ME Bank takes a closer look at electronic signatures and the digital lending process
Speaking to Mortgage Business following the bank’s fiscal year 20 results release, ME Bank Interim CEO Adam Crane noted that the bank was working to adopt more digital technologies to enable remote underwriting of loans.
Noting that ME Bank was one of the the first remote VOI users when the COVID-19 pandemic first struck (allowing brokers to verify the identity of a borrower via digital means such as Skype’s FaceTime), Mr Crane added that the bank was working to make more possible the remote home loan process.
Mr. Crane said, “We quickly adapted our systems and processes to help customers, working with key business partners to give consumers new ways to access the banking services they need.
“For example, ME was one of the first banks to develop a new virtual customer verification system to ensure that our well-developed team of mobile lenders and broker partners can continue to support and serve customers while maintaining a safe social separation. “
The Interim CEO told Mortgage Business, “The mortgage loan process, we believe, should be simple and easy, and be able to be done as remotely as possible.
“We have put in a lot of intermediate steps and made a lot of improvements, but there is still a lot to do. “
Mr Crane told Mortgage Business that the bank was on the verge of launching electronic signatures (as opposed to physical / wet signatures) and had “worked with partners to present this as an acceptable solution” on mortgage documents. .
“We are certainly looking at digital signatures now and we are in the market to run a whole new end-to-end mortgage lending engine,” he added.
NPAT on the rise, mortgage settlements on the decline
Looking at the full FY20 results, the interim CEO said the bank was “really happy” that its underlying after-tax net profit rose 24% to $ 123.9 million and its income net of interest increased by 10%.
According to the acting CEO, the increase was brought about as the bank “focused on tightening spending and increasing the number of customers” and deposits.
However, he noted that although the bank’s overall loan portfolio grew 2 percent (to $ 25.5 billion), settlements were down 15 percent from the previous year at 5 percent. , 5 billion dollars.
When asked what caused the drop in settlements, Crane noted that the bank suffered from “service issues” at the start of the fiscal year, which slowed down turnaround times.
“The market has also become very competitive, particularly in the last quarter of the year as well, and we have seen a lot of business flocking to the majors who were offering large refund offers and very low rates,” he said. -he declares.
“While we have seen cash outflows, as soon as one of them (the majors) deactivated its cashback, we saw the cash flow coming back.
“So part of that has to do with this competitive environment and the fact that we were just focusing on the areas where we could get an acceptable return rather than chasing it all. “
He added that broker flows have also increased this fiscal year, rising from 70 percent at 72.5%.
“Brokers play an important role in the market, and we are happy to interact with them around home loans,” Mr. Crane said, noting that ME Bank has joined a new panel of brokers during the last financial year.
“We are focusing on brokers as the primary channel and we are also expanding our capabilities for that channel over time. “
Redraw and update the report
By touching the controversial political decision to redesign which drew the ire of bank customers earlier this year, Mr Crane reiterated that the bank’s intention was good but was ‘wrong’ in the execution.
Mr Crane told Mortgage Business: “What we have seen is that only 23% of these customers requested a full or partial reinstatement of their new circulation, but the majority that was changed were left in place. . “
The acting CEO said the bank has now reached out to the majority of customers who have requested reinstatement of their old limit to ensure the “health of their home loan and that they understand what their payments would be if they were pulling “.
“We just want to make sure they don’t get into trouble, which the pilot was in the first place,” he said.
The secondary lender has also started its six-month registration with customers who have deferred their mortgage payments, with Mr Crane suggesting the bank has contacted around 7% of those customers.
According to the acting CEO, around 25% of customers had returned to full refunds before this registration period, adding that the “vast majority” of customers contacted chose to restart payment.
However, he added: “There are a small number that unfortunately have to go through the hardship process because they just don’t have a way back, and there is a small percentage that goes into postponements. prolonged … but, on the whole, it is quite positive compared to [with] what the industry expected, but it’s just the start.
Mr Crane concluded that the bank will continue to take a “prudent” approach to managing its capital, liquidity and funding as the COVID-19 pandemic and its associated economic impacts unfold, adding: “With high rates of Interest at record levels, and in our view of remaining weak for some time, we will continue to focus on profitable and sustainable long-term growth and execute our business strategy accordingly.
“Helping Australians progress is at the heart of everything we do and that is why we will continue to support the financial well-being of our customers and communities and be the true banking alternative that Australia needs throughout. this period.”
[Related: ME Bank appoints chief risk officer]
Annie Kane is the editor-in-chief of The Adviser and Mortgage Business.
In addition to writing about the Australian brokerage industry, mortgage market, financial regulation, fintechs and the broader lending landscape – Annie is also the host of Elite Broker and In Focus podcasts and The Adviser Live webcasts. .