A year on from obtaining its full banking licence, Australia’s first smartbank is confident it has entered the next phase in its evolution and reports the mortgage side of the business is “primed for growth”.
To date, 86 400 has over 225,000 accounts on its platform, holds more than $300m in customer deposits, and has processed over $1bn in transactions.
The group launched its home loan product within nine weeks of being granted its licence and remains the only Australian neobank to provide mortgages; now, 86 400 reports having reached $40m in loans settled and awaiting settlement.
“We had the mortgage product live very quickly after licencing. The reality though, is it was in a pilot phase for some time,” explained 86 400 CEO Robert Bell.
“There was a lot of learning throughout that. I think we’ve made over 100 changes to our systems, policies, and processes since then.”
The adjustments made following the initial launch were directly shaped by broker feedback.
“We’ve been gradually and very carefully putting on more mortgage brokers. We didn’t want to have 1,000 on day one. We started with quite a small, controlled group to make sure the experience was really good,” said Bell.
“We’re happy that most of the time we’re getting under 24 hour approval of home loans, so we’re more confident now to start having more accredited brokers and we’re absolutely ready to deal with higher volumes.”
According to the CEO, while the group finished the financial year at the $40m mark, the majority of those home loans were processed in the six to eight weeks preceding the year’s end as the bank found its stride.
Having now fully moved through the pilot phase, the group expects the mortgage side of the business to accelerate at a faster rate, especially as a “major new partner” is in the works which is poised to catapult the group towards its target of hitting $2bn in home loans by the end of 2021.
“In the next couple of weeks, we’re hoping to make an announcement that demonstrates we’ll have significantly more brokers on our panel – or rather, we’ll be on the panel of significantly more brokers,” said Bell.
While COVID-19 has caused disruption across the banking industry, as an entirely digital bank, 86 400 has been able to seamlessly continue its operations and has even hired ten full-time team members since March of this year.
“That’s why we’re gaining momentum with home loans as well. Brokers are going, ‘Well, if I put a loan through a big four bank, it could take two, three, four weeks to process it.’ They’re using offshore processing centres that are facing challenges in this environment as well,” said Bell.
“For us, we’ve created a digital process where a customer doesn’t need to physically meet the broker, they don’t need to physically go into a branch, a post office. We’re well-designed for the current situation.”
Bell fully expects to sustain that level of service and for momentum to continue to build as more brokers come on board and volumes swell.
“What we find is the very first deal a broker does with us can take a few touchpoints with our BDM because it’s a little different in terms of the technology we’re using and the process,” he said.
“The second one they write, maybe only one touchpoint. After that, they just don’t need to talk to us at all. It’s really simple and really easy to do,” he concluded.
