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Fujitsu

Australia

Australian mortgage brokers frustrated by lack of service provided by lenders

Fujitsu Australia Limited

Sydney, November 21, 2006

Fujitsu Australia today announced the results of a comprehensive survey of more than 1,000 brokers, or 10% of the Australian mortgage broker community. The survey found that mortgage brokers are frustrated by the lack of service they are receiving from lenders, with lenders ‘outsourcing’ the inefficiencies in their mortgage processing systems to the broker community.

Martin North, Managing Consulting Director, Fujitsu Australia and New Zealand said, “The main battleground for consumer mindshare is in providing superior service, rather than product selection or variation. As the industry evolves, the balance of power will continue to shift to players that can exceed customer expectations. However, neither brokers nor lenders will be able to provide better service to consumers until they address inefficiencies in the current mortgage application process.”

Mr North continued, “Mortgage brokers are frustrated by the process and the length of time it takes to find out the status of loan applications or to find out the answer to simple loan queries. Inefficiency in the mortgage application process means that brokers have to submit information multiple times across multiple channels – for example, entering application details in an aggregator portal or through the lenders’ website, while also having to fax applications as back-up. Respondents to our survey believe that lenders do not use the internet as effectively as they could.”

Other findings from the survey included:

Mortgage Processes and Service

  • Brokers live or die by their ability to service their clients well. Most brokers face a number of process and technical problems which limit their ability to deliver the standard of service they desire to provide
  • Whilst 35% of brokers were aligned to aggregators (for example Mortgage Choice, AFG etc.), there are a large number of independent business owners, who prefer to remain non-aligned. Brokers who do decide to align with an aggregator generally trade off sharing commissions with the additional services provided by the platform provider
  • Half of those brokers aligned to an aggregator, also submit some loans direct to a lender
  • Most brokers choose mortgage products from a small number of lenders. The majority would select from 3-5 lenders, even if their aggregator platform listed more than 30 lenders
  • There is significant inefficiency in the mortgage application processes, with brokers having to submit information multiple times though multiple channels – for example, entering application details in an aggregator portal, lender’s website, while also faxing information
  • The average time to complete a broker facilitated loan application in Australia is 121 minutes, compared with 78 minutes in UK
  • 85% of brokers complained that aggregators and lenders did not provide adequate services to quickly and effectively track the progress of a loan post application submission
  • Brokers would prefer to use more online tools than are currently available.

Broker Firmographics

  • Historically, the majority of brokers were ex-bankers, over 50 years of age. However this profile is now changing, with the emergence of younger specialists. Over 30% of brokers who joined the industry in the last 12 months were under 40 years of age
  • 86% of brokers are aligned to the Mortgage Industry Association of Australia (MIAA)
  • Brokers are becoming more technology literate, with 72% of respondents regularly using the Internet and using a computer. Brokers over 50 years old tended to be significantly less technology literate, relying more on fax and phone
  • Only 20% of mortgage brokers advise on non-conforming products, with the majority focused on mainstream lending products
  • Less than 15% of brokers said they would consider expanding their businesses into broader advisory services, wealth management products, or business products, mainly because of the complexity involved in these product areas.

Broker Business Confidence

  • Brokers level of confidence varied by state, with those in Western Australia and Queensland expecting significant growth in the next 12 months, whereas those in New South Wales and Victoria believed there would be industry shrinkage and consolidation. Nearly 20% of brokers in New South Wales and Victoria were considering leaving the industry in the next 12 months
  • 91% of brokers identified the main threats to their business as firstly, more extensive regulation, and secondly, a significant reduction in lender commissions
  • 48% of brokers expect to see lender commissions being squeezed in the next 12 months
  • 85% of brokers believe that a target of 50% of loans being originated through the broker channel is achievable.

Martin North will be discussing the results of this research at the Mortgage Industry Forum 2006, which is taking place in Sydney on 21-22 November 2006. If you would like to arrange an interview with Martin North, please contact Liz Greene below.

About Fujitsu Australia Limited

Fujitsu is a full service provider of information technology and communications solutions. Throughout Australia and New Zealand we partner with our customers to consult, design, build, operate and support business solutions. From strategic consulting to application and infrastructure solutions and services, Fujitsu has earned a reputation as the single supplier of choice for leading corporate and government organisations. Fujitsu Australia Limited is a wholly owned subsidiary of Fujitsu Limited of Japan. For more information, please see: au.fujitsu.com

About Fujitsu Limited

Fujitsu is a leading provider of customer-focused IT and communications solutions for the global marketplace. Pace-setting device technologies, highly reliable computing and communications products, and a worldwide corps of systems and services experts uniquely position Fujitsu to deliver comprehensive solutions that open up infinite possibilities for its customers' success. Headquartered in Tokyo, Fujitsu Limited (TSE:6702) reported consolidated revenues of 4.7 trillion yen (US$44.5 billion) for the fiscal year ended March 31, 2005. For more information, please see:www.fujitsu.com

Elizabeth Greene

Phone: Phone: +61 2 9113 9252
Mobile: Mobile: +61 433 135 681
E-mail: E-mail: elizabeth.greene@au.fujitsu.com
Company:Fujitsu Australia and New Zealand Limited

Date: 21 November, 2006
City: Sydney
Company: Fujitsu Australia Limited