Defence Bank beats a path to real-time lending in mutual sector

George Lekakis

Customer-owned Defence Bank has broken fresh ground in the mutual sector following the launch of an automated lending platform engineered to crunch loan approval times to less than a minute.
 
The bank yesterday said it was now offering secured car loans through the new platform that was developed internally with Sydney-based technology partner Cloudcase Software Solutions.
 
Defence Bank chief executive David Marshall said the launch of digital car loans followed a three-month pilot of the automated platform that was being extended to process applications for mortgages, credit cards and overdrafts.
 
It is believed that Defence Bank is the first Australian customer owned bank to launch an automated system for assessing personal loans.
 
Marshall said the platform is able to release funds within 20 minutes of receiving applications from members.
 
“We’re planning to add mortgages to the approval system towards the end of the year followed by credit cards,” Marshall said.
 
“We went with personal loans first because they are an important product for our young members who are typically interested in buying a car when they are recruited to the defence force.”
 
Defence Bank has one of the youngest membership bases in the mutual sector, owing mostly to the steady flow of recruits to the army, airforce and navy.
 
While the bank offers its services to the wider Australian community, it has longstanding bonds with the defence forces since it was founded by a group of returned Vietnam soldiers 45 years ago.
 
Marshall said that 60 per cent of the current membership were under the age of 50.
 
The bank’s customer base has grown rapidly in recent years to 75,000 members who are serviced by a national network of 32 branches and mobile bankers.
 
Cloudcase has been working with the bank for 12 months to build the user case for the digital rollout, which required several API integrations with its client’s Data Action core banking system.
 
All of the bank’s credit rules and regulatory settings are embedded in the automated system.
 
In technology terms this puts Defence Bank a generation ahead of major banks such as ANZ and Westpac which have been struggling to upgrade their loan approval processes.
 
Despite having acquired new processing capabilities, Marshall insists that Defence Bank is not interested in marketing its products through brokers.
 
“We’ve never used brokers for home loans – instead we’ve chosen to focus on developing a good set of proprietary origination channels,” he said.
 
“As soon as you go down the broker path you lose the relationship with the customer.”