Percentage of mortgages originated by advisers lifts sharply
Kiwibank has lifted its home loans business to now have an 8% market share, with about 64% of its mortgage business originated by advisers.
Tuesday, November 5th 2024, 9:11AM 
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In an interview with TMMO, chief executive Steve Jurkovich says it is a percentage the business will not blink from. He is expecting it to rise to 80% in the next few years.
In the first quarter of this year Kiwibank did nearly 25% of all new loans. “We are now a decent sized player in the home loan space,” he says.
He expects Kiwibank’s market share to keep growing alongside the number of mortgages written by advisers.
To assist in that goal, Kiwibank has strengthened its relationships with home loan advisers, where it was lagging behind. “One of the good things about being New Zealand’s fifth biggest bank is you realise you really do have to partner with the right mortgage advisers in this space, Jurkovich says.
“We think it’s a great opportunity for everyone involved. Reinforcing that third party advisers do a great job of helping people navigate some complexity and drive value for the borrower is a positive thing.”
It's only going to grow, he says. “When I look at Australia and other places I can certainly see a world where loans originated by advisers might be 80% of business.
“We are all in for partnering with advisers because when 60 odd percent of people choose to be in front of a mortgage adviser, that's where we need to be.”
Doubling assets
Apart from ramping up its home loan business, Jurkovich is keen to see Kiwibank’s overall business double in the next five years to $80 billion in assets.
Finance Minister Nicola Willis asked Treasury in August to engage with Kiwibank's parent company Kiwi Group Capital on options for raising capital, including from KiwiSaver funds or New Zealand investment funds as well as wider investment from New Zealanders.
The main four Australian banks feel it is unnecessary for Kiwibank to become a major competitor. They control about 88 per cent of the banking market.
However, the Commerce Commission in its banking competition inquiry held earlier this year said a stronger Kiwibank and open banking could shake up the “oligopoly” dominating the sector.
Jurkovich says it is not unreasonable to think Kiwibank could make significant progress in growing its market share over the next five years. "We know banks have done this in the past. We certainly think we can create competition.”
Kiwibank is hopeful Parliament’s Finance and Expenditure Committee’s ongoing inquiry into bank competition will be the catalyst for injecting capital into it to help sustain growth.
So far work on injecting more capital into Kiwibank has been about exploring whether the Crown injects money into the bank, third party investors come on board or there is an IPO. “We are just exploring those options and there have been no decisions, but Willis’ genuine openness to any of the three will have an impact and give us room to grow,” he says.
Jurkovich says the bank is strongly focused on a multi-year transformation that will deliver more scalable systems to enable it to further accelerate its current growth rate to compete as the ‘maverick'.
He says the main banks are increasingly seeing it as a competitor but it did not have the scale to impose "competitive restraint".
Jurkovich is also hoping the banking inquiry will encourage simplification of some of the new and existing regulations around banking. “If I had my Christmas wish, it would be accelerating the idea we don’t have a one size fits all for every bank in the land and we have some proportionality for smaller players.”
“Ultimately competition is about open banking and trying to encourage people to participate in areas where they think there's value. You don't have to necessarily have another bank.”
A slice of the banking sector can lead to success, Jurkovich says. “Look at the success of Wise Card – a new entrant into one area of the sector. There is a market for those offers and that is probably the best way to see competition sharpen up.”
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Kiwibank’s only real selling point to a customer is that they are “locally owned” It sure as heck isn’t their home loan policy e.g. they don’t even offer an 18-month fixed rate option to customers and it’s not their customer service either which based on comments posted online whenever they are in the news is famously bad. I’ve seen so many people over the years electing to leave Kiwibank for another lender just out of share frustration. Kiwibank are a one-trick pony only. All their marketing and hype to existing customers is based around them been a 100% Kiwi owned bank. That all counts for very little as a lender nowadays if you aren’t also competitive with your policy or your customer satisfaction levels.
New Zealanders and the mortgage adviser industry should instead be supporting a locally owned bank like The Co-operative Bank which is owned by its customers and has shared with them $20+ million since 2013 via rebates. As shareholders, Co-operative Bank customers can also have their say at their AGM and annual director election. This is a far cry from how Kiwibank is currently held accountable to NZ taxpayers. The fact that the NZ taxpayer is still having to prop Kiwibank up after 20+ years illustrates that the Government’s experiment owning a bank hasn’t worked. New Zealanders have not seen a significant impact on the cost of borrowing money since Kiwibank’s arrival. To continue to say that Kiwibank has a unique role to play in the NZ banking sector as a disruptive force is false.