They already use check-out data to offer insurance – so why couldn’t they do it with mortgages?
They already use check-out data to offer insurance – so why couldn’t they do it with mortgages?
Supermarket mortgages have been on the horizon for some time, and for the next issue of MPA, Sarah Megginson spoke to industry experts on whether we’ll soon be getting our homeloan with a side of milk. And unlike other lenders, supermarkets actually know their customers – from their weekly spend to the type of toilet roll they prefer. We've summarised what this means for mortgages:
How could supermarkets do loans differently?
Coles GM Richards Wormwald recently announced the formation of a financial services business, which would offer personal loans. Both Coles and Woolworths have been offering financial products for some time, and last year Woolwoths’ director of group retail services Penny Winn told the media how the Everyday Reward scheme was used to target car insurance at safer customers (those who stocked up on milk and red meat, apparently). Andrei Hantu, Director of Bloom Lending and Financial Strategy, told MPA this data could be used for home loans “They’ve got a large client pool that they have access to, and they have something unique to offer in terms of packaging discounts around fuel and groceries,”
Which borrowers will they appeal to?
“It will mainly impact brokers who look after basic mum and dad type clients”, Integrated Finance Solutions broker Paul Allen explained to MPA. This is firstly because supermarkets have a very particular reason for entering the mortgage space, continued Allen; “the idea being that it will significantly tie the client to do all their shopping with Coles or Woolworths. In that sense, I see it is a ploy to secure clients to their brand more than any attempt to revolutionise the mortgage industry “.
Just as banks use shopping lists to target safe drivers, it is likely they will go for prime customers. Andrei Hantu argued: good employment histories, high deposits, and low LVR limits, of 80% or less.
What are the potential obstacles?
Most obviously, supermarkets face the problem that home loans are a different product to insurance policies. “The basic products attached to low rates and product discounts “don’t suit everyone”, Andrei Hantu explained, “with only customers sitting in very certain criteria able to get across the line”. With non-conforming lenders continue to grab near-prime clients, and banks slashing fixed-rates, the cheap-but-dull products produced by data analysis could struggle to make waves.
Read the full article on supermarket mortgages in issue 14.10, on desks mid-September.
Supermarket mortgages have been on the horizon for some time, and for the next issue of MPA, Sarah Megginson spoke to industry experts on whether we’ll soon be getting our homeloan with a side of milk. And unlike other lenders, supermarkets actually know their customers – from their weekly spend to the type of toilet roll they prefer. We've summarised what this means for mortgages:
How could supermarkets do loans differently?
Coles GM Richards Wormwald recently announced the formation of a financial services business, which would offer personal loans. Both Coles and Woolworths have been offering financial products for some time, and last year Woolwoths’ director of group retail services Penny Winn told the media how the Everyday Reward scheme was used to target car insurance at safer customers (those who stocked up on milk and red meat, apparently). Andrei Hantu, Director of Bloom Lending and Financial Strategy, told MPA this data could be used for home loans “They’ve got a large client pool that they have access to, and they have something unique to offer in terms of packaging discounts around fuel and groceries,”
Which borrowers will they appeal to?
“It will mainly impact brokers who look after basic mum and dad type clients”, Integrated Finance Solutions broker Paul Allen explained to MPA. This is firstly because supermarkets have a very particular reason for entering the mortgage space, continued Allen; “the idea being that it will significantly tie the client to do all their shopping with Coles or Woolworths. In that sense, I see it is a ploy to secure clients to their brand more than any attempt to revolutionise the mortgage industry “.
Just as banks use shopping lists to target safe drivers, it is likely they will go for prime customers. Andrei Hantu argued: good employment histories, high deposits, and low LVR limits, of 80% or less.
What are the potential obstacles?
Most obviously, supermarkets face the problem that home loans are a different product to insurance policies. “The basic products attached to low rates and product discounts “don’t suit everyone”, Andrei Hantu explained, “with only customers sitting in very certain criteria able to get across the line”. With non-conforming lenders continue to grab near-prime clients, and banks slashing fixed-rates, the cheap-but-dull products produced by data analysis could struggle to make waves.
Read the full article on supermarket mortgages in issue 14.10, on desks mid-September.
