Westpac Goes Digital With Plans For A 10-Minute Mortgage Approval

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Westpac Goes Digital With Plans For A 10-Minute Mortgage Approval

  • Digital approval applies to homeowners with at least 20 percent equity and on PAYG income
  • Currently 5 million digitally active customers, effecting 2.2 million daily payments
  • Climate change is now a Group wide strategic priority at Westpac
  • Objective is to source equivalent of 100 percent of electricity from renewable sources by 2025
  • Zero lending to companies with >5% of revenue sourced directly from thermal coal mining by 2030
  • Westpac seeking to become the zero-carbon emission transition partner of choice among banks.

Westpac Banking Corporation (Westpac or the Group) is Australia’s oldest bank and one of four major banking organisations in Australia. The Group provides a broad range of banking and financial services to over 13.9 million customers.

Westpac owns a portfolio of brands comprising Westpac, St.George, Bank of Melbourne, BankSA, BT and RAMS.

Digital Mortgages

In a market update today, Westpac will offer homeowners a fully digitised residential mortgage product capable of providing unconditional approval in 10 minutes. Roll-out is scheduled to commence by the end of 2022. The digital mortgage application is estimated to save the Bank about 3 hours for each finance application interaction. The digital solution will be delivered through Westpac’s consumer apps and website, as well branches and mortgage broker channels. Initially the digital product offering will be limited to homeowners with at least 20 percent equity in their property who are on PAYG income. Westpac will not be offering lower mortgage interest rates to customers who apply for their home loan using the online facility. This is in contrast to CBA which is offering a 30-basis points discount to its lowest variable rate.

A key feature of Westpac’s technology that expedites the loan approval process is the use ‘screen scraping’ to digitally examine data held by parties other than Westpac. This includes data held by other banks and enables Westpac to perform credit checks and property valuations and verify financials.

The move is part of a broader strategic initiative by Westpac to encourage customers to become more digitally active. Currently Westpac has 5 million digitally active customers, conducting 67 million daily online sessions and effecting 2.2 million daily payments. Today 89 percent of new-to-bank Westpac transaction accounts are straight through processed accounts. Branch over the counter transactions have declined from 16.5 million transactions in 1H20 to 11.1 million transactions in 1H22. At the same time, digital transactions have increased from 267 million to 334 million over the same time period.

In other digital initiatives, Westpac is now using Biometric and Artificial Intelligence to identify fraud, including real-time blocking of potentially questionable online merchants. The bank will also launch an algorithmic driven customer behavioural tool to combat remote access scams, resulting in lower fraud losses.

Becoming a net-zero bank

Climate change is now a Group wide strategic priority at Westpac.

The bank has achieved a 58 percent reduction in carbon emissions since 2016 and plans to achieve an 85 percent reduction by 2025. The bank’s objective is to source the equivalent of 100 percent of electricity from renewable sources by 2025.

Westpac has announced its intention to not lend to companies with >5% of their revenue sourced directly from thermal coal mining by 2030. The bank has also announced plans to reduce exposure to companies involved in oil and gas exploration, extraction and drilling, as well as LNG producers. Westpac’s exposure to the oil and gas sector has trended down over the past 5 years and presently stands at $2.4 billion.

Exposure to electricity generators and cement producers is also being reduced.

In 2021, Westpac was Joint Lead Manager for the first Sustainability-linked bond in Australia. A Sustainability-linked bond is a fixed income debt instrument with financial and/or structural characteristics linked to predefined Sustainability/ESG objectives.

The bank is supporting customers in their transition to net zero and is aiming to become the transition partner of choice among the major banks. Westpac is currently the largest bank lender to greenfield renewable energy projects in Australia and has recently launched an electric and hybrid vehicle loan produc

Louis Mosmann

Louis Mosmann is a Private Wealth Client and Research Assistant at KOSEC- Kodari Securities. Louis covers macroeconomic events, global markets and ASX300 company announcements, allowing clients to make more informed investment decisions. Email Louis at l.mosmann@kosec.com.au.

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