Which states will be the focus of your expansion strategies?
CN: The regions that we’re currently working very hard in to increase volume and increase flows are Queensland, NSW and Victoria; those are our key targets. Over the near term we’ll put more effort into Western Australia and more effort into South Australia; that’s down the pipe a little.
MPA: How would you like brokers to view Auswide Bank a year from now?
CN: The key thing for me is for brokers to understand how their customers get serviced by Auswide Bank, and for brokers to be really confident in that proposition – because I know when a broker places a customer and the customer has
a great experience, then that is the key moment of truth.