Pepper Money leads the industry with innovation

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In an industry in which technological change is moving quickly, one company’s success stands out as it continues to challenge the status quo and set new standards

TECHNOLOGY AND INNOVATION that underpin brokerage growth and productivity have been major themes since the events of 2020 starkly revealed the disadvantages of an analogue world. Now, as the lending industry sheds the fetters of the pandemic, it’s the perpetual innovators and those who embrace them that are increasingly pulling away from the pack. Pepper Money is leading the charge. “While our success is underpinned by our people, strong credit policy and funding program, it’s our focus on technology and investment in our digital innovations that equips brokers with the right tools and knowledge to help more customers,” says Pepper Money chief executive Mario Rehayem. “We’re laser focused on innovation and digitisation that drives rapid change in our industry to continue delivering a highly competitive loan experience across a range of options and the complete spectrum of borrower profiles that resonates with brokers and their clients.”

Pepper Money is one of Australia and New Zealand’s leading non-bank lenders. Established in 2000, Pepper Money first launched as a specialist residential home loan lender in Australia with a focus on providing innovative home loan solutions to customers who were being underserved by traditional lenders. Today, Pepper Money has a broad product offering of residential home loans, personal loans, asset finance, novated leases and commercial real estate loans across Australia and New Zealand.

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Mario Rehayem, Pepper Money

The non-bank’s flagship tech tools, Pepper Product Selector™ (PPS) and Pepper Resolve™, are known throughout the industry for their accuracy and speed to credit decision. “We know consistency, certainty and speed to credit decision are critical now more than ever for brokers so they can confidently recommend Pepper Money, knowing their customer will get a great outcome. Our two-minute approval via PPS is therefore a one-of-a-kind innovation with a compelling value proposition,” says Rehayem. “Put simply, there is nothing like it in the wider banking and lending industry. The innovative tool was designed to save brokers time and provide confidence that the Pepper Money recommendation given to the customer means no surprises post-submission.” Available for prime, near prime and specialist credit profiles, PPS allows the broker to accurately identify a suitable Pepper Money home loan product via an indicative offer that gives the broker and their customer full line of sight of the interest rate and fees (if applicable) for the loan in a matter of minutes. “All they need to do is complete a series of questions about their customer’s loan scenario, and within minutes PPS accesses the customer’s credit information, conducts a product suitability assessment, and presents an indicative offer that Pepper Money will honour subject to credit review.” Importantly, the process doesn’t leave a credit enquiry footprint for the customer.

Mario Rehayem, Pepper Money

The need for speed Prompt decision-making on loan applications is crucial in this rapidly changing economy. With mainstream banks sometimes taking weeks to assess even longstanding clients, non-banks are rated highly by brokers for their speed. Doing things slowly may not only result in missed opportunities for the client but also means less time for brokers to maximise the value they offer, such as by negotiating the best possible deal or offering a wide range of loan options, and less time to build stable, profitable relationships. According to Equifax’s 2022 Mortgage Broker Industry Pulse Check, the three biggest broker time wasters are slow lead generation, lengthy application lodgements, and verifying an applicant's employment income information and assessing for fraud.

For brokers who haven't yet embraced tech innovations such as those offered by Pepper Money, there is a significant time and revenue drain involved in manually working out which leads are worth pursuing or chasing clients for unreturned documents. The PPS solution can provide an indicative offer from Pepper Money in two minutes. Data, analytics and technology are playing an increasingly important role in simplifying processes, reducing workload pressures, creating better customer experiences and helping brokers achieve faster turnaround times, which in turn translates to higher revenues. “The customer will have transparency on the rate available to them, the maximum LVR, fees, and loan amount on offer against the security, without impacting the customer’s credit report – and there are no surprises,” says Rehayem. “Our Credit Cascading Model, which is attached to a diverse range of credit policies and products, materially increases the probability of conversion for the customer. “Ultimately, our consistency in credit decisioning and time to yes has been a huge drawcard; we have held our infamous 24-hour turnaround times for the past five years, which instils confidence with the broker network when recommending Pepper Money.” Getting to yes Rehayem says that around 50% of customers are getting a negative response from their first-choice lender, despite the fact that a ‘yes’ might be a possibility if the application was presented to Pepper Money, which takes a real-life and common-sense approach to understanding the customer’s needs and circumstances. Pepper Money recognised this problem and came up with Pepper Resolve™ as a solution. This is an automated home loan offer tool that integrates into a mortgage broker’s or aggregator’s customer management database (or CRM) to offer an instant alternative solution within seconds when their application has been declined by another lender, withdrawn, or is otherwise stuck due to the lender’s onerous conditions.

The leading non-bank lender was also named Best Non-Bank of the Year 2022 for the second year running at the Australian Mortgage Awards. “What sets us apart in the market is trust, transparency, speed to yes, consistency, diversification of our products, and our people; these are the ingredients to our success and why we’ve been recognised as the leading non-bank in the market,” says Rehayem.

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“It’s our focus on technology and investment in our digital innovations that equips brokers with the right tools and knowledge to help more customers”

“We know consistency, certainty and speed to credit decision are critical now more than ever for brokers”

In an industry in which technological change is moving quickly, one company’s success stands out as it continues to challenge the status quo and set new standards

Normally, if a broker wants to find an alternative for a declined customer, they need to research and resubmit an application to another lender. “This can take hours, with no guarantee of a positive outcome, and the customer may get another enquiry on their credit file,” says Rehayem. The customer can be left in a vulnerable position while the broker is researching for an alternative solution, but Pepper Resolve™ gives instant assurance that there is an another option available. This can buy the broker and customer time to further investigate alternative solutions, knowing that Pepper has already indicated that the customer fits its credit criteria. “Pepper Resolve™ takes the legwork away from the broker,” says Rehayem. The conversation with the customer instantly shifts from a negative to a positive one, thereby strengthening the broker proposition. “It also helps customers find solutions that they might not have been previously aware of, so they can turn a no into a yes and stay on track to meet their financial goals.” Pepper Money has won high praise for the Pepper Resolve™ innovation, recently being recognised as the 8th Most Innovative Company in the bank, finance and super sectors across Australia by the Australian Financial Review BOSS list.

Digital identity verification Real-time digital VOI with NextGenID

Pepper Money’s innovations and enhancements in 2022

Source: Pepper Money

Pepper Money’s commitment to continually evolving and improving its value proposition to help brokers become more productive and achieve better results has led to a high level of trust in the non-bank. “Brokers continue to uphold a level of confidence in the people, product and processes behind the Pepper Money brand – and that’s a commitment our team take seriously,” says Rehayem. “We’ll continue to look at ways we can reimagine and challenge the way things are done, because to us, challenging the accepted is business as usual.”

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50%

Proportion of loan applicants rejected by their first-choice lender

Simplified valuations Automated and electronic home loan valuation options and commercial valuation ordering on CoreLogic Property Hub

Loan statements Removal of loan statement provision to verify repayment history (CCR) for refinance loan assessment

PPS Enhancements to Pepper Product Selector that continue to optimise the broker experience

Electronic signing NextGen e-signing of documents and compliance tab

Commercial team structure Pepper Money is investing in its BDMs to help them take a holistic approach, and leverage its data and experience in specialist and SME lending

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Digital identity verification Real-time digital VOI with NextGenID

Pepper Money’s innovations and enhancements in 2022

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