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Fintech lender gets huge mortgage lending deal

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A fintech lender has just landed a huge mortgage lending deal.

Fintech loan origination platform Tic:toc has secured a $25 billion, seven-year lending agreement from partner Bendigo and Adelaide Bank, The Australian Financial Review reported. The agreement will give Bendigo – which is a part-owner of Tic:toc and one of Australia’s largest home lenders – access to as much as $300 million in loans each month.

Bendigo currently has a $51 billion mortgage book, according to data from APRA.

Anthony Baum, founder and CEO of Tic:toc, says the fintech platform has settled about $1.7 billion in loans on Bendigo’s balance sheet, and that the agreement will underpin the next phase of Tic:toc’s growth, AFR reported.

“If we are able to maintain a five to 10% market share of digital and we are able to do that as digital trends towards the 30% of the market, which we think it will in the medium term, that’s a big market share,” Baum told AFR. “It’s a logical partnership for us because what it enables us to do is focus on making our technology better and our customer experiences better. Australia’s banks still collect the vast majority of Australia’s savings, and I don’t see that changing.”

Tic:toc’s platform speeds up the mortgage approval process. It can validate a prospective borrowers income, assets and expenses and deliver the necessary paperwork in about 60 minutes, according to AFR. Its arrears rate is around 12 basis points, compared to an industry average in the mid-to-high 70s.

“We are generating asset quality that is around five times the industry average,” Baum told AFR. “If you’re a bank and you’ve got access to the fastest-growing channel at the lowest operational cost generating industry-leading asset quality, why wouldn’t you partner up extensively and leverage their market-leading capability?”

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According to Tic:toc, its loan assessors achieve 7.3 outcomes per day. At a bank with a fully manual process, assessors achieve a run rate of around one per day.

The average loan at Tic:toc is around $500,000, in line with the standard mortgage, AFR reported. About 60% of successful applicants are seeking to refinance with loan-to-valuation ratios in the mid-60s. About 35% are first-home buyers.

Baum told AFR that Tic:toc hasn’t seen a drop in applications even with the advent of tougher lockdown restrictions in Sydney and Melbourne.

“Actually the opposite,” he said. “June was a record, May was a record, April was a record before that, and we’re on track to deliver another record in July across submits, approvals and settlements. “If you think about it, if you’re in a lockdown then it’s a really great time to refinance because you can save yourself some money. If you are one of our fastest customers, you will have the loan documents in your inbox the same day. The savings are significant.”

The fintech is not restricted to using Bendigo’s funding if growth exceeds what the bank can make available, according to AFR. Tic:toc also has a white-label product with Aussie and offers a software-as-a-service offering in both Australia and New Zealand.

Ryan SmithRyan Smith is currently an executive editor at Key Media, where he started as a journalist in 2013. He has since he worked his way up to managing editor and is now an executive editor. He edits content for several B2B publications across the U.S., Canada, Australia, and New Zealand. He also writes feature content for trade publications for the insurance and mortgage industries.
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