"How does a bank enact the additional obligations without negatively impacting the customer experience?"
A broker and two lenders explain how the cooling property market and royal commission are affecting SMEs
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One thing the royal commission has forced banks to do is reflect on their practices, behaviours and service— and improve on how they treat their customers.
While the customer-owned banks were not called upon to testify before the royal commission, they have used it as an opportunity to review their own processes and service levels.
As organisations, service is not assessed based on the average outcome, experience or SLA, but on the worst experience that a customer may have, explained Stewart Saunders, head of broker distribution at Heritage Bank, at the MPA customer-owned banks roundtable on 11 Feb.
“We need to focus our energy on where we have failed customers and make sure that doesn’t happen again. We need to look for and address root causes to issues rather than just addressing a single complaint or an individual circumstance. You need to look at why the system failed and fix that system, so it doesn’t happen again,” he said.
Similarly, when Bank Australia prepared its written submission for the royal commission, it looked back at customer outcomes from the last 10 years.
“While nothing terrible came out of that, we identified a number of areas where we could have done it better,” said Vincent Lewis, the bank’s manager of partnerships.
“The outcome at the end of the day was that the customer was satisfied, but the process to get there was often too clunky, so we used that opportunity to go back over and say, ‘What did we learn from this?’ There’s always good out of bad.”
Mark Middleton, head of third-party distribution at Teachers Mutual Bank Limited, said that in order to mitigate poor consumer outcomes, it’s all about ethics in action and embedding those values in bank practice.
“For us, it’s about our clients and how we interact with them and give them the right solution; not for the sake of selling just for selling, but to … uncover the right solution for them,” he said.
What the royal commission proved was that the mainstream banks have not always put the customer first, and that’s the main thing that needs to change.
“The customer is always the focus. We are doing a lot of work internally with our first party to get them to understand the broker network and that relationship and how we can complement it,” said Beyond Bank Australia’s head of third party, Darren McLeod.
What do you recommend brokers focus on in 2019?
Brokers will need to focus on responsible lending, living expenses and improving their file notes and conversation records.
“It’s about asking questions to work out if that person is going to be able to afford the loan in five, 10 years, and when they retire. The whole way we look at servicing a home loan is changing from your current position to your future position and that’s why there are so many questions involved now,” McLeod said.
Saunders said it’s also important for brokers to realise that the way they did something 12 months ago has likely changed.
“Don’t live in the past, look to the future and accept it for what it is,” he said. “Through periods of great change come great opportunities, so don’t look at the next year ahead with the royal commission and change of government as being a hugely negative event. Have a look within your own business at what the opportunities are and how you can adapt to exploit those.”
Since trust in big institutions has been impacted, brokers should also look outside the big four and their subsidiaries to find alternatives that suit the value brokers provide, Middleton suggested.
“Look for true alternatives such as the mutuals to demonstrate the value that a broker brings to the table through experience, knowledge and a range of lenders that will not only meet their clients’ needs but exceed them.”
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