Late to the party with digital lending but ANZ insists its new product will be market leading

ANZ has lagged its main rivals to introduce digital mortgages and doesn’t expect a full rollout until the second half of 2023.

ANZ has stridently defended the much slower pace of its digital mortgage rollout compared with its main rivals, saying the bank was carefully positioning for a jump in direct online lending and its process was fully digital.

ANZx design and delivery managing director Peter Dalton on Wednesday told journalists the bank had started beta testing its digital home loans, but didn’t expect a product launch until the second half of 2023.

“We’ve looked at the other banks. This (ANZ Plus product) is a fully digital home loan proposition; there is no other bank that we can find – maybe some of the small neo banks … that has a fully digital home loan proposition,” he said.

“Many of them in the credit assessment process have human beings looking at the credit assessment. So are we worried we’ve missed the boat? No … We are going as fast as we can and we think this is where the industry is going.”

ANZ has severely lagged its peers on the digital mortgage rollout, even though it launched the new ANZ Plus digital banking platform this year with savings accounts.

The launch of the digital home loan will begin with a minimum viable product before ANZ adds other functionality and categories, eventually also introducing the online home loans to investors and mortgage brokers.

ANZx design and delivery managing director Peter Dalton. Picture: David Geraghty

The Commonwealth Bank in May introduced its direct digital mortgage called Unloan, after National Australia Bank brought out a new and faster home loan platform in 2021. Westpac’s direct online mortgage is live for sole applicants and will expand to other categories next year, including couples and investors.

ANZ Plus – which is pitched as a faster, data-driven, more secure and seamless platform – has about 100,000 customers and more than $2bn in deposits. The average balance is about $21,000 and some 30 per cent of those customers are new to ANZ, with the remainder being existing bank customers moving to the new platform.

Mr Dalton said while the digital mortgage was a “materially lower cost” proposition for the bank versus its traditional home loans, ANZ was yet to decide whether it would be priced at a lower rate than existing mortgages.

“We would like to reflect that in the price, but we haven’t made that decision yet,” he said.

CBA priced its digital product sharply on launch and the Unloan mortgage included a loyalty discount that increases by one basis point every year.

Mr Dalton said ANZ’s digital home loan had overhauled its traditional mortgage credit processes and digital identification verification, the latter of which uses selfies and photos of actual documents rather than providing licence or passport numbers. A live selfie is also used instead of a signature for loan documents.

Mr Dalton said ANZ had canvassed banks across Britain, Europe and the US on its digital loan and learned a lot about how it fit with open banking and how it should be structured.

“The one that stands out for me is the Rocket mortgage (in the US),” he said.

ANZ is still waiting, however, to become a data recipient under the open banking regime, which the bank expects will occur early in 2023.

Mr Dalton said while 27 per cent of Australians currently started their home loan search or application online, virtually none followed that through.

He thinks it’s just a matter of time before that changes as functionality improves and noted ANZ’s digital mortgage process had the option of talking to employees at points along the way.

“I think it (the 27 per cent) will grow over the next couple of years to be well north of 50 per cent (after 2024),” Mr Dalton said, noting that he expected ANZ’s digital mortgage would be able to service about 30 per cent of the addressable market in 2024.

Other lenders are also bullish about digital home loans.

In October, IMB Bank chief executive Robert Ryan said he was confident that over the next three to five years digital mortgages would account for as much as 40 per cent of the bank’s new home loans.

Mr Dalton also said if ANZ’s purchase of Suncorp’s bank were approved, it would over time migrate the regional’s customers on to ANZ Plus.

“The plan is to move their retail customers on to ANZ Plus over a number of years. We’ve actually mapped the product sets in Suncorp against ANZ Plus and there’s a really good fit,” he said.