Bendigo Bank eyes 4-5pc ‘organic’ home loan growth with new digital platform

Bendigo and Adelaide Bank is spitballing ‘Matilda’ as the World- Cup-inspired name of its new digital home loan platform.

Bendigo and Adelaide Bank says its upcoming digital-only mortgage platform will help it grow home loan volumes “organically” by at least four to five per cent this financial year, but says it remains prepared to step back from the market if competition gets too heated.

Bendigo’s renewed focus on organic growth follows its failed attempts to acquire Suncorp’s banking unit last year to double its size and lower its costs, which the Queensland lender snubbed in favour of a $4.9bn sale of the unit to ANZ.

The regulator blocked the deal earlier this month, saying a tie-up with Bendigo would be better for competition, but the banks are seeking a review by the Competition Tribunal.

“We’ll watch that with interest,” Bendigo’s head of consumer banking, Richard Fennell, told The Australian.

“Clearly there’s a lot of water to go under the bridge before anyone’s going to be worried about Bendigo and Suncorp considering a marriage, given that there’s a lot of regulatory activity that’s going to in the next 12 months with where Suncorp hopes to find a different partner rather than Bendigo.

“In the meantime, we just keep on and remain very much focused on growing our business organically and staying close to our customers in times like this … (when) many of them wouldn’t have experienced a time with interest rates at this level in their working life.”

Following 12 cash rate increases by the Reserve Bank since May last year, Bendigo and its larger peers are expecting mortgage stress to rise modestly from near record lows. But they have also been surprised by the resilience of customers, most of whom remain employed and have used their cash buffers to withstand the higher rates.

The country’s sixth largest home loan lender has spent $206m – over a third of its record $577m cash profit this year – in what it calls “foundational” technology over the past two years, to simplify and transform the bank into a more efficient digital operation.

“We’ve been looking to build out digital capability for customers to self-serve as much as possible over the last year or so,” Mr Fennell said, adding that this is already increasing productivity and is proving able to “generate growth”.

Bendigo and Adelaide Bank head of consumer banking Richard Fennell. Picture: Jane Dempster

It’s digital channels now represent 12 per cent of home settlements, up from 2 per cent in 2019, including its digital banking BEN Express, the millennial neobank Up it acquired in 2021, and its third party partnerships with Qantas Money and Tic:Toc. Those channels are all currently powered by Tic:Toc, part of which Bendigo owns.

But the bank is also building its own proprietary digital platform, following in the footsteps of the big four banks.

“Looking forward, we are partway through a major lending transformation piece that will revamp our lending process and systems to automate a lot of the process in a very similar way to the way Tic:Toc does it, but it will be within our proprietary system.”

The bank will introduce the new lending platform in a trial with longstanding partner Finsure in November, and extend it across the bank’s broker network in the second half of the financial year.

The yet-to-be-named online banking platform will later be introduced at its branches and among its mobile bankers, chief executive Marnie Baker said on Monday.

“Depending on what happens tonight, maybe we should call the new system Matilda,” Mr Fennell said ahead of Australia’s women’s soccer team’s World Cup semi-final match against England on Wednesday night.

The bank expects it will slash around eight hours from its broker-led application processing time to something that takes just minutes, and expects it will drive significant growth for the business as it will be able to compete on service with the likes of Macquarie, which is known for its quick response times.

“I know from experience a lot of people don’t make a decision, for example, on whether they want to bid on an auction on a Saturday until a few days before, and then all of a sudden it’s a mad rush to try and make sure they have their finance arranged,” Mr Fennell said.

“So we’re looking to be able to support customers in that situation with a speedy response if they’re looking for the ability to participate in an auction with confidence.”

That should mean relatively high growth for the bank, depending on the competitive landscape, he said. With home prices expected to rise in the coming 12 months, Bendigo says it expects credit growth for the industry to be about 4 to 5 per cent this year, which the bank will seek to match.

“We would like to think we will potentially grow at around that rate if we are able to have a competitive price offering. And then in the years that follow, as our digital capability continues to grow as a proportion of our lending, we would hope that we’ll be back growing above system, subject to being able to price competitively and generate reasonable returns.”