ANZ to end paper loan trail

ANZ customers will be able to track their home loan applications online from initial form-filling to settlement of funds in their accounts as the bank becomes the first Australian major to take its mortgage operations completely electronic.
The technology will slash the 4.7million pieces of paper a year generated as part of ANZ's credit approval process.

The $70 million investment will cut the time taken to process a loan from up to a week to two days, and in theory will avoid the need for two million telephone inquiries a year relating to the status of loan applications.

Once the process is automated, a "small" proportion of about 900 back-office mortgage jobs would be sent to Bangalore in India, ANZ mortgages managing director Michael Rowland said yesterday.

The system involves the use of imaging technology, rather than paper, to digitise the mortgage process. But unlike low-doc loans, supporting documentation such as proof of earnings will still be required.

Mr Rowland said the technology had been successfully introduced by banks offshore, which were keen to reduce their costs, add to their range of products and make the mortgage approval process more efficient.

"This is a big change, because fundamentally the system now is paper-based," Mr Rowland said.

"If we don't do this, we won't be competitive; our profit margins continue to decline in mortgages, which is close to being the most competitive part of retail banking.

"International players like GE, BankWest and ING are playing very heavily in this space," he said. ANZ would be the only bank of the Big Four to fully automate all its mortgage processing.

This would enable work currently performed in Australia to be done offshore.

There are 1500 people employed in ANZ's mortgage area. The final number of jobs to be sent offshore was yet to be determined, Mr Rowland said, but the employees affected would be retrained and redeployed.

A number of big corporations with large customer bases, including all the major banks except the Commonwealth, are "offshoring" jobs, despite a vigorous campaign by the Finance Sector Union to keep the work at home.

Unlike business rivals that outsource to specialist firms overseas, ANZ has a company-owned facility in Bangalore. There the bank employs 1700 Indians on the same terms and conditions, but significantly less pay, than Australian workers would receive.

The Australian - news.com.au
By Richard Gluyas
May 15, 2007

This is huge news. The banking and mortgage processing system has been crying out for news like this.
A few questions

1. when will this be implemented?
   
2. will the customer's legal representative be part of the loop?
   
3. what about introducing a digital loan?
   

But $70M. Does it really cost this much to implement change?

Back end settlements has been and still is the bane of the conveyancing industry. The ANZ initiative is long overdue but welcome announcement. I for one would refer more business to the ANZ and I would expect that brokers would also welcome the change and refer more loans as a result. As the ANZ claims it reduces the bank end cost but I would expect ANZ's market share will increase as well. I trust the other banks will follow.