Aussie adds digital home loans in an effort to keep up with the big four

Aussie looks to keep up with the big four by entering digital mortgages. Though the technological shift doesn't come without concerns.

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Aussie is looking to keep up with the times and the other major banks. The Sydney-based financial group is dipping its toes into digital home loan lending, as reported by The AFR.

The housing bull market continues to boom, so much so that whispers of regulator intervention are lingering. But for now, banks are clambering to scoop up all those new-to-market buyers. In this modern era, digital home loans are a crucial offering to do exactly that.

Tic: Toc our way to a home loan

Not to be mistaken for the social media giant, TikTok. The Adelaide-based fintech Tic: Toc is a direct-to-customer platform that allows lenders and brokers to fulfil responsible lending obligations.

Additionally, the front end of Tic: Toc acts as a seamless home loan application portal. The point being, the fintech's technology also serves as an accelerator for lenders in the digital age.

Bendigo and Adelaide Bank Ltd (ASX: BEN) holds a 28% stake in Tic: Toc. The technology has helped the bank grow its loan book to $600 million — increasing at 8% to 10% per month.

Although start-to-finish digital mortgages are still a niche portion of the lending market, this expected to grow rapidly. A survey conducted by KPMG found digital to be the preferred channel for all stages of the mortgage experience — with 58% wanting to apply for a mortgage online.

Stiff competition

Aussie might be jumping on the trend a little late, with already established rivals in the form of Athena Home Loans and, owned by Resimac Group Ltd (ASX: RMC). However, it is important for Aussie to remain competitive with the likes of the Commonwealth Bank of Australia (ASX: CBA).

In February, CBA reported in its interim results that it was gobbling up home loans at a blistering pace. During the half, Commonwealth Bank added $53 billion in new housing lending, an increase of 8% on the prior half.

At the moment, Aussie is a solely owned subsidiary of CBA. That will change if the big bank's divestment is approved by the Australian Competition and Consumer Commission. At which point CBA would be left with a 45% minority stake.

Aussie plans to merge with Lendi, another mortgage broker, to form a single entity with an $80 billion loan book.

Aussie CEO's take on home loan shift

In an interview with The AFR, Aussie CEO James Symond saught to bring ease to the concerns of the bank's broker network. Digital disruption is great for people, aside from those that it replaces. That appears to be the tension in the air. Whether increased technological growth will lead to consolidation in the future, Mr Symond stated:

Time will tell, but at the moment, we have way more customer inquiries than we can handle. I would be very surprised if any brokers says they are losing business to an online channel right now. They are dealing with as much as they can consume and this will actually help our brokers.

Motley Fool contributor Mitchell Lawler owns shares of Commonwealth Bank of Australia. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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