Commonwealth Bank remains the owner of Aussie, but its stake will be reduced to a minority stake of 45% when a merger deal with Lendi is reached, which will offer Lendi shareholders 55% of Aussie. Lendi will help Aussie create a new digital brokerage experience, while Tic: Toc provides direct execution capability to clients, from online chat to loan appraisal, to settlement.
Purely digital end-to-end mortgages remain a small part of a very large market: Customers who search for a mortgage online and stay online to complete the transaction represent 6% of the market, worth approximately $ 21 billion a year, according to a Momentum Intelligence Survey cited by Aussie.
But that’s increasing by 33% per year, Equifax says. “The digital channel is developing rapidly and within this framework, it is the pure digital players who are growing the fastest,” said Anthony Baum, CEO and founder of Tic: Toc.
Aussie will be competing with a growing number of players, including Athena Home Loans, Homeloans.com.au (which is part of Resimac), UBank (which is part of National Australia Bank) and Tic: Toc itself. Tic: Toc settled $ 1.5 billion in mortgages under his own brand in 2020 (loans are also underwritten by Bendigo), up 128%.
Aussie wants to attack the market of customers who start looking for a home loan online, but then head straight to a bank to complete it, which Momentum says is 16% of the market, worth around $ 57 billion. of dollars. The value of loans settled through Australian brokers in 2020 was $ 17.7 billion.
“The Aussie is leveraging the global ‘platform’ theme in financial services,” Baum said. “The brand, the technology and the bottom line break down into three capacity components. Aussie uses its brand, Tic: Toc technology and the Bendigo balance sheet. It’s like Afterpay, 10x, and Westpac. “
While Tic: Toc will handle the process and Bendigo issues the loan, from the customers’ perspective, the look and feel of the application process will remain within Aussie’s environment. If customers wish to interact with a broker during the buying journey, they will be transferred to one of Australia’s 1,000 mortgage brokers in approximately 220 storefronts across the country.
With this network of Australian brokers potentially uncomfortable with the digital shift, Mr Symond has sought to allay any concerns about the disruption. His message to Aussie brokers is: “This is a client we would not usually attract.”
When the The Australian Financial Review Asked if increasing digitization would lead to physical network consolidation, he said, “Time will tell, but right now we have a lot more customer demands than we can handle. I would be very surprised if any brokers say they are losing business to an online channel at this time. They trade as much as they can consume and it will really help our brokers. “
“This industry is still very complicated, you have thousands of products and deviations. Today, and for a long time to come, face-to-face meetings and brick and mortar will be there. Online, in my opinion, will only be a minority part of the business for quite some time. However, as systems and processes become cleaner and simpler, inline traction will become more and more important. So we want to capture all the different parts for consumers. “
Asked whether Bendigo would keep an exclusive arrangement, Mr Symond declined to be specific and said, “Let’s see how the program works. Let’s see what kind of volume and quality we get. In 12 or 24 months we can see who else wants to play. But at this point we have a dance partner for this product line and we are committed to Bendigo and Adelaide Bank and are happy to launch this with them.
Going to one of the big banks “is certainly not part of the thinking process right now,” he added. About two-thirds of the loans referred by Aussie are through non-material bank lenders.
Adding a digital channel to Aussie made sense given the history of the company, Mr Symond said. When the company was established in 1992, it didn’t even have bricks and mortar, but instead sent brokers to homes, before realizing that a physical network would help attract new customers.
“Either you are part of the change or you are a victim of it,” he said. “This is the Aussie trying to step forward again and we’ve been really good at it for 30 years. When brick and mortar storefronts were needed, we deployed them successfully. Aussie Online is something really important for the future of the business. There are a lot of people looking here to see if we are doing it right. “