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ALIC Reaches $1B Gross Settled Loans Milestone In FY22

The 2021/2022 financial year has been a tumultuous one. The first two quarters were marked by the tail end of the post-COVID high – historically low interest rates and a housing market that showed no signs of slowing. 

In Q3, though, there were rumblings. Consumer confidence dipped. CPI climbed even higher. Banks began predicting cash rate hikes and the accompanying slowdowns. Then, in Q4, it happened – the dip turned into a freefall, the housing market plateaued, and the RBA raised the cash rate by 75 basis points over a single quarter.

For mortgage brokers, a cooling breeze became full-blown headwinds in an uncomfortably short time span. Lenders were tightening their standards, fast, and the halcyon days of two-week approvals were over. If company performance slowed, there was a good reason for it. 

But it was in exactly this environment that ALIC managed to reach more than $1 billion in annual gross settled loans – a milestone achieved only by the best-performing brokers in Australia. To find out exactly how the team did it, we sat down with Damian Brander, ALIC’s chief executive officer.

ALIC: The Four Pillars

The Australian Lending and Investment Centre is a company built around helping Australians build wealth through property.

“What we aim and aspire to do, and what we’re extremely passionate about, is helping our customers develop wealth enablement strategies through lending scenarios,” says Damian. “We typically deal with people who have a desire to invest, a disposable income that allows them to invest, and who are really needing the support of specialists to learn and really understand how to do that effectively and efficiently.”

That purpose rests on four pillars: ALIC itself, Prime Mortgage Managers (affordable housing loans), ALIC Blue (specialised equipment financing and chattel mortgages), and ALIC Black (development and construction loans). All four brands have found fertile ground in dealing with lending scenarios in which the main banks have overly complex, time-consuming lending processes.  

ALIC Black, in particular, is focused on finding more favourable non-bank pathways to funding. “We see a lot of opportunities where customers are definitely able to acquire funding, but they’re put through a real disadvantageous process by banks,” Damian tells us. 

“That then leads them to look at alternatives to the main banks putting them through the wringer.  So we look at opportunities to assist them in ways where they don’t necessarily need to do things like pre-sales, they can go for a higher LVR, and they can leverage completed products to secure funding for the next development.”   

Passing the $1B Mark

ALIC has been helmed by Damian since September 2021. Before stepping into that role, he served as Bank of Melbourne’s regional general manager for business banking – a position that primed him for pushing ALIC past $1 billion in settled loans, up 10% from the $923 million settled in 2021.

“The market was buoyant, and we were always going to be able to expect an uplift [in settlements].  But to achieve $1 billion in gross settled lending, which the business had never done before, we knew we had to do things differently to capture the opportunities that were present. The market was favourable, the environment was right, but we still needed to be really disciplined, efficient, focused and determined.”

ALIC’s revitalised modus operandi was based on three key strategies: widescale digital adoption, rapid back-office scaling to match demand, and increased investment in marketing and brand.

Digitisation, of course, was partially a product of the pandemic.  With clients and brokers isolated in their homes – Melbourne was the most locked-down city in the world – ALIC’s team still needed to arrange meetings. The solutions were Zoom, Microsoft Teams, and Google Meet, the unified communications platforms that went mainstream during COVID.

“Brokers leveraging video conferencing technology was a massive efficiency gain,” says Damian.  The technological shift, combined with more flexible hybrid work schedules, meant that brokers could accommodate additional meetings.  Traditional chokepoints – before work, lunchtime, and after work, where clients competed for calendar space – were distributed more evenly across the day, improving onboarding efficiency.

But more clients meant more paperwork, and that wasn’t something ALIC’s existing capabilities could deliver. “We had a back-office operation in Manila, and we knew that was an advantage for us in capturing more opportunity.  We basically doubled the size of it in the [2021/2022] 12-month period.”

Those numbers meant that the Manila team could use one-on-one training to quickly upskill new hires.  More experienced staff were paired with entrants, which facilitated a kind of ‘experience transference’ – an ongoing exchange of ideas and knowledge that helped expedite the back-office expansion.  With enough administrative capacity to accommodate the influx of new clients, ALIC was free to grow.

To keep broker pipelines full, ALIC also increased its marketing and brand expenditure.  New websites for all four brands supplemented leads from specialist industry partners, with investment in digital distribution channels like organic search and social media expected to deliver ongoing results.

“We became much more efficient with what we had,” Damian says.  “And we were always looking for ways to improve that efficiency.  That was how we hit the $1 billion.”

The Storm on the Horizon

ALIC might be heading into the new financial year on the back of an excellent 2021/2022 performance, but that doesn’t mean it’s smooth sailing ahead.  The economic outlook is increasingly ominous, and lenders across the board are shoring up standards as consumer confidence continues to plummet.

Damian, though, is confident that the company can navigate the headwinds of the next year.  All the factors that made $1 billion in settlements possible are still present.

“I strongly believe that the work-from-home environment will continue on for some time.  Flexibility working arrangements now are and will be the norm, so we can expect that our customers will continue to have the ability to meet us,” he says.  “We’re seeing that now.  Our brokers are still booking back-to-back meetings all day long, because customers are accessible at any time, rather than just at the times they used to be.

“What we are seeing is that the market environment – the war in Ukraine, rising interest rates, a softening in the east coast populated areas like Melbourne and Sydney, and depreciating property values, along with factors like headline inflation increasing beyond 7% – will have an impact on consumer confidence and property buying activity.

“To offset that, we’re looking to leverage brand consideration and marketing activities.  We’ve never really utilised that in the past, so we’re hoping it will help combat the cooling off in the industry, and even help us grow at a time when our competitors are contracting.”

He’s equally positive about helping borrowers navigate higher interest rates and lower housing affordability.

“There’s an old saying that’s very pertinent to people with an investment focus: ‘You buy in the gloom, and sell in the boom’.  It’s hard to make returns on your investment when you’re buying at the peak of the market.  We’re foreseeing a period for our customers where they start to enter back into the markets, because the buying opportunities and more stable and the forecast investment prices are more accurate – our investor customers are already becoming more active.”

Borrowers are also beginning to exit fixed-rate loans into a much higher-interest markets, Damian tells us.  They’ll need the expertise of property brokers to find the best possible market prices – especially given some borrowers may be facing the prospect of doubled or tripled repayment costs.

For ALIC, it’s an opportunity to help their clients build wealth in a time of deep economic uncertainty, to deliver on the promise of ethical lending that underpins the brand.  That means always putting client interests foremost – revenue is a secondary, almost incidental result of delivering exceptional service.

“In an environment where there’s uncertainty, volatility in markets, we still see an extremely exciting time for ALIC’s growth agenda,” Damian says.  “There are opportunities to work collaboratively with other businesses to achieve $2 billion in written loans.  There are market opportunities that are continuing to evolve, such as the private lending space. 

“And, in all of that, there’s a desire to expand our footprint further across Australia, knowing that our brand and our current client base will allow us to service new customers.  There’s more pessimism entering the landscape, but we’re extremely excited about the opportunities for ALIC across the next 12 months.” 

Fortunes are made in down markets, and it’s equally true of companies as it is of investing.  There might be a storm on the economic horizon, but, when other companies are battening the hatches, ALIC is preparing to capitalise on a year of wins.  More clients served, more loans written, and more offices opened – it’s all on the cards for 2023.     

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