MENU

Here’s how Westpac Banking Corp aims to disrupt the mortgage brokers

Watch out Mortgage Choice Limited (ASX: MOC) and Homeloans Limited (ASX: HOM) shareholders because Australia’s oldest bank is aiming to disrupt the mortgage broker industry.

According to a report in The Australian Financial Review today Westpac Banking Corp (ASX: WBC) has invested $16.5 million in rising fintech company uno in a bid to win a portion of the estimated $2 billion in fees that banks pay annually to mortgage brokers.

Uno is a digital mortgage service designed to find the right home loan to match a customer’s specific needs. According to its website no lender or product is ever prioritised for any reason other than the criteria that the user has entered.

Westpac and its full range of brands are already amongst the many lenders featured on the website. Others include AMP Limited (ASX: AMP), Commonwealth Bank of Australia (ASX: CBA), Suncorp Group Ltd (ASX: SUN), and National Australia Bank Ltd. (ASX: NAB).

This is the largest investment the bank has made in a start up to date, though neither party has disclosed the level of equity that Westpac will gain from it.

Whilst this is a very positive move, I wouldn’t quite class it as thesis-changing. If uno can eventually gain a strong market share then Westpac will no doubt do very well from its investment.

But that is far from a certainty of course. Let’s not forget that the digital mortgage broker space is highly competitive already and has low barriers to entry.

Digital companies such as Finder.com.au, Compare The Market, and iSelect Ltd (ASX: ISU) are just three of a growing number of companies that uno will have to compete with in the space. Interestingly, Westpac has also just become a substantial holder in iSelect with an almost 6% stake.

Overall this is a positive step forward in my opinion, but not one that I expect will noticeably impact its earnings for some time to come.

If you're still looking for investment ideas then look no further than these three fantastic ASX shares. As well as solid earnings growth, each has a growing fully franked dividend also. Definitely worth taking a closer look at in my opinion.

Why These 3 Blue Chip Shares Are Set to Soar in 2016

Discover The Motley Fool's Top 3 blue chips for 2016. These 3 'new breed' shares pay fully franked dividends AND offer the prospect of significant capital appreciation. Simply click here to gain access to this comprehensive FREE investment report.

No credit card required!

Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.