Westpac has doubled its investment in online broker uno Home Loans with another $25m to support the mortgage service's ambitious targets.
The amount has brought Westpac’s total investment in uno to $51.5m, giving the bank about 81% stake. The move is seen as part of Westpac’s plan to get a share of the more than $2bn annual mortgage broking revenues.
Westpac made its first investment – worth $16.5m – in uno in 2016, the year the company launched. This was followed by two more rounds of funding for the online broker last year, bringing the total to $26.5m by October 2017.
uno targets to get a 10% share of the mortgage market in 10 years. It currently has less than 1% share of the business.
“We grew our business 600% in our first financial year ending 30 September 2017 and the next phase of our strategy -- which this round of funding will support – will focus on our goal to support 10% of Australia’s mortgage customers to secure their home or invest in their future,” said Founder and CEO Vincent Turner.
While it would seem the company is looking to take market share away from brokers as it scales its business, Turner said uno is not focused on taking on traditional brokers. Instead, it is marketing its business model as a third option.
“A lot of customers looking for a mortgage go to brokers and banks. We always say this is a third option. There’s mortgage broker market share, there’s bank market share, and then there’s digital mortgage service as a third option – that’s the category we are focused on,” he told
Australian Broker.
The company is at an early stage of growth where it is working at exactly what the customers want and how to deliver that, said Turner.
uno plans to use Westpac's latest funding to further streamline the mortgage process.
“We are switching gears to scaling. Part of the equation in the next few years will be about taking the value proposition we have and working on how to deliver it to a lot more customers,” said Turner.
uno is looking for a new CEO to lead its business operations. Turner will assume the role of chief innovation officer and founder in mid-2018, a move he considers critical for his company’s growth plans.
To support its growth strategy, the online broker is expanding its team by more than 50% and will continue investing in technology and building its brand.
The company has 22 lenders on its platform, including Westpac and the other three major banks. It settles two-thirds of loans through non-majors, with 75% of loans going to 12 lenders.
“Customers, when given visibility to all the products, actually have a broader spread of lenders,” said Turner.
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