Tech connects lending ecosystem like never before

Tech advances are giving brokers more time, accelerating business activity and bringing formerly disparate parts of the financial system into ever closer relationships

THE PHILOSOPHER Alfred North Whitehead said that civilisation advances by extending the number of important operations we can perform without thinking about them. This seems like a pretty accurate description of some of the recent changes underway in parts of the financial system as more automation reduces the need for human involvement and prompts its synapses to fire ever faster. Just as physical distances seemed to shrink thanks to advances in transportation and communications over the last two centuries, so too are various touchpoints in the financial system being drawn closer together as technology increasingly permeates the lending economy. Non-bank lender Wisr, which specialises in financial services, unsecured personal loans and secured vehicle loans, is one firm at the forefront of this evolution. “Technology is playing a significant role in strengthening Wisr’s relationships with aggregator and broker partners,” says chief commercial officer and head of broker Peter Beaumont.

“Better technology doesn’t just mean an improved back-end service, it should also be easier to use,” he says. He highlights OnDeck’s Lightning Loans that require just six months of a small business client’s bank statements to be uploaded to the OnDeck portal. “It really doesn’t get much easier than this for a broker.” OnDeck’s KOALA Score™ risk-predicting credit model for business lending similarly allows the broker to perform important parts of the lending process without thinking about them. “KOALA gives OnDeck the ability to analyse the personal credit scores of business owners,” Poolman says. “It uses a sophisticated blend of big data, predictive analytics and statistical techniques in combination with data from multiple credit-reporting agencies, including illion and Equifax, to support more tailored risk assessment for Australian small business lending.” Previously, a business with limited data would have required some serious forensic analysis for a broker to discover its creditworthiness and might not have qualified for a loan, but KOALA uses a mix of commercial and consumer credit history plus cash flow to build a holistic risk profile. “This is a plus for newer enterprises that don’t have extensive trading data to draw on, as well as sole traders and partnerships, which generally don’t have the substantial volume of commercial data required by traditional lenders,” Poolman says. The most obvious benefits of these behind-the-scenes tools accrue to the end user. Beaumont says, “The biggest areas of impact from a customer perspective will be improvements in the customer experience, be they brokers or direct applicants.” Lodging applications straight from a broker’s CRM removes the need for double data entry and ensures data sets align, speeding up the loan assessment and settlement process, he says.

The rising cost of living is highlighting certain areas of the lending sector that are ripe for improvement as demand increases, such as consumer loans. “The consumer personal and secured-vehicle loan business is characterised by lots of ‘small tickets’; as a result, there are many efficiencies to be gained through technology and automation – reducing costs and removing process bottlenecks,” Beaumont says. When interest rates were low, the focus for brokers and those developing tech solutions to assist them was on tech that helped increase the customer base. That phase has now ended and other parts of the infrastructure that brokers use are undergoing upgrades. Recent research by Gartner shows that this is a worldwide trend as IT projects shift towards optimisation of core applications and platforms that support efficiency gains. “We have this amazing opportunity to look at a range of other things; for example, making it easier for customers to change their loan repayment frequency or to make one-off payments from the Wisr App,” says Beaumont. Wisr has recently brought in a new system to engage customers who are struggling to repay their loans due to the current economic climate. It has also invested in a world-class banking-as-a-service platform that will go live later this year to manage loan servicing.

Getting accurate and robust data about a client from the get-go makes a huge difference to brokers going through the loan application process. “Our view is that the more data we have, the better for the client. Data allows us to form a holistic view of a small business, which forms the foundation of responsible lending and also allows us to better tailor our finance solutions to each client’s circumstances,” Poolman says. “However, for tech to reach its full potential in this area, the quality of the data needs to be

OnDeck Australia is a leading online lender that focuses on Australia’s small business community. As OnDeck only provides small business loans, it’s an expert in an area that has been underserved by the banking sector for too long. Importantly, OnDeck offers a skilled and experienced team who have been hand-selected for their understanding of the needs of small enterprises.

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A few short years ago the previously arm’s length actors of broker, aggregator and lender would have gone through a series of largely manual processes to discover if clients were able to obtain a loan. Today, they are part of one almost seamless network linked by technology. Beaumont points to API connections that allow brokers to use their customer relationship management systems to obtain live loan pricing from Wisr on individual applicants in seconds via a ‘soft touch’ on their credit files; determine the applicant’s eligibility based on given lending criteria; and submit applications directly to a platform such as Wisr’s for assessment. OnDeck is another firm that embraces the advantages of technology. Chief executive Cameron Poolman points out the Whiteheadian implications of recent innovations at the non-bank.

Cameron Poolman

OnDeck

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Cameron Poolman has served as OnDeck Australia’s CEO since the company’s launch in the Australian market in November 2015. Prior to joining OnDeck, he was the founder and CEO of Grays Online, one of the country’s largest e-commerce groups focused on small businesses, from 2000 to 2014. He holds a Bachelor of Engineering (Mechanical) from the University of Sydney and a Master of Business (Marketing) from the University of Technology, Sydney.

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Cameron Poolman

OnDeck

Industry experts

OnDeck

Cameron Poolman

Peter Beaumont joined Wisr in 2015 and has led the growth of the company’s broker channel. He is a senior business executive with over 25 years of global banking, finance and project delivery experience with leading international investment banks Citibank, UBS AG, Bank of America, Merrill Lynch and ABN AMRO. Beaumont brings to Wisr a broad set of customer acquisition and sales leadership skills and has deep experience in operating high-volume, online financial product businesses.

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Peter Beaumont

Cameron Poolman

OnDeck

Industry experts

“[More] data allows us to form a holistic view of a small business, which forms the foundation of responsible lending and also allows us to better tailor our finance solutions to each client’s circumstances”

Cameron Poolman, OnDeck

Clients win when things happen faster. “New technology lets the broker get the deal done sooner,” Poolman says. “This flows through to benefits for their small business clients, who often rely on the rapid delivery of funding to take advantage of time-specific opportunities such as discounts on trading stock.” Work that’s unlikely to result in a successful loan application can be screened out early in the process, reducing paperwork and stress on the system overall. At Wisr, Beaumont says, “Our SLAs [service level agreements] for credit decisions have been reduced through improvements in key areas; for example, we can automatically filter out loan applications that don’t meet our criteria and then automatically approve those loans that do fit, subject to verifying against available data.” A key difference many brokers have noticed as more tech is introduced into the lending process is a time dividend at the end of the day to spend on value-added tasks. “Time is money, and brokers are very fortunate to have a wide choice of tech-enabled products and services that give them back their time,” Beaumont says. “All these tech products and services are aimed at helping them grow their businesses via one means or another.” Brokers can leverage these time gains by talking to clients about nascent or future lending needs in their particular areas. Such insights often only readily emerge at the ‘coalface’ when a broker is directly discussing the details of a client’s situation.

OnDeck

Cameron Poolman

Peter Beaumont

Wisr

Peter Beaumont

Wisr

Peter Beaumont

Barry Saoud joined Pepper Money in July 2021 as general manager, mortgages and commercial lending and is responsible for its strategic direction and operating performance across product, credit and settlements sales functions for Australia and New Zealand mortgages, commercial loans, personal loans and direct sales. With over two decades’ experience in financial services, Saoud has worked in numerous areas across legal, company secretary, sales and product management roles with the likes of Aussie Home Loans, GE Capital, HSBC and Norton Rose Fulbright. Saoud is a passionate leader with proven ability to grow businesses and exceed targets through innovative strategy and effective execution.

Pepper Money

Barry Saoud

Peter Vala has extensive experience in residential, commercial and development finance. He specialises in strategic implementation, leads the Thinktank relationship manager team, and works closely with brokers and aggregators.

Thinktank

Peter Vala

John Mohnacheff is Liberty's ebullient and charismatic group sales manager. With over 30 years of insurance, banking and finance experience, he is committed to improving the sales habits and disciplines of the entire group sales team. Before joining Liberty, Mohnacheff held executive roles at Westpac and Bank of Melbourne. He has a Bachelor of Business and a Marketing Master’s from the University of New England, and a Postgraduate Diploma in Organisational Behaviour from the University of NSW.

Liberty

John Mohnacheff

“Brokers are very fortunate to have a wide choice of tech-enabled products and services that give them back their time”

Peter Beaumont, Wisr

The time dividend

Published 23 Aug 2023

Peter Beaumont

Wisr

Matthew Porch is a financial services professional with extensive experience in the banking industry. He held corporate banking positions at Lloyds Banking Group and HSBC in the UK, then joined the ANZ corporate banking division in a credit role in Australia before becoming a relationship manager in small business lending. After a short stint as a finance broker, Porch joined Aquamore as a national sales manager and is now head of distribution. He has a Master’s in Applied Finance, as well as qualifications from the Chartered Institute of Bankers in Scotland and the Chartered Institute of Securities and Investment in London.

Aquamore

Matthew Porch

Barry Saoud joined Pepper Money in July 2021 as general manager, mortgages and commercial lending and is responsible for its strategic direction and operating performance across product, credit and settlements sales functions for Australia and New Zealand mortgages, commercial loans, personal loans and direct sales. With over two decades’ experience in financial services, Saoud has held numerous roles across areas ranging from legal to company secretary, sales and product management at the likes of Aussie (Home Loans), GE Capital, HSBC and Norton Rose Fulbright. He is a passionate leader with proven ability to grow businesses and exceed targets through innovative strategy and effective execution.

Pepper Money

Barry Saoud

Peter Vala has extensive experience in residential, commercial and development finance. As general manager partnerships and distribution at Thinktank, he specialises in strategic implementation, leads the non-bank's relationship manager team and works closely with brokers and aggregators.

Thinktank

Peter Vala

Wisr (ASX: WZR) is Australia’s first neo-lender with a commitment to the financial wellness of all Australians through providing a smarter, fairer and wiser collection of financial products (personal and secured vehicle loans) and services. Wisr provides a unique Financial Wellness Platform underpinned by consumer finance products, the Wisr App to help Australians pay down debt, a multiple credit score comparison service and Australia’s first money-coaching app, Wisr Today. This is combined with content and other products that use technology to provide better outcomes for borrowers, investors and everyday Australians.

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More brokers are relying on technology to boost their business opportunities, better understand customers’ needs and continue to be trusted partners to consumers. The Equifax Mortgage Broker Pulse Survey 2023 shows 16.5% of broker respondents intend to adopt new digital solutions to automate processes in the next 12 months, while an additional 17% will adopt new digital solutions to improve customer experience. Changes are being supercharged by a deluge of quality customer data that’s accessible to financial institutions on the back of open banking. This is expected to boost competition by making it easier to switch lenders and deliver consumers more choices to help them manage the family budget. “The introduction of open banking in Australia has the potential to make a wealth of data available to allow lenders to make faster, more accurate decisions,” Poolman says. The Consumer Data Right framework now covers virtually all consumer household deposits and is in the process of being extended to non-bank lenders. The CDR will streamline application processes, helping non-bank lenders make more accurate and efficient lending decisions. The number of daily API invocations, an indicator of open banking data consumption activity within the system, has rapidly accelerated from around half a million per day in June last year to over two million per day recently.

Wisr is working on gamified ways to help people pay off loans early; helping consumers better understand their credit scores and be aware of behaviours that can be detrimental; and giving its app a revamp. “The Wisr App – found in any app store – is going through a major expansion of functionality and a redesign to make it all fit. We are moving it from an optional piece of tech to an essential tool for customers to effectively manage their loans and engage with us with lots of value-added features.” Indeed, it seems there is hardly an area in finance that isn’t a candidate for some tech wizardry. A recent report from Accenture showed that generative AI will transform work across many industries, but of the 20 industries included, the highest potential for change was in banking.

In many ways, the current tech acceleration is still in its early stages in many industries, and brokers will need to be in a continuous state of relearning how to do their jobs. Many aspects of their jobs will likely become easier with systems and processes that require less active intervention. “There are so many opportunities to design and deploy new technology in the consumer personal and secured-vehicle loan business that one of the most challenging issues is simply prioritising which project or opportunity to tackle first,” Beaumont says. “The challenges are where we place our best for each upcoming quarter.” But even as the revolution gains momentum, many in finance expect that humans will almost certainly work alongside algorithms, helping customers on their journeys and handling exceptions rather than being replaced outright. “Regardless of advances in tech, we know that people always want to speak to people,” Poolman says.

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Developing links to the commercial sector through networking is also a good strategy. “We are proud that most of our work comes from word of mouth, so keeping the conversation going with our network is key,” Koutsoumidis says. “We help our brokers walk through the transaction and try to deal with obstacles before they crystallise.” As major banks continue to offer less-flexible products in a tougher economy, demand for knowledge and service in the non-bank commercial lending arena is only likely to grow. “Who better to help navigate that transition than brokers?” Bannister asks. “This is where we see significant opportunity in the years ahead.”

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Snapshot of daily API invocations from active data holders in the CDR

19 June 2022

15 SEPT 2022

18 DEC 2022

17 MAR 2023

278,908

619,621

1,233,888

1,613,689

19 JUNE 2023

2,066,033

Source: CDR government website

Banking

Insurance

Software and platforms

Capital markets

Energy

10%

20%

30%

40%

50%

60%

Higher potential for automation

Higher potential for augmentation

Lower potential for automation or augmentation

Non-language tasks

Percentage of work-time distribution by industry and potential AI impact*

Source: Accenture research report: A New Era of Generative AI for Everyone

*Based on these industries’ employment levels in the US in 2021

Top 5 industries in which generative AI will transform work

exceptional, and all financial institutions need to be prepared to engage in sharing data for open banking to live up to expectations.” Looking ahead, Wisr intends to improve its Broker Portal and also focus on additional automation of credit decisioning. “This will likely include further moves away from using scanned copies of physical documents to support assessment and increasing digital connectivity to access online customer information,” Beaumont says. As the quality of data available to the system improves, so the ability to automate applications accelerates. He says, “We plan to greatly increase the percentage of conditionally approved and auto-declined loan applications by applying deep data science and analytics to our decisioning engine.”