Lender aims to increase home loan volumes by 4%-5%
Bendigo and Adelaide Bank says it will leverage its upcoming digital-only mortgage platform to achieve organic growth in its home loan volumes.
The bank aims to increase its home loan volumes by at least 4%-5% in the current financial year, according to a report by The Australian. However, Bendigo remains cautious about the level of competition in the market and is prepared to step back if the competition becomes too intense.
This renewed focus on organic growth comes after the bank's unsuccessful attempt to acquire Suncorp's banking unit last year, The Australian reported. The Queensland lender, Suncorp, opted for a $4.9 billion sale of the unit to ANZ, rejecting Bendigo's proposal to double its size and reduce costs.
The ANZ deal was blocked by regulators earlier this month, who believed that a tie-up with Bendigo would be more favourable for competition. Both banks are now seeking a review by the Competition Tribunal.
Richard Fennell (pictured above), Bendigo's head of consumer banking, expressed interest in the ongoing regulatory activities surrounding Suncorp and emphasised that Bendigo remains focused on growing its business organically.
“Clearly there’s a lot of water to go under the bridge before anyone’s going to be worried about Bendigo and Suncorp considering a marriage, given that there’s a lot of regulatory activity that’s going to [happen] in the next 12 months with where Suncorp hopes to find a different partner rather than Bendigo,” Fennell told The Australian. “In the meantime, we just keep on and remain very much focused on growing our business organically and staying close to our customers in times like this … [when] many of them wouldn’t have experienced a time with interest rates at this level in their working life.”
Fennell acknowledged that the market conditions, with interest rates at unprecedented levels, pose unique challenges for customers. However, Bendigo aims to stay close to its customers and continue its organic growth strategy.
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Despite anticipating a modest increase in mortgage stress due to multiple cash rate increases by the Reserve Bank, Bendigo and other major lenders have been surprised by their customers' resilience, according to The Australian. Many customers have maintained their employment and utilised their cash buffers to withstand the higher interest rates.
Bendigo has invested $206 million, more than a third of its record $577 million cash profit this year, in foundational technology over the past two years, The Australian reported. This investment aims to simplify and transform the bank into a more efficient digital operation. The bank has been actively building its digital capabilities, with digital channels now accounting for 12% of home settlements, up from 2% in 2019. These channels include BEN Express, the millennial neobank Up (acquired by Bendigo in 2021), and third-party partnerships with Qantas Money and Tic:Toc.
While Bendigo currently relies on Tic:Toc for its digital channels, it is also developing its proprietary digital platform, following the footsteps of the big four banks. The bank is in the process of a major lending transformation that will automate a significant portion of the lending process, The Australian reported.
The new lending platform will be introduced in a trial with long-standing partner Finsure in November, followed by its extension across the bank's broker network in the second half of the financial year. Eventually, the yet-to-be-named online banking platform will also be introduced at Bendigo's branches and among its mobile bankers, according to The Australian.
The bank expects the new lending platform to significantly reduce the processing time for broker-led applications from around eight hours to just minutes. The bank aims to support customers who require swift financing decisions, especially in situations like participating in auctions.
Bendigo forecasts relatively high growth, depending on the competitive landscape, as home prices are expected to rise in the next 12 months. The bank aims to match the industry's credit growth, estimated to be around 4%-5% this year, by offering competitive pricing and generating reasonable returns, The Australian reported. As Bendigo's digital capabilities continue to expand, it anticipates growing above the industry average in the following years.
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