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Making it count – why conversion is key

Pepper Money CEO Mario Rehayem has a unique appreciation and understanding of the importance of loan conversions for mortgage brokers. A former mortgage broker himself, he says the number of hours brokers spend on loans that go nowhere is daunting. They are often knocked back due to changing or opaque credit policies. Rehayem says conversion is important for the whole lending ecosystem – customers, brokers, and lenders. “I’ve spent over two decades working alongside brokers, and in my recent broker interviews it became apparent that broker pain points haven’t changed much at all. The fundamental challenge of conversion still exists,” says Rehayem.

A customer typically sits down with a broker whom they see as a professional, he says. The broker spends a few hours getting to know the customer, carrying out assessments and recommending which lender suits that person’s needs. “As you can imagine, for the customer, there’s a bit of excitement that they’re taking this significant step, applying for a loan, one of the largest investments they’ll ever make, only to [sometimes] find out later that they are not successful,” he says. “We see this as a very poor experience for the customer; "we consider it the point when the customer" may begin to doubt their broker’s capabilities of recommending a suitable product.” This puts pressure on the broker. “That’s a couple of hours they have put into an investment and got no return – it actually makes bad business sense to continually not convert loans. The customer gets a poor experience, and the broker isn’t getting paid. There are ultimately no winners.” Many lenders are constantly moving the goalposts of their credit appetite, says Rehayem. The other problem is that customers are “falling victim to a shiny rate” only to find out after applying for the loan that the lender’s credit policy for that product doesn’t apply to them.

Conversion tips for brokers Converting loans starts with education, says Rehayem. This includes having a better understanding of the parameters of the lender panel, whether this comprises mainstream banks or non-bank lenders, and of the probability of customers getting a loan with specific lenders. “It comes down to understanding credit policies of particular lenders but also the type of customers they’re attracting. If they’re attracting a certain segment of borrower, then better aligning themselves with lenders that appreciate or understand that type of customer is valuable.

“It really comes down to knowing your credit policies, knowing your customer base, and marrying the two together.” Rehayem says brokers are excited and grateful that Pepper Money is offering them tools such as Pepper Product Selector (PPS), which takes just a few minutes to provide a rate, product, and fees associated with a customer’s specific needs. “We’re able to give them a quick answer in under two minutes, with transparent indicative rates and fees. It gives a huge confidence boost for the broker that when they do recommend a Pepper product using the PPS tool, they can have confidence that there is an option that they can progress with.” PPS is a sophisticated tool that does an electronic valuation, an LVR postcode search, and obtains an Access Seeker credit report, simultaneously feeding the information through Pepper Money’s unique cascading credit model, Rehayem says. PPS is also useful when a client has had a negative response from the

original lender. Brokers can then offer an indicative approval on a Pepper Money loan and provide the rates and fees. “It just bolsters the positioning of the broker that they are experts in their field, they haven’t given up on the customer, and they’re giving them an alternative solution,” he says. Boosting conversion rates Pepper Money has always been an advocate for broker education, and investing in the broker network is a priority, says Rehayem. “Whether it’s tools on our websites [or] courses that we’ve put brokers on, it’s that constant reinvestment in the broker channel.” Another broker tool is Pepper Resolve, which offers an alternative lender product with no surprises when it comes to rates and fees post-assessment. Rehayem says Pepper Money also invites brokers into its credit workshops, and they love the fact that they can “pick the brains” of the credit team. “Where Pepper Money differentiates is its transparency – you can either use the tool, and it will give you the goalposts in under two minutes, or you can come into our credit workshops and really get an understanding of how your credit team think and what they look for when they receive a submission.” Broker partnerships Pepper Money is proud of the fact that 97% of its business comes from mortgage brokers, says Rehayem. “We’ve been backing the broker channel now for over 21 years. I used to be a mortgage broker myself, and I’ve got first-hand experience and an understanding of the typical pain points for brokers and customers.” Pepper Money invests a lot of time adjusting its processes, products, and the way it communicates. It also responds to brokers’ feedback about changes or improvements needed. “We’re on the front foot, constantly changing and ensuring we’re delivering a seamless and transparent offering to both the broker and the customer.” Rehayem says Pepper Money never contacts a broker-introduced customer directly unless a broker requests this. “We respect the channel that has referred that customer to us, and you will not get any channel conflict from the Pepper stable.” The non-bank lender has also “upped the ante” in its support of customers post-settlement, making it easier to deal with Pepper Money through digital settlements, fast turnaround times, and phone calls. “This reflects well on brokers because they have recommended Pepper Money to their customers, and we deliver with no surprises.” Rehayem says brokers are loving this aspect of Pepper Money, and this is partly why mortgage originations have grown nearly 90% year-on-year. “There’s a reason behind brokers choosing Pepper Money – that’s a combination of market-leading turnaround times; accuracy, and transparency in our decisioning; leading tech; the way that we treat their customers – and we’ve got a very strong BDM force that have built strong relationships with brokers built on trust and expertise.”

Spotlight

“There’s a lot of false hope built, and unfortunately around 50% of most customers are getting a ‘no’ when it could be a ‘yes’. The possibility of yes may exist, but in many cases it never gets presented as an option,” he says. “Conversion is key, because it’s fundamentally synonymous with delivering a great experience, and delivering on the value of a broker as the expert. “It makes business sense [for brokers] to try to align their understandings with lenders that are going to convert or have a higher probability of yes on every application. That’s where Pepper Money has spent a lot of time focusing on better understanding the constraints, the pain points of the customer and the broker, and trying to find better ways to service those customers and brokers to get a higher probability of yes."

Pepper Money is a non-bank lender with businesses in Australia and New Zealand. Pepper Money provides a variety of home loan options, as well as car loans, personal loans, loans for professional equipment, and commercial loans. In 2021 Pepper Money listed on the Australian Securities Exchange (ASX: ticket PPM).

Company Profile

2000

Year established

1000+

Number of employees

288,900

Number of customers served (cumulative since 2014)

18,000+

Number of accredited mortgage brokers

1 in 9

Number of electric vehicles financed by Pepper Money in Australia

Bio

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Milestones

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Accolades

Company Profile

Years in industry

Number of employees

1000+

Career highlight

“Working with the brilliant people that make Pepper Money what it is today has fuelled my energy and passion to do more for others, particularly the underserved in our community”

Mario Rehayem

CEO at Pepper Money

Ensuring a customer’s loan makes it all the way to settlement is crucial to a broker’s value proposition and business success, which is why Pepper Money continues to invest in tech and processes that boost broker conversions

Read on

“It really comes down to knowing your credit policies, knowing your customer base, and marrying the two together”

Mario Rehayem, Pepper Money

“With Pepper Product Selector, brokers can be confident of presenting an indicative offer to customers, knowing we will not change the product selection post-full assessment. We deliver a commitment in under two minutes with no surprises”

Mario Rehayem, Pepper Money

IN Partnership with

April 2021

May 2021

July 2021

Feb 2022

Mar 2022

April 2022

Pepper Money celebrates 21st birthday

April 2021

Lists on the ASX

May 2021

Appoints new general manager, mortgages and commercial lending, Barry Saoud

July 2021

Delivers full-year results exceeding IPO forecasts

Feb 2022

Launches Near Prime Clear loans

Mar 2022

Acquires 65% of Stratton Finance

April 2022

Milestones

Completes sixth public securitisation for 2021, bringing the total raised over the year to $4.8bn

Dec 2021

Wins Non-Bank of the Year at the Australian Mortgage Awards

Oct 2021

Number of electric vehicles financed by Pepper Money in Australia

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