Technological transformation for Resimac as lending competition ramps up

Resimac is ramping up efforts to improve its technology and credentials as a digital non-bank.

Resimac chief executive Scott McWilliam: ‘COVID has accelerated the digital movement and consumers in some cases were forced to do research and transact online.’ Picture: John Feder

Resimac is ramping up efforts to improve its technology and credentials as a digital non-bank as competition in the mortgage market heats up at a time of record low interest rates.

The bigger digital push is a key part of chief executive Scott McWilliam’s strategy.

The transformation project, which started about 12 months ago and is expected to wrap up in the 2022 financial year, sees ASX-listed Resimac partnering with global players and moving to a cloud-based system.

Resimac was one of the few lenders to pass on the Reserve Bank’s 15 basis point cut in official rates on Tuesday for new and existing customers, albeit only for mortgages in its homeloans.com.au division.

Competition is intensifying as banks and smaller lenders fight over new and refinancing business, and credit growth remains soft.

Mr McWilliam described the digital strategy as “a quantum leap” for Resimac, as with almost $13bn in mortgages it wanted to stay relevant to customers and continue its growth trajectory.

“We are positioning ourselves as very much a digital or neo non-bank in the future, so therefore we needed a platform that has that agility, that has plumbing but also has that security,” he said.

“We are overhauling and in some places replacing our core systems.”

The program, which aims to improve the experience for borrowers and mortgage brokers, includes partnerships with key technology providers including Infosys, Loanworks, Nextgen and Equifax.

Mr McWilliam said Resimac’s data and infrastructure would be housed locally despite the new tie-ups. Asked about the interest rate decision, Mr McWilliam said falling funding costs facilitated the variable reduction at its homeloans.com.au division and helped the lender manage pressure on net interest margins. “Funding costs have been trending downward in recent times, a precursor to the RBA reducing the cash rate. Our reduced funding costs have offset part of the customer rate reduction,” he said.

About 7 per cent of Resimac’s loan book was deemed to be on active COVID-19 repayment pauses at the end of July, and Mr McWilliam expects that will “materially drop” by the end of the calendar year and through the first quarter of 2021.

Resimac joins a spate of local companies that are seeing faster take-up of digital services during the pandemic.

“COVID has accelerated the digital movement and consumers in some cases were forced to do research and transact online,” Mr McWilliam said.

Resimac’s partnership with global giant Infosys will see its core system migrated to the cloud-based Finacle banking solution and digitise the experience for customers.

Infosys, which has operations spanning 46 countries, this year helped ANZ re-platform its internet banking system as part of a upgrade of online infrastructure.

Technology is becoming a key battleground for banks, smaller lenders and start-up banks as they fight harder for the attention of borrowers and savers.

National Australia Bank has a strategic partnership with Microsoft to migrate 80 per cent of applications to the cloud.

NAB’s results on Thursday showed it had migrated 38 per cent of applications to the cloud in the 12 months to September 30.

Resimac’s digital push sees local group Loanworks replace the lender’s existing origination platform, which will be integrated with credit-decision technology from Equifax and NextGen’s digital application submission platform.

Mr McWilliam said the benefits of the technology upgrade program would include faster loan application response times, new features for the mobile application, a self-service platform and increased payment capability.

But while he is monitoring developments in the market, Resimac doesn’t have plans to partner with a banking player for deposit accounts, in the way that buy now, pay later group Afterpay did last month with Westpac.

The new Resimac partnerships follow other digital initiatives including a new workflow platform, digital loan documents, digital ­telephony, an integrated customer contact system and partnerships with artificial intel­ligence providers.