At only 15 months old, a digital home loan provider has been named Australia’s top innovative company.
Nano Digital Home Loans, which prides itself on processing mortgage applications in just 10 minutes, is the overall winner of the 2022 AFR Boss Most Innovative Companies awards.
Andrew Walker (pictured above left) and Chris Lumby (pictured above right) who were executives at BT (the wealth arm of Westpac, until they launched Nano and its first product in July 2021, say mortgage customers have traditionally suffered from long wait times.
“Our analysis was that the largest pool of economic rent in retail banking globally comes from the mortgage business,” Walker told AFR.
“It’s also the part of the business that’s got the worst customer experience, the longest wait times and has had the least amount of investment in it for decades.
“Australia’s a controlled oligopoly - circa 80% of the economic flow comes to you by virtue of market structure and as a publicly listed company, the incentive at the margin to invest in innovation is very low, so consequently you don’t invest. We took a step back and said, ‘is there a way to fundamentally reinvent the mortgage market?' ”
This is the second consecutive year that a mortgage start-up was named the overall winner of the AFR BOSS Most Innovative Awards after Athena Home Loans took out the 2021 prize. More than 700 businesses competed for the AFR BOSS awards in 10 categories, which showcases the best innovations in Australia and New Zealand.
Walker told the AFR by automating the mortgage application and approval process, which involves collecting information such as property valuations, credit bureau and financial transaction data electronically, it could reduce the completion time to about 10 minutes from the three or four weeks banks were typically taking.
“The end goal was to license the digital mortgage platform to banks, but first we needed to prove the technology worked,” Walker said.
“The best way to do that was to start as a direct-to-consumer mortgage provider which ensured the product was visible to potential corporate clients.”
In October 2021, just four months after launching, Nano was writing $20m in loans a week and within a month of launching mortgages direct to home buyers, it was fielding inquiries from banks keen to explore partnerships.
Walker and Lumby said they assumed it would take five years to switch to becoming a business-to-business operation, but that time frame was shortened to two years.
“Our business today is all about leveraging the global partnership with Salesforce,” said Walker.
“The direct-to-consumer side of the business is certainly not a growth focus for us at the moment.”
Speaking on Nano’s success, Walker said its ability to look at the mortgage market from the outside meant they were not encumbered by existing norms.
“You need to get people from outside the industry that you’re trying to disrupt in key roles,” Walker said.
“Where you start dictates where you’ll finish. If you start from incumbent thinking, you start from old systems and old processes and you really can’t innovate at the pace that the companies that are starting with a blank sheet of paper.”
Lumby told the AFR that Nano’s future was bright.
“A global downturn triggered by rising interest rates might act as a dampener on overall mortgage market growth, but it is likely to prompt banks to look for cheaper ways to process home loans and ensure we are meeting rising customer expectations,” Lumby said.
“The hardest part of innovation is execution and the capital raising. Nano completed its first round of funding during the pandemic (of $33m) which was very, very hard.”
