HOME buyers will be able to invite banks and credit unions to compete
against each other to offer the best loan using a digital platform
developed in Adelaide.
Joust, a company founded by
experienced former banking executives Mark Bevan and Richard Hockney,
aims to launch early next year.
“For most people, a home loan is really a simple product,” Mr Bevan said.
Joust
will enable these people easily to find the lowest rate on a standard
variable loan. Would-be home buyers or people considering switching loan
providers enter some basic information which is then supplied to
participating financial institutions.
“It’s a bit like eBay in reverse,” Mr Bevan said.
“There’s
an digital, live process where our panel of lenders look at the type of
client you are and how you’d fit into their own plans and then bidding
back to you to offer a loan.
“We’re pretty confident it’ll deliver the sort of competitive tension
you could only get if you had a few weeks spare to visit every bank.”
The
system differs from existing loan comparison sites because it involves
active bidding rather than simply listing available home loan products.
The bids will be visible to both the consumer and to the competing banks.
“There’s total transparency on both sides,” Mr Bevan said.
The system will be accessible from a mobile phone, tablet or desktop.
Mr Bevan and Mr Hockney have a combined 60 years experience at the Commonwealth Bank, National Australia Bank and Westpac.
They have raised funding from angel investors, some of whom also have backgrounds in banking.
A
recent second round of equity fundraising was oversubscribed. “This
means that we are on track and fully funded to launch early next year,”
Mr Bevan said.
Joust engaged digital studio Fusion to develop the product.
Based in Rundle St, Fusion is part-owned by publicly listed STW Group.
It counts several financial institutions among its clients.
Joust will not provide advice, write loans or demand trailing commissions.
The service will be free for consumers with Joust making its money by charging fees to participating banks.
“We’re only targeting prime mortgages,” Mr Bevan said.
The
target is people wanting to borrow less than 80 per cent of the value
of the property, owner-occupiers rather than investors and wanting
variable not fixed loans.
The bidding process will not be binding on either borrower or lender but establishes a baseline for a loan application.
“It’s simple and easy for consumers,” Mr Hockney said.
The
Joust founders believe home loans have become too complicated over the
past few years with banks offering a variety of products with different
features that aren’t strictly necessary.
This has led to growth in the broking industry.
While
brokers will still provide a valuable service, many homebuyers would do
better with a simple loan at a lower interest rate, they believe.
As
a new technology, Joust is in talks with the Australian Securities and
Investments Commission about their licensing requirements.
Initially,
Joust is targeting six lenders for its panel — BankSA, Bendigo and
Adelaide Bank, Beyond Bank, Credit Union SA, People’s Choice Credit
Union and Police Credit Union SA.
Four of the six lenders have
signed MoUs to take part and negotiations are continuing with the others
and with more financial institutions.
Mr Hockney said Joust was
deliberately picking “challenger” brand lenders rather than the Big Four
banks (although BankSA is ultimately owned by Westpac).
“We’ve
also deliberately chosen to launch in Adelaide,” he said because SA was
the founders’ home state and because of its reputation as a good testing
ground.
“So, after we’ve run the pilot in SA the goal is to get to Melbourne and Sydney and so on reasonably quickly,” Mr Hockney said.
Mr Bevan said there was a lot of investor interest in the product because of its disruptive nature to existing models.
There also was scope to expand into other consumer areas than home loans at some point in the future.
