Digital mortgage lending start-up Nano was in the news last month, when AMP Bank announced that it would use Nano’s technology to develop its own digital mortgage product, and now the company has revealed the extent of its ambitions in the software-as-a-service market.
In a presentation yesterday, the company said it is working with a top 10 Australian mortgage lender that is looking at using its platform and it has plans to launch platform licensing businesses in the United States, the United Kingdom and Canada.
Nano co-founder and chief executive Andrew Walker said he is confident the company has the world’s best digital lending platform and that its technology is proven.
Nano launched in July last year, offering refinance with a promise that applicants would get their approval in minutes. Two months ago it started offering new loans. Its book is worth $550 million.
Everything involved in Nano’s origination process – customer identification, income and expense verification, credit records, property valuation and onboarding - is digital. There is no paper at any stage.
A set of algorithms do all the assessment and decision-making.
Some applications are referred to underwriters, such as where there is irregular income or the loan is on a debt-to-income ratio above six times (Nano’s DTI limit is eight times and its LVR limit is 80 per cent).
Walker said Nano’s lending business acts as a proof of concept and allows other lenders to do their due diligence on the platform.
He said the SaaS revenue would overtake the interest income from lending within a year.
Walker said speed and efficiency will determine the winners and losers in the mortgage market and he produced some data to underline his point.
The number of days a residential property is on the market has fallen from a 10-year average of 40 days to 28 days currently, according to CoreLogic data.
This is the reason borrowers are looking for lenders to improve their approval turnaround times.
Consumer research done by Pureprofile for Nano found that around 20 per cent of Australian borrowers reported missing out on a property because of a delay in securing finance. Ten per cent said they had missed out more than once for this reason.
Twenty-two per cent of respondents said their loan approval took three to six weeks and 5 per cent said it took more than six weeks.
“Mortgage processing is still cumbersome for most lenders. You can make improvements but you will always come up against some limitation because of legacy systems.”