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Westpac invests $16.5 million in uno to disrupt mortgage brokers

15 September 2016

Westpac invests $16.5 million in uno to disrupt mortgage brokers

 

Westpac has invested $16.5 million in 3 month old fintech business uno, a digital mortgage service that offers a platform designed to enable users to search, compare and settle on a home loan online .Uno is targeting the $2 billion in fees that banks pay to mortgage brokers each year. Since its launch, uno has over a thousand active users and has sold more than $400 million in mortgages.

Westpac has made the equity investment directly rather than through its venture capital fund, Reinventure Group, reflecting the fact that uno is operating in a core area of Westpac's business of writing mortgages.

Westpac is one of the banks offering products to the platform, along with Comm Bank  and NAB and 14 other lenders. Over 400 mortgage products are offered through uno. ANZ is not participating given its policy to sight a loan applicant early in the process, which conflicts with uno's end-to-end digital process.

Over 50% of all mortgages sold in Australia are provided by Mortgage Brokers with Mortgage Choice and Aussie Home Loans the clear market leaders. The Sydney based start up plans to grow through a partnership model, where it allows users to see and compare all of the information about a loan that a traditional broker would access.

Founder Vincent Turner says the company is tapping the trend for customers who want technology which they can use in conjunction with personal service which they can request as and when required; uno has 35 staff, including customer service staff that are salaried so employees are not paid commissions. Most customers seek support and advice through the process via uno’s internet chat service.

Westpac chief strategy officer Gary Thursby said. "uno turns the clunky, face-to-face interaction with brokers to something that is digitally enabled accompanied by a personal service," he said.

"It is an adjacent business to the core business we have already got. It lines up very well with our idea of what customer service means … I see it as an opportunity to take a reasonable share in the current traffic that already goes into brokers."

Mr Turner, who spent the past five years in Silicon Valley before launching uno earlier this year, said Westpac's equity investment does not impact on the way in which the platform recommends its products.

He said transparency is at the core of uno's philosophy, which allows customers to see all of the alternative loans and all the components of them including price, access and speed of approval.

Turner says uno is aiming to redefine how people buy or refinance homes by giving Australians more control and power in the process through a tech-heavy approach.

"If you have transparency and visibility you have a higher likelihood of an efficient market and this is about creating that efficiency," Mr Turner said.

The commission paid by banks using uno is roughly equivalent to what is paid to traditional mortgage brokers.

Westpac's move into the mortgage broking industry comes years after two of its rivals moved into the space. National Australia Bank created the Advantedge brand after the acquisition of Challenger Mortgage Management in 2009. The year before, Commonwealth Bank of Australia acquired a third of Aussie Home Loans, then lifted that stake to 80 per cent in 2012.

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