Westpac says empowering front-line staff fuels mortgage book growth

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Westpac New Zealand attributes its growth of market share in the mortgage market over the last couple of years to putting decision making capability back to its front-line staff.

Thursday, June 7th 2012, 4:50PM 1 Comment

by Jenny Ruth

"Since 2009, we've been working on a strategy of empowering our local teams," says Gay McGrath, Westpac's head of retail.

Now the local teams have authority to make credit decisions rather than having to go through a centralised credit team at head office, McGrath says.

People sitting in Auckland don't necessarily know the true value of a property in, say, Wanganui, she says.

Local staff also have target times within which to meet customer queries and to make sure customers "really like the experience."

Westpac's figures show in general terms its mortgage book has been growing faster than the overall mortgage market since about mid-2009.

A major expection was the December 2011 quarter when its book grew just $29 million compared with the $309 million and $347 million growth Westpac showed in the September and June quarters of 2011. The mortgage book's growth was back on track in the March quarter this year with net new mortgages rising $489 million.

McGrath says growth in the December quarter was particularly slow across the market as a whole. As well, some banks which hadn't been very active in the market previously started to compete aggressively about then, she says.

The largest bank in the market, ANZ National Bank, has been losing market share for years but had its best quarter in the mortgage market in the March quarter since 2007.

Westpac's figures showed just about all its growth in the March quarter came from mortgages with loan-to-valuation ratios (LVRs) below 80%.

"We've learned a lot of the lessons of the GFC," McGrath says. "It reflects the ability of the local teams to be able to make sure we have the appropriate profile."

While factors such as competitive interest rates and being flexible on credit criteria are part of the equation when a customer takes out a home loan, the most important factor is the customer's overall experience, McGrath says.

One incentive Westpac offers customers with high LVR loans is that it charges a higher margin on loans with LVRs above 85% but as soon as the LVR on that loan drops below 85% that margin falls off, she says.

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