The Australian home loan industry is worth more than AUD$1.4 trillion, with the big four banks some of the most profitable in the world. That suggests consumers aren’t always getting the best deal. Meanwhile, Australian entrepreneurs have caught the Fintech bug, with a rapidly developing ecosystem spearheaded by Stone and Chalk. One resident startup, LoanDolphin, has created an auction platform, introducing transparency and competition to the mortgage market. A Proptech / Fintech hybrid, CTO and Co-Founder Rod Dutra explains their plans to change how Australians get a home loan:
What is the problem you have set out to fix with LoanDolphin?
We both worked for a big 4 bank here in Sydney (Australia) and during this time we were able to experience first-hand the power banks have over the consumers and the amount of savings customers were missing out due to the lack of awareness when it comes to effectively negotiating and finding the right channel to complete their property finance requirements. We saw that customers were at the mercy of banks and had to do a lot of work to get the home loan deal they deserved.
Mortgage brokers can help, but different mortgage brokers have access to different rates so the customer still doesn’t know if they’re getting the best deal. We thought it was about time the consumers had more control and that brokers and banks did the hard work instead so we created LoanDolphin to empower consumers with more choice, convenience and value.
What has been the biggest challenging in launching the platform?
It’s very similar to most startups. Building trust with the customers is probably one of the biggest challenges we have. We collect a considerable amount of information and, as a result, sometimes customers may be reluctant to give all the information out. We are still building our brand from scratch. But this is when early adopters and talking to our existing customers becomes very important. We love it when customers share their feedback with us so we can keep improving our product.
What was the process like in signing up the first bank and generally how have the banks responded?
We were able to sign up some banks early on when we were about to launch our MVP. It takes a lot or persistence and patience with the banks. Generally, banks are very conservative. Different stakeholders, inconclusive priorities and a lack of long term strategic thinking is very hard to tackle as a startup.
When you say lenders and brokers compete is it fully automated and how does that work?
There is a human behind all this competition. We believe that the home loan deal as well as the person who assists you with the application is crucial. Our ratings and reviews will help our customers choose not just the right product but also the most suitable person – whether it’s a bank lender or a mortgage broker. Also, all the bids are placed in an open and transparent platform so brokers and banks can see what everyone else is prepared to offer each customer, which means that the competition is very fierce.
How does a broker compete with a bank when presumably their loan is from the same institutions?
Goes back to what we mentioned about the lack awareness. Certain brokers are categorised as ‘platinum’ or ‘flame’ brokers. These brokers have special deals and certain privileges with certain banks. Likewise some senior bank lenders have anything from pricing discretions to the ability to fast track applications if need be. So as a customer if you go to a normal lender or a normal mortgage broker you might end up with an average deal for one of the biggest purchases in your life.
Do you have any direct competitors?
Our competitors range from comparison websites to DIY broker sites, all with fairly different offerings and value propositions from us.
How has Stone and Chalk helped your business?
It’s been great here at Stone and Chalk and we have found great mentors. The collaborative efforts within the community to help, share and support each other is absolutely priceless.
What do you think of alternative funding platforms like funding.com.au?
We believe that alternative funding platforms will have a part to play in the industry. There are plenty of problems in the market which need innovative solutions to tackle them. As long as no one is ripping the customers off (like the payday lenders saga) and there is a clear value add to the customers, alternative funding platforms will remain relevant.
What is the focus for the next 12 months?
- Expanding our team
- Release LoanDolphin v2 to the market in the next 8 weeks
- Get more direct banks involved
You have announced plans to expand the platform for mortgage brokers. Can you explain how this will work?
We already have mortgage brokers taking part in our platform. We are actively looking to expand our partnerships with Victorian mortgage brokers since we are starting to see a big uplift in our customer base from Victoria.