Commonwealth Bank's broker chief is back on the warpath with new commission and turnaround initiatives
Commonwealth Bank has been lying low in recent months, but now general manager of broker sales Sam Boer is back on the warpath, with commission and turnaround initiatives – and some strong words for the broking community
MPA: Why has CBA decided to reintroduce first-year trail commission now?
SAM BOER: We signalled in March we were investing in a whole new commission project. Our current platform was old, and with old software comes risk, so we decided to invest in a whole new platform. We researched with brokers, through forums and structured surveys, and one message came through: brokers wanted choice. A one-size-fits-all commission model may not be the right solution for everyone … we’ve come up with a program we think works for aggregators and brokers alike.
Everyone’s been talking about first-year trail, but we recognise what’s important to brokers is their cash flow. Some brokers are in a start-up mode, higher growth phase, investing phase, so they need money now … other brokers are quite mature and looking to grow the value in their portfolios, so we’ve got a plan for that.
The big difference with the new commission system is that previously we’d hold the head group accountable for the [financial] result. In the new commission system we have the ability to hold the individual accountable for that result. So if you have one broker who has conversion rate issues or quality issues, we may decide to differentiate the upfront rate for that individual, without affecting all the brokers in that head group. We’re not going to pull that lever initially, because we recognise the nature of the market at the moment, but we’re going to report quality metrics, and we’ll make a decision on that in the future, based on quality performance. We’ve never backed away from quality; in fact that’s the overriding message. We’re very much targeting quality operators writing quality business that’s a win-win for both broker and for us.
MPA: Brokers actually nominated turnaround times as their number one concern with banks, so what are you doing to improve yours?
SB: We’ve invested a significant amount in our processing. Everyone talks about turnaround times, but what does that mean? Instant approvals? Wouldn’t that be nice? The thing I hear from brokers is they want certainty; they want to be confident that when recommending CBA they’re going to get a decision from us and a consistent process. It’s about making sure we resource our teams properly. We’re quite unique: we have local credit [teams] in each state, which works with our local market, and our diamond brokers have access to that local credit resource pool, and that’s quite invaluable. They can meet with them; they can talk to them, and share knowledge. It’s a trade-off between efficiency and relationship in credit; we can’t offer that to all brokers, because we wouldn’t be able to provide consistent turnaround, because there are spikes, and I need to share resources around the country.
It would be unrealistic to expect a credit team to turn around a file that’s five inches thick, with credit statements and trust funds, in 24 hours. We need to get better at managing expectations around the complexity of the loan. We do complex deals really well; we do simple deals even better.
We’re kicking off a new [pilot] process in credit, working towards a service turnaround guarantee, for simple transactions, where the broker has provided everything we require to turn that deal around quickly. If you use the checklist, read it, [and] do everything on it, we will turn around the loan quickly.
I think you need to be in the hunt for 24–48 hours; and we do same-day processing today for some deals, and some take a week, and I’m trying to bring consistency to the market that brokers can set their watch by. When brokers recommend CBA, they can say confidently to their customer, “I’m recommending CBA, not just because they have great products and service, but because we will have an outcome for you within 24 hours. That’s a good strong position to be in.
MPA: Have brokers benefited from CBA’s restructuring since Kathy Cummings’ departure?
SB: In terms of the business, it’s gone from strength to strength, and I’ve made a few changes. We’ve invested a lot on the ground in terms of relationship managers and, more importantly, sales support staff who can help the RMs.
We’ve invested in CommBroker; we’ve invested in our credit call centre in Melbourne to help resolve issues faster, with a new E-Concierge program; we’ve got Broker Assist for all our scenarios … in addition we’ve invested very heavily in process improvement, and there are a lot of technology changes coming, which are going to further digitise the whole end-to-end process. We talk about doing things quicker and smarter; my vision is that in 12 months’ time brokers will be able to print the loan docs right there and then, after the initial interview, and have their customers accept the contract.
MPA: How are you helping brokers improve their efficiency?
SB: Rather than just have an internal efficiency program for our own business, we decided there was a real opportunity to take [the Kaizen program] to the market, and deliver it to our brokers.
The first thing to say is it’s not for everyone. A business who wants to change and wants to improve its processes and productivity, whether it’s a one-person operation or 20 people plus, where the owners of the business have invested in this program they have had terrific results.
What we often find when you ask a broker, ‘How is your process?’, is they say, ‘My process is great’. Then you ask, ‘Can you show me your process?’ And they go, ‘Oh, it’s not documented’. If it’s not documented, how do you know if it’s a good process or not? The first thing we do in the productivity program is sit down and work out that process. And more often than not, when you get the staff engaged, they bring stories about things that aren’t working. By the end of the one-day program, they walk away with a fully documented new process and actions to help them implement it.
MPA: How are you promoting cross-selling?
SB: We’ve run the CONNECT Referral program since 2004, and it’s gone through a number of evolutions to improve it. Most recently we launched Commercial CONNECT for all our residential brokers, to take advantage of the leading features we’ve got in asset finance and commercial finance.
It goes to the heart of the customer experience: the broker’s done a fantastic job recommending Commonwealth Bank, submitting the deal, managing the customer experience; it’s almost malpractice not to talk to them about other needs … The role of the broker is to have a great relationship with our local branch manager, and we take the responsibility to initiate that … that’s the essence of CONNECT, our cross-sell program: it’s connecting brokers and branches to satisfy the customer’s holistic banking needs. Some brokers will say: hang on, I’m doing financial planning, or hang on, I already do commercial. That’s fine: we will talk the customer about those needs the broker can’t fulfil.
MPA: Is it your job to argue the case for the broker channel within CBA?
SB: CBA is a big bank; there are a lot of channels and not a lot of resources. So I’d say yes, I am the voice for the channel internally, in championing the cause, along with my boss, Lyn Cobley.
We recognise the broker channel; we were here through the GFC when others decided not to be. We’ve been with the channel all the way; we’ve never faltered. Now our strategy isn’t about increasing our market share every month; it’s about a sustainable position, so when brokers deal with us they know if they recommend the client to CBA we’ll do the right thing by the broker and the customer.
We’re developing a propensity model, which predicts the number of customers that are likely to sell their properties in the next few months. We’re sharing that information with our customers so they can reconnect with those customers and fulfil any needs they’ve got coming up in the future. I couldn’t think of anything CBA does that shows commitment to the channel more than that.
MPA: In one sentence: why should brokers go for CBA?
SB: Our proposition is to provide market-leading broker partnerships to enhance your reputation as a mortgage finance professional, which gives your customers peace of mind.
MPA: Why has CBA decided to reintroduce first-year trail commission now?
SAM BOER: We signalled in March we were investing in a whole new commission project. Our current platform was old, and with old software comes risk, so we decided to invest in a whole new platform. We researched with brokers, through forums and structured surveys, and one message came through: brokers wanted choice. A one-size-fits-all commission model may not be the right solution for everyone … we’ve come up with a program we think works for aggregators and brokers alike.
Everyone’s been talking about first-year trail, but we recognise what’s important to brokers is their cash flow. Some brokers are in a start-up mode, higher growth phase, investing phase, so they need money now … other brokers are quite mature and looking to grow the value in their portfolios, so we’ve got a plan for that.
The big difference with the new commission system is that previously we’d hold the head group accountable for the [financial] result. In the new commission system we have the ability to hold the individual accountable for that result. So if you have one broker who has conversion rate issues or quality issues, we may decide to differentiate the upfront rate for that individual, without affecting all the brokers in that head group. We’re not going to pull that lever initially, because we recognise the nature of the market at the moment, but we’re going to report quality metrics, and we’ll make a decision on that in the future, based on quality performance. We’ve never backed away from quality; in fact that’s the overriding message. We’re very much targeting quality operators writing quality business that’s a win-win for both broker and for us.
MPA: Brokers actually nominated turnaround times as their number one concern with banks, so what are you doing to improve yours?
SB: We’ve invested a significant amount in our processing. Everyone talks about turnaround times, but what does that mean? Instant approvals? Wouldn’t that be nice? The thing I hear from brokers is they want certainty; they want to be confident that when recommending CBA they’re going to get a decision from us and a consistent process. It’s about making sure we resource our teams properly. We’re quite unique: we have local credit [teams] in each state, which works with our local market, and our diamond brokers have access to that local credit resource pool, and that’s quite invaluable. They can meet with them; they can talk to them, and share knowledge. It’s a trade-off between efficiency and relationship in credit; we can’t offer that to all brokers, because we wouldn’t be able to provide consistent turnaround, because there are spikes, and I need to share resources around the country.
It would be unrealistic to expect a credit team to turn around a file that’s five inches thick, with credit statements and trust funds, in 24 hours. We need to get better at managing expectations around the complexity of the loan. We do complex deals really well; we do simple deals even better.
We’re kicking off a new [pilot] process in credit, working towards a service turnaround guarantee, for simple transactions, where the broker has provided everything we require to turn that deal around quickly. If you use the checklist, read it, [and] do everything on it, we will turn around the loan quickly.
I think you need to be in the hunt for 24–48 hours; and we do same-day processing today for some deals, and some take a week, and I’m trying to bring consistency to the market that brokers can set their watch by. When brokers recommend CBA, they can say confidently to their customer, “I’m recommending CBA, not just because they have great products and service, but because we will have an outcome for you within 24 hours. That’s a good strong position to be in.
MPA: Have brokers benefited from CBA’s restructuring since Kathy Cummings’ departure?
SB: In terms of the business, it’s gone from strength to strength, and I’ve made a few changes. We’ve invested a lot on the ground in terms of relationship managers and, more importantly, sales support staff who can help the RMs.
We’ve invested in CommBroker; we’ve invested in our credit call centre in Melbourne to help resolve issues faster, with a new E-Concierge program; we’ve got Broker Assist for all our scenarios … in addition we’ve invested very heavily in process improvement, and there are a lot of technology changes coming, which are going to further digitise the whole end-to-end process. We talk about doing things quicker and smarter; my vision is that in 12 months’ time brokers will be able to print the loan docs right there and then, after the initial interview, and have their customers accept the contract.
MPA: How are you helping brokers improve their efficiency?SB: Rather than just have an internal efficiency program for our own business, we decided there was a real opportunity to take [the Kaizen program] to the market, and deliver it to our brokers.
The first thing to say is it’s not for everyone. A business who wants to change and wants to improve its processes and productivity, whether it’s a one-person operation or 20 people plus, where the owners of the business have invested in this program they have had terrific results.
What we often find when you ask a broker, ‘How is your process?’, is they say, ‘My process is great’. Then you ask, ‘Can you show me your process?’ And they go, ‘Oh, it’s not documented’. If it’s not documented, how do you know if it’s a good process or not? The first thing we do in the productivity program is sit down and work out that process. And more often than not, when you get the staff engaged, they bring stories about things that aren’t working. By the end of the one-day program, they walk away with a fully documented new process and actions to help them implement it.
MPA: How are you promoting cross-selling?
SB: We’ve run the CONNECT Referral program since 2004, and it’s gone through a number of evolutions to improve it. Most recently we launched Commercial CONNECT for all our residential brokers, to take advantage of the leading features we’ve got in asset finance and commercial finance.
It goes to the heart of the customer experience: the broker’s done a fantastic job recommending Commonwealth Bank, submitting the deal, managing the customer experience; it’s almost malpractice not to talk to them about other needs … The role of the broker is to have a great relationship with our local branch manager, and we take the responsibility to initiate that … that’s the essence of CONNECT, our cross-sell program: it’s connecting brokers and branches to satisfy the customer’s holistic banking needs. Some brokers will say: hang on, I’m doing financial planning, or hang on, I already do commercial. That’s fine: we will talk the customer about those needs the broker can’t fulfil.
MPA: Is it your job to argue the case for the broker channel within CBA?
SB: CBA is a big bank; there are a lot of channels and not a lot of resources. So I’d say yes, I am the voice for the channel internally, in championing the cause, along with my boss, Lyn Cobley.
We recognise the broker channel; we were here through the GFC when others decided not to be. We’ve been with the channel all the way; we’ve never faltered. Now our strategy isn’t about increasing our market share every month; it’s about a sustainable position, so when brokers deal with us they know if they recommend the client to CBA we’ll do the right thing by the broker and the customer.
We’re developing a propensity model, which predicts the number of customers that are likely to sell their properties in the next few months. We’re sharing that information with our customers so they can reconnect with those customers and fulfil any needs they’ve got coming up in the future. I couldn’t think of anything CBA does that shows commitment to the channel more than that.
MPA: In one sentence: why should brokers go for CBA?
SB: Our proposition is to provide market-leading broker partnerships to enhance your reputation as a mortgage finance professional, which gives your customers peace of mind.
