Suncorp’s new banking boss Clive van Horen has wasted little time putting his mark on the business with confirmation on Monday that the bank will begin rationalising its line of mortgage products.
From 5 October Suncorp will cease accepting applications for two retail mortgage products - its Access Equity Line of Credit and the Annual Interest in Advance loan option.
In a notification issued yesterday to mortgage brokers, Suncorp said it was also writing to existing borrowers about changes it was making to the obsolescent products, but the bank did not furnish details about potential changes to fees and terms for legacy customers.
The cull is part of a wider product simplification strategy that van Horen is implementing across the banking business.
Van Horen joined Suncorp from CBA in early August and has been given a mandate to expedite the integration and digitisation of Suncorp’s mortgage origination, settlement and servicing platforms.
A key part of that process is to rationalise the mortgage product set so that the bank’s home loans are more easily marketed and understood by online customers.
During his time at the helm of CBA’s mortgage business van Horen steered an overhaul of home loan processes, which led to the retirement of mortgage products that were judged to be less marketable in the digital realm.
Canstar director Steve Mickenbecker believes the decision to rationalise the mortgage portfolio makes sense because it will reduce the risk of product cannibalisation among existing Suncorp borrowers.
“When you’re looking to sell through digital channels, you often find that you’re competing with yourself if you’ve got too many products in the market,” he said.
“Too many products confuses customers.
“Simplicity is required to sell loans to digital customers, especially in a low rate environment.”
Suncorp is in the middle of an aggressive cost reduction program that will result in a material reduction in its bricks and mortar presence across Australia.
Earlier this month the bank announced the closure of 20 branches in Queensland, NSW and Victoria – a decision that renders 550 jobs redundant.
Bank analysts expect more branch closures as the bank steers customers to mobile and internet banking channels.
Group chief executive Steve Johnson highlighted the digital push at a briefing of analysts after the release of the full year accounts on 21 August.
“We’ve now got our digital capability to where it needs to be and you can see that evidence through what we’ve done on deposits,” he told analysts.
“Now we need to turn that into a similar type cross-collaborative approach, the way we look at our lending portfolio and drive to a higher level of origination through our lending portfolio through digital.”
One of the big challenges for Suncorp and other mid-size regional banks is to secure and maintain improvements to turnaround times on loan approvals and applications.
In 2014 van Horen floated the prospect of CBA being able to process and settle mortgage applications in 24 hours – an aspiration that his former employer and others in the industry are still chasing.