Heartland’s digital home loans disrupt the market

The launch of Heartland Home Loans

In October 2020, Heartland entered the residential mortgage market with the lowest fixed term rates New Zealand had seen in decades. Unlike some other lenders in the market with low or special rates, Heartland’s strategy for offering market-leading rates did not involve the RBNZ Funding for Lending Programme. Instead, low interest rates were the result of our self-serve, digital application process which significantly reduces the cost of onboarding for Heartland and provides customers with a fast and convenient online application.

The October launch followed a successful trial in March 2020, which determined there was appetite in the market for an online mortgage application process – one where customers could apply and receive approval without needing to speak to a mortgage manager or visit a bank. Throughout the rest of FY2021, Heartland Home Loans continued to make waves in the residential mortgage market with the addition of the country’s then lowest revolving credit home loan rate, as well as multiple fixed and floating rate drops.

Heartland’s competitive advantage has historically lain in providing best or only products, which has allowed it to target niche markets. Our re-entry into the residential mortgage market signified the extension of Heartland’s strategy to providing best or only products through scalable digital platforms.

Taking mortgage applications digital

Heartland’s aim is to create a frictionless experience – ‘friction’ is all the things that keep customers waiting. At the same time, friction is costly. Investing in automation and self-service applications leads to better service at a lower cost.

In proving the effectiveness of a ‘do-it-yourself’ digital application, the Home Loans launch paved the way for Heartland to build digital application processes for a number of other lending products, such as vehicle loans and Sheep & Beef Direct rural loans.

Heartland’s digital platform for mortgages incorporates an automated application and approval process, the benefits of which can be passed on to customers in the form of lower prices. This provides the opportunity to compete against the big lenders. Heartland’s online Home Loans application can be completed in minutes, with an average turnaround time of less than three working days. The eligibility criteria that Heartland applies aims at simple, high quality leads that facilitates automation and a faster approval process.

New technologies open opportunities for the future

Heartland is focused on enhancing its digital platforms and applications to continue to provide customers with a frictionless service at each stage of their customer journey. We will be embedding property database checks into the online application to automate the eligibility verification of the customer’s property.

In addition, as part of our response to the upcoming changes to the CCCFA, we are using bank scraping technology to assist with verifying customer income, debts and expenses for our consumer loans. Heartland is using this regulatory change as an opportunity to implement technologies that will accelerate the digitalisation of our business and cut down the cost to serve.

We are excited to continue disrupting the residential mortgage market through our digital processes and competitive rates, into FY2022 and beyond.

• $895.2m received in online enquiries
• $200m+ approved from applications received during FY2021.
• 9,489 online applications received
• 19 minutes on average for customers to complete the application
• 7 working days on average for Heartland to verify an online approval
• 3 loan calculators to help customers self-serve
• 3 market-leading interest rates (as at 30 June 2021)