Australian start-up creates competitive advantage for home buyers

Sydney based start-up LoanDolphin introduces a platform that puts the loan seeker in a position of power, levelling the playing field with brokers Australia wide.

The mortgage industry is about to experience a major shift, as local fintech start-up LoanDolphin is set to disrupt the market. Through a unique platform, the online-based business connects loan seekers with loan providers, in an auction setting that highly favours the enquirer.

TechYeah met up with LoanDolphin founders Ranin and Rod at national tech event Myriad, to gain more insight about the new venture.

Previously employed at one of the ‘Big Four’ banks, the founders experienced inefficient loan processes on a daily basis. They noticed how the lack of knowledge and power among borrowers tended to put them in unfavourable positions,

“We saw first hand how borrowers were missing out on tens of thousands of dollars worth of potential savings”, Rod told Tech Yeah.

It’s not only the dollar savings that are affected by miscommunication. Some consumers end up with the wrong kind of product, which can lead to higher fees long-term.

Despite the consumer focus, the platform simplifies the process for many banks and brokers as well.

“[Brokers] were utilising their energy and effort trying to work with the wrong market segment, most of them simply did not utilise digital capabilities to connect with the right borrower,

“We allow direct banks as well as vetted mortgage brokers to compete for borrowers with best price and service in a transparent platform. The process makes it extremely easy for bank lenders to participate and become a member”, Ranin said.

The opposite of a loan shark

The bidding platform gives the power back to the customer, by allowing her to anonymously find the most suited product, and better home loan rates, by filling out an information sheet. Mortgage brokers and banks can then review the information (not revealing her identity), and make a bid for the loan.

“Dolphins are friendly, intelligent and preferred over sharks”, Rod said.

“[We’re able to] bring together a community of mortgage experts from experienced brokers and bank lenders nationally, to help empower borrowers with their expert knowledge, skills and dedication”.

Since its launch in 2016, the company has experienced tremulous growth, with over $800 million in home loans being facilitated through their platform. The interest rates offered via bids on the platform are often lower than those available when enquiring in person.

The Australian mortgage market has occasionally been criticised for its lack of transparency between brokers, banks and borrowers. While LoanDolphin is not a direct competitor, the service is certainly challenging current industry landscape.

“The platform provides borrowers to access to approximately 80% of mortgage service providers, including the big 4 banks, who are very well represented by their authorised broker members.

“This means that we have mortgage brokers from different aggregators nationally who have access to different pricing and products in one simple place”, explained Ranin.

According to IBISworld mortgage affordability report¹, mortgages have become slightly more affordable in the past five years. Meanwhile, the housing prices have significantly risen in that same time period, especially in NSW and Victoria.

This trend is predicted to continue in the next five years, with industry revenue expected to grow at an annualised 1.5% over the five years through 2022-23, to $85.9 billion².

Following the industry growth, the innovation focused start-up is constantly adapting to solve the challenges of tomorrow. LoanDolphin’s internal team is currently working on the newest feature ‘Intelligent Matching’, which will enable banks and brokers to implement dynamic risk-based pricing.

“The next wave of consumers who are avid users of apps like Tinder, Snapchat and Instagram are not going to interact with the banks the same way as the current or last generation”, Ranin said.

¹ IBISWorld Business Environment Profiles December 2017, Mortgage affordability
²IBISWorld Industry Report X0010 February 2018, William McGregor, Mortgages in Australia