Proptech Panel: How Technology is Changing Residential Mortgage Lending

Guest Speakers:

Anthony Baum – Tic:Toc

Melissa Christy – 86 400

Tony Harris – Nel.Fund


Simon Hayes: (00:19)
Good afternoon, everyone. My name is Simon Hayes, and I’m the Secretary of the Proptech Association of Australia. It’s great to have you here for our monthly Proptech Panel discussion. Before I begin, in the spirit of reconciliation, Proptech Association of Australia acknowledges the traditional custodians of country throughout Australia and their connections to land, sea, and community. We pay our respect to their elders, past and present and emerging, and extend that respect to all Aboriginal and Torres Strait Islander peoples joining us today.

Simon Hayes: (00:49)
I’d especially like to thank our founding sponsors, Stone & Chalk, who have made this event possible. For those of you who don’t know Stone & Chalk, it was founded as a not-for-profit in Sydney in 2015 to help fintech startups commercialise and grow. From 40 startups in 2015, it now has around 200 startups in Sydney, Melbourne, and Adelaide, covering all areas of emerging technology, including proptech. Currently around 20 proptechs call Stone & Chalk home. I’d also like to thank our other foundation sponsors, [inaudible 00:01:26], Macquarie Bank, The Real Estate Institute of Western Australia, Pexa, and Webit.

Simon Hayes: (01:33)
Now let’s get into today’s panel without further ado, and I would now like to hand it over to Jennifer Harrison, the Vice President of Proptech Association of Australia, to conduct this discussion. Over to you, Jennifer.

Jennifer Harrison: (01:48)
Thank you, Simon. Hello and welcome to April’s The Proptech Panel. Today I’m super excited to be talking about two of my favourite things, namely, finance and property. Yes, we are going to be talking about mortgages, but specifically we’re going to talk about the modern fintech way to get approved for a home loan more quickly and less painfully. Great Australian dream to own your own home. Now for most people, that means saving the deposit and getting approved for a home loan. I’ve recounted to a few folks already an experience I had about 10 years ago now, where I went to my relationship bank. I won’t name them, but I’d been a customer of this bank for about 20 years at the time. And I indicated to them that I’d recently returned from overseas and I wanted to get a home loan.

Jennifer Harrison: (02:44)
I was given an appointment with a mortgage specialist, and we had a lovely cup of tea and we had a lovely chat. And then she explained to me the process. Now obviously, I was expecting that they would have requirements of information from me. What I wasn’t expecting is that their process would have been quite so manual, quite so archaic, and quite frankly, quite so brutal. For example, I was asked to provide evidence that I had the deposit. I said, “I do. It’s sitting there in my high interest online savings account with you.” And the mortgage specialist said, “That’s fantastic, Jennifer. If you could just log on to online banking, if you could just take a screenshot of that and email it to me, that would be fantastic.” And this was just the start. I was also asked to provide three months’ worth of credit card statements. I said, “My credit card’s with you.” She said, “That’s fantastic, Jennifer. If you could just log on to online banking and print off three months’ worth of statements and scan them and PDF them and email them back, that would be fantastic.” And so on and so forth.

Jennifer Harrison: (04:00)
Now, this was my relationship bank. I’d been with them for 20 years at this point in time, and they didn’t get to earn the revenue from me from my home loan, because I went looking elsewhere. Now, I can see our expert panellists nodding and laughing, and thankfully, today it’s different. Let’s meet the panel and let’s find out about how getting that deposit and getting that mortgage and getting onto the property ladder is better, because we’re using technology.

Jennifer Harrison: (04:32)
First off on the panel today, we have Anthony Baum, who is the Founder and CEO of Tic:Toc. Hello, Anthony. Welcome to the panel. And you’re on mute.

Anthony Baum: (04:46)
Thanks for having me, Jennifer.

Jennifer Harrison: (04:48)
Thanks for joining us. Second on the panel, let’s say g’day and welcome to Melissa Christy, who is the Lending Product Lead at neobank 86 400. Hello, Melissa.

Melissa Christy: (05:01)
Hello, Jennifer. Thanks for having me.

Jennifer Harrison: (05:03)
Pleasure. And lastly, we have Tony Haris, who is a finance and property enthusiast and the Co-founder and CEO of Hi, Tony. Welcome to the panel. You’ll need to come off mute as well.

Tony Haris: (05:20)
Unmute. I’m here. Hi, Jennifer. Thank you for your welcome. Hi, Melissa. Hi, Anthony. It makes me shudder, Jennifer, that story. Unfortunately, it’s still going on, and it’ll be great to talk about some things today that we can share some experiences. But seriously, I saw the smiles from the other panellists, and especially Melissa, who’s been in this industry 15 years, like myself a long time, and it still goes on. And that’s what the sad part is.

Jennifer Harrison: (05:51)
Yep. But that’s also the massive opportunity of bringing fintech smarts into the property space. Anthony, let’s talk to you first, please. Can you tell us in a nutshell what Tic:Toc does? Give us your elevator pitch.

Anthony Baum: (06:07)
Sure. Tic:Toc is all about making the process of home loan fulfilment faster, smarter, and simpler. We’re a capital T fintech, so we’ve developed a proprietary platform that, under the Tic:Toc brand, we launched in 2017, which basically provides a digital home loan experience. And we’ll cover that in more detail, but also as a capital T fintech, we make that technology available to the industry. We now have three brands operating on the Tic:Toc platform in the industry. Tic:Toc, Bendigo and Adelaide Bank, and as of today, Aussie.

Jennifer Harrison: (06:53)
Yes, I saw that announcement. Congratulations. That’s fantastic news.

Anthony Baum: (06:59)
Thank you.

Jennifer Harrison: (06:59)
Tell us, though, why is the business called Tic:Toc?

Anthony Baum: (07:02)
We’re called Tic:Toc because it is actually about time. It’s about time for the customer and time for our people. We listened to your experience upfront, Jennifer, and that is a very different experience from a Tic:Toc customer. The fastest we’ve done a home loan, dual applicants, starting application, fully approved home loan in their inbox, is 58 minutes. But that took an assessor in our world 10 minutes of effort. So we’ve given time back to the customer, and we’ve given time back to our people by automating and digitalizing the processes.

Jennifer Harrison: (07:45)
Okay. Let’s talk a little bit more about the core problem that you’re solving for. I shared some of my own personal real life experience. Can you explain a little more about how you are using technology to solve for that problem?

Anthony Baum: (08:02)
Sure. Basically, there’s three things you need to fulfil a home loan for a customer. You need the information that they need to provide you about themselves, assuming you don’t know them like your bank does, about the property. And then you need to validate all of that information, which is really about data. The first part is about data, and then it’s about automation of the data. It’s about using AI, a very fashionable word which is really process automation, but then using process automation, which is using that data to automate the process. And then basically, digitalization of all of the business rules, circumstances, credit policies that underpin a home loan, and basically, bring that together with an ability for a human to interact with that data and those decisions to the extent they need to, and only to the extent they need to, to fulfil for that customer.

Anthony Baum: (09:15)
Now, when you bring all that together, that is what an automated platform with human in the loop looks like, and that’s effectively what we’ve developed, had in market now for three years, and are offering to the industry.

Jennifer Harrison: (09:32)
Fantastic. Can you tell us a little bit more about how you are going to market and engaging with the industry? What feedback are you getting? What reactions are you getting from them, whether that’s positive or negative? Are they raising objections, for example?

Anthony Baum: (09:47)
Well, from the industry or from customers?

Jennifer Harrison: (09:51)
Oh. Well, let’s start with the industry.

Anthony Baum: (09:53)
Okay. With the industry, look, we’re seeing platformification really start to gain hold as a thematic within the industry. We built Tic:Toc on the premise that that would happen. And by platformification, what am I talking about? I’m talking about the breakdown of brand, technology, and balance sheet into component forms, where you can put any brand, let’s call it Aussie, with a technology platform, Tic:Toc, on a balance sheet, Bendigo and Adelaide Bank, to basically create a leading digital customer experience and proposition. And you can get to market from signing a contract and effectively make the vast majority of your cost base variable by entering into a partnership like that as the brand.

Anthony Baum: (10:57)
Those two things together are clearly highly attractive, so we’re really starting to see a lot of interest in, hang on, brand A, brand B, brand C. Can we go on your platform? That brand may be tied to a balance sheet, as a bank. It may not, because it has a brand that carries into home loans. We’re seeing lots of interest. We’re seeing this on both the lending side and now also on the deposit side. You’ve got Afterpay, 10X Technology, Westpac. Hope you don’t mind me saying this, Melissa, but you’ve got effectively UBank, 86 400 technology, and their balance sheet. So you see variations of the thematic, but that’s effectively what we’re starting to see play out in the industry.

Jennifer Harrison: (11:51)
Do you think that the big four banks are maybe realising, and not just the big four banks but some of the other banks, are realising they need to partner and collaborate with fintechs?

Anthony Baum: (12:04)
The answer is yes, but it’s slow, and there still is a build bias. Whilst we talked about that thematic gaining hold, it’ll still take more time, but it will happen, in my opinion. A really good example is, if you look at the data out of the global studies that are done by people like Accenture, 70 to 80% of transformation programmes, regardless of industry and particularly in financial services, are failing. $1.3 trillion was spent globally on transformation within projects last year, based on Accenture’s estimates. 70 to 80% of that investment will be waste. So it is something that I think is going to gain more traction. The more success stories there are through partnership, be that Tic:Toc with Bendigo and Adelaide Bank or 10X with Westpac or whoever, you will see the platforms that are the technology part of the equation, and they’re not just technology, I’ll come onto that with one last comment, but that part become a business model, a strategy and structure in itself, and brands and balance sheets will leverage that capability.

Anthony Baum: (13:39)
Because if you’re going to offer a platform proposition, it is actually not just technology. The technology is the enabler, but really you’re combining a different culture, a different way of managing risk, a different way of thinking about process. It’s completely different. And then technology and bringing all those four things together to deliver a proposition. So yes, that’s where we see it at.

Jennifer Harrison: (14:08)
Yeah. I think there’s definitely something very different about the fintech way of doing things, and I also personally think that the passion and purpose of the founder to solve a problem is incredibly powerful. Anthony, can you tell us a little bit, was there any particular inspirational moment where you thought, hey, I know what I want to do next, I want to found a fintech?

Anthony Baum: (14:37)
Well, first thing I did was go and run one. I was an ex-bank exec. I went and ran a fintech called ThinkSmart, which is now part of Flexi in Australia and part of Afterpay in the UK. That business was sold. And then from that world, stepping into some discussions in visibility to the bank world from which I’d come, I started just simply looking at, well hang on, if you applied those things, culture, different ways of managing risk, different process, different technology, and you brought that together, the transformation you could make in the customer experience or create in the customer experience, versus what was being done in the banking industry, to your earlier example, Jennifer, was just exponential. It was definitely 10 times faster. It was definitely 10 times cheaper. It definitely had much higher levels of regulatory compliance, and it would drive better asset quality.

Anthony Baum: (15:46)
So I started talking to banks about what was possible, and I built a very nice little consulting business off the back of that. I’d literally watch a very expensive design and exploration of what was possible get paid for, and then it would basically go in a drawer. I thought the only way to do this and to prove what is possible is actually to do it ourselves. That was really the driver for Tic:Toc, and we started on that journey, obviously, in about 2015-16, and here we are. Yeah. Does that answer your question?

Jennifer Harrison: (16:30)
Yes, that’s perfect. Thank you so much, Anthony, for telling us those quite informative and inspirational pieces about your work at Tic:Toc. Melissa, let’s come to you and talk about the neobank way to get a mortgage. Can you tell us first of all, what is 86 400? Is there an elevator pitch? How do you explain to people when you say you work for 86 400?

Melissa Christy: (16:57)
I know that most people know us as a neobank. We like to call ourselves a smart bank, Australia’s first smart bank. I guess the whole purpose of 86 400 is to provide something different to the market in banking and help customers take control of your money. What does that mean? That means giving you additional features in your app that you can control your whole financial world. That’s all your banking across all the institutions you have. Give you insights, show you your upcoming bills, and give you insights on how you spend and how you save your money. And as well as that, we obviously have home loans, and our digital home loan is to improve that end-to-end mortgage experience as well.

Jennifer Harrison: (17:41)
Perfect. And what is the business’s name all about? Why is it called 86 400?

Melissa Christy: (17:47)
Well, funnily enough, it’s also about time, but 86,400 is the number of seconds in a day. It actually came from that we will help you control your money every second of every minute of every day.

Jennifer Harrison: (18:05)
Wonderful, thank you. Now coming to the lending product, and specifically mortgages, tell us more about the problems you saw in the mortgage market and how you are using digital and technology to solve for those problems.

Melissa Christy: (18:20)
Yep. I joined 86 400 over three years ago, and I’ve got quite extensive experience in mortgages. I guess the key problems that were presented wherever I’ve been, but particularly with brokers, is the amount of time it takes to get an approval, was number one. That was the core thing that people, brokers and customers, had an issue with. And the second one was how much paperwork needed to be provided for an application. They’re the two core things that I was looking to solve, and what we’ve built really… We don’t require any paperwork for a refinance application at all. Obviously, we use data to provide all the different pieces of information we need from a customer. And for a purchase, all we need is a contract of sale.

Melissa Christy: (19:14)
Going through the process of developing our proposition and building and developing our requirements, and we are 100% broker, I used all the big banks’ broker checklists of everything they need to provide. That can be six to eight pages of documents on different scenarios, all the documents you need to provide. And one by one, I went through them all and said, “Do we need that? If we need it, how can we do it differently?” That was the process of going through, “Well, we don’t need that.” How can we, for instance, validate rental income if they’re purchasing a new investment property? There we have plugged in a rental ABM on that. Looked at all those different things and how we could use data to essentially verify the information upfront, so when it gets into our back office, there is a lot less for our team to do.

Jennifer Harrison: (20:05)
Perfect. Can you tell us more a little bit about how you are going to market? How are you using mortgage brokers? And what feedback are you getting from brokers and also from borrowers?

Melissa Christy: (20:16)
At the moment, we use 13 different distribution partners. The bigger ones, AFG, Connective, Mortgage Choice, Val, and SFG. I guess they’re our key distribution partners. It was extremely hard to get onto distribution panels when you are a unknown brand name, you’re a number, and you also do things differently to everybody else in the market. We’ve come a long way in the last couple of years to get the buy-in from those brokers and to get on those aggregator panels. Part of that is also about brokers hearing about our proposition and what we were doing differently, and I’d say the power of PR and social media has helped us there, in that brokers were actually going to their aggregators and going, “Why is this lender not on our panel?”

Melissa Christy: (21:14)
So that really helped us getting the messaging out about quicker, faster, easier to process. And we have brokers that obviously love us. There’s some brokers that what we do is not for them. They’re more traditional. But we have brokers coming back and back again, just saying it’s so much easier. And there’s so much less follow-up, because we can get you an answer very quickly.

Jennifer Harrison: (21:39)
And are you getting anyone objecting to the changes you’re bringing to the market?

Melissa Christy: (21:45)
Definitely. I mean, there are brokers that won’t use us. They’re more paper-based, and that’s just the way they are. There’s also customers who don’t want to electronically scrape their income, expenses and get us to categorise it and provide it that way. Unfortunately, no one likes to lose business, but if that’s the only way you can provide your income and expenses, you cannot send in paper copies, so if the customer doesn’t want to do that, we tell our BDMs, when you’re speaking to a broker, as part of working out whether the scenario fits us, you need to ask if they’re going to scrape their bank accounts. Because if they don’t, we’re not the bank for them, because that whole manual process does not fit our model, and we’re not resourced in the back office to cope with that.

Jennifer Harrison: (22:29)
And can you tell us a little bit more about what’s on the products roadmap? What have you got planned to come up in the later months of this year and possibly into next year?

Melissa Christy: (22:38)
We’re got loads of things to actually continue to improve that broker experience even better. That’s the broker and customer experience, but also get more efficiencies in the back office so we can approve things faster. At the moment, the quickest we’ve turned around a loan is about one hour and 50 minutes, so it’s a bit longer than Anthony, but we are still working on all those different rules we’ve got and how we can get more things sailing through. But the big thing for us that we are launching, and we’re actually in pilot doing real live loans today, is our direct-to-consumer channel. That will be an online experience where the customer can apply and do it all themselves. That’s coming very, very soon, so we’re very excited about that.

Jennifer Harrison: (23:27)
Wow, that’s really interesting, because probably only second to how much Aussies love property, a lot of Aussies really love their mortgage broker as well. I know a lot of Aussies who’ve had their mortgage broker as best man at their wedding. It’s a symbiotic relationship. But I think it does make sense, as more and more we have the smartphone in our hand, and the smartphone is taking care of lots and lots and lots of things in our life. It makes sense that we will be getting a mortgage in minutes from our mobile phone.

Melissa Christy: (23:59)
And the broker obviously plays an important role for more complex deals, and will always be our biggest channel. But if you’ve got a simple vanilla under 80% LVR PAYG, you’ve refinanced a couple of times before, you know what you’re doing, then the direct channel is for you. So we’re very excited to share that very soon, but we started our pilot just last week.

Jennifer Harrison: (24:25)
Oh, how exciting. Awesome. Well, Melissa’s just mentioned LVR, the loan-to-valuation ratio, which is a perfect segue to come and talk about deposits. As our property prices in Australia keep going up and up, to get that 10 or 20% deposit goes up and up and up as well. And increasingly, millennials and Gen Z are requiring the bank of mom and dad’s help, or they’re taking years to save the deposit. There was a newspaper article earlier this year that said a professional couple saving for a deposit on a house in Sydney could be looking at an 11-year journey to save that deposit. So Tony, let’s come and talk to you now about Can you tell us, please, what’s your elevator pitch? What’s all about?

Tony Haris: (25:18)
Well, Jennifer, I’m so excited. If I could get a loan, obviously I’d go and talk to Melissa or Anthony. But the problem we’re solving is when clients haven’t got a deposit. They’re madly saving, trying to buy a property, especially in Sydney and Melbourne, and the reality is, they seem to be giving up. They’re getting further and further behind in saving for a deposit, because at this point in time, they’re not getting government help, they’re not getting stamp duty help, and the reality is, they’re getting really frustrated. I’ve been in this space for 20 years now, and it’s always been a problem. But I believe the people that can afford a mortgage should be having a mortgage, and they can get a mortgage.

Tony Haris: (26:02)
What we’ve tried to do, and we are out there now doing it, we’re putting a co-funding model together. Now as we know, when you talked about the LVR, Jennifer, anything above 80% in most cases requires mortgage insurance, and mortgage insurance is very expensive. There are only two major players now, with QBE and Genworth, and Melissa and Anthony can join me in saying, they know how expensive mortgage insurance is when you’ve got high LVRs. So we’re trying to solve that problem in getting with our co-funding model.

Tony Haris: (26:37)
Our co-funding model will work on the basis of you’ll go and get a first mortgage from Tic:Toc or 86 400, and then we, as the co-funding provider, will provide the other amount of money. What we’ll do is that we’ll have a second mortgage behind their first mortgage. Yes, technology will play a big part, but in so many experiences, what we’re going to be doing is helping people through the process, because what I’ve found so often is that when people are buying their first home, they don’t really have much of an idea. We want to be able to use that experience to help them, because it’s important that they buy the right property with all the data that’s available, in the right location, and obviously, that they’re in a position that they can service the debt.

Tony Haris: (27:27)
When we’re supplying the co-funding amount, we will be charging them, and our modelling is being done on a 5% per annum for that portion. We’ll ideally have a term of five years to do that. It won’t be a shared equity model, but basically, at the end of the term of the five years, we believe that the property they’ve bought has gained capital growth. In a lot of cases, their income has increased, and they will also then pay what we call a capital fee at the end of that period. We want to encourage them so that they can get into property a lot sooner than the 10 years you’ve mentioned to save the money, and where the property market’s going, because look, it’s been an ongoing frustration for me after many years now that I see people giving up. You and I are both addicted to property, Jennifer, that people are just giving up in actually getting a home.

Tony Haris: (28:24)
These statistics say that if you actually haven’t bought a home by the time you’re 42, you never will. People are actually waiting longer and longer to get into the property market, and look what we’ve seen recently. So we’re really excited about fixing that problem. And the other thing, with all our calculations and all our financials, we believe that our product, in the right location with the right capital growth, will be cheaper than mortgage insurance. Really, we’re quite excited about that, to start going into that space.

Jennifer Harrison: (28:58)
Yeah, that’s the thing, isn’t it? For most of us, your principal place of residence is your single biggest asset. Many Australians have been able to cope with risks and things that life throws at you, like the death of a loved one or divorce or disease or some other kind of personal disaster. They’ve been able to cope with those life events, because they owned their own home. People who are renting are much more vulnerable and have much less resilience to cope if life does throw those kinds of eventualities at them. I’m curious to know, Tony, what does stand for? Why is the business called that?

Tony Haris: (29:41)
Well, as you can see from my logo behind, “nel” is nest egg living. With our bird, you actually create the nest egg for creating your wealth as your life cycle goes through. And we won’t just be helping owner-occupiers. In helping owner-occupiers with our co-funding model, they may be able to buy a property now, but it’s not the one they want. It’s not the one that they want to live in. It’s not close to work. It’s not close to their community where they live. So what we’re able to do is use what funds they have to be able to get into the property that they want now, rather than later and down the track. Obviously, Jennifer, 10 years is a long time to save the money, and maybe you’ve got a couple of kids by then, and couples, and they just get further and further outside the home ownership. And as we all know, Aussies love property, and there is still that ambition that people, even what we’ve been through with COVID-19, they still want to get into a property themselves, and we believe that we’re solving that problem.

Jennifer Harrison: (30:49)
Tony, tell us a little bit more about your team and your founder’s journey. You’ve been in and around finance and property for a long time. Was there a particular moment of inspiration when you and your co-founder decided, what, we can see a problem, we’re going to solve for it?

Tony Haris: (31:07)
Look, for so long, I’ve been around finance and relate to what Anthony and Melissa are saying about this whole industry. For many years now, I’ve found that clients and prospective purchases on high incomes that can afford the mortgages just can’t get that deposit together. And I’ve actually become really frustrated over many years that these people can’t get into property. They haven’t got, unfortunately, a grandmother who’s passed away, left them some money. Mom and dad bank, as you mentioned, Jennifer, with guarantees and guarantors, the reality is, the baby boomers, and I fit into that category, with three children, how do you help three children with deposits and guarantees to get into it? You just can’t do it.

Tony Haris: (31:56)
And so I’ve realised this over 20 years in financial services and mortgage broking, that the reality is, I didn’t want those people to miss out, because they shouldn’t miss out, because it’s fundamentally a need to have a roof over your head. It hasn’t been like a light bulb moment, but the further I got down this track, it just became so frustrating that no one was actually solving the problem. I believe we can.

Jennifer Harrison: (32:26)
Where are you on the journey and on your route to your market?

Tony Haris: (32:32)
The reality is, we’ve prepared everything. We’re about at the point now that we’re going to be doing a seed capital raise. We’ve done so much work on this over many years. With all that experience of myself and the co-founder, Ben [Brocken 00:32:47], he’s really good on the financial side. He identified this, as he fits in the millennial category. Bit different to me on the baby boomer side. But together we’ve developed this. We’ve spent a lot of time and our money in getting it to this point, and now we’re at the point we will want to raise seed capital. We’re having some great discussions with funders and lenders, and also the distribution channels, and we really believe, I think we’ve got something. And yes, I’d love to be talking to 86 400 and Tic:Toc about our product.

Jennifer Harrison: (33:23)
Well, I was going to ask you about that. When I recounted my own personal experience of my bank, they wanted to see that I’d actually saved the deposit. Have you had feedback and discussions with the lenders who’ll be taking the first registered mortgage about, is there a perception issue? How will they factor this into their risk profiling and credit decisioning to make that main loan and take that first mortgage?

Tony Haris: (33:50)
Jennifer, I think it’s a really good question. We’ve been very conscious of it, but as you can appreciate, the first mortgage provider is taking the loan up to 80%. There’s obviously that product. There’s no mortgage insurance involved. The reality is, the first mortgage provider is very well secured. They obviously rely on us, because we have now obtained from ASIC a Australian credit licence for our product, and they know that in terms of the National Consumer Credit Protection Act that we have to be very responsible in terms of who we lend to. And in working with a first mortgage provider, we’ll be able to convince them, in terms of our responsibility and all our governance and compliance, that together we can pick the right clients, number one, and that we can also pick the right properties.

Tony Haris: (34:39)
Obviously, Anthony is very experienced in using the data and the AI that’s out there to select the clients, because the reality is, there’s so much data on all of us, and there’s so much data on the properties. It’s matching that up to give the confidence to the first mortgage provider that this is a good product. And ideally, at this point in time, we’re going for a cohort of millennials that are earning good incomes, that can afford the amount of the borrowings that’s entailed in this, and that they can service the loan. And the reality is, the first mortgage provider is also going to share with us some really good quality clients.

Jennifer Harrison: (35:20)
Wonderful. I mean, I’m very interested by what you’re doing, in terms of financial inclusion, because I read a newspaper article, I think it was just last week, that the bank of mom and dad is now something like the ninth biggest home lender in Australia. The average size of the loan from mom and dad is $90,000, and that $90,000 is for the purpose of putting down the deposit. Now, not everyone has a mom and dad who can lend them $90,000, so from a financial inclusion perspective, I’m really liking what you’re trying to do at, Tony. Thanks for talking with us.

Jennifer Harrison: (35:55)
Anthony, I might come back to you now for a few more rapid fire questions, and Melissa and Tony as well. And if anyone does want to ask a question live to one of our panellists, please use the Q&A function down the bottom in the middle of your screen. Anthony, can you tell us a little bit more about what you’ve got coming down the pike for the rest of this year and going into next year? What have you got on the product roadmap?

Anthony Baum: (36:23)
Our product roadmap is primarily driven around our platform. We launched it in July 2017, and basically, we continue to invest extensively in our automation and in making our platform modularized. Today, we have built the platform in a way that it’s fully integrated. What we’ve started to do is break the platform down into a series of blocks or modules. Those modules are going to be available to the industry as we release them. The first module that we’ve released is called XAI Validate, which is our digital validation of financial position capability. Really, what that’s designed to do is enable other platform aspirants and other lenders that don’t want to use our platform holistically like Bendigo or Aussie do, to actually say, “Well, we want that module. We’re going to integrate it into our technology stack and use that part of your platform in our proposition.”

Anthony Baum: (37:45)
Really, it’s about the modularization of our platform is really our product roadmap, with the first component, XAI Validate, having been launched in 2020. And we have our first customers on that product working with us to refine it. It is a SaaS product. It’s configurable. But also, we’re seeing a lot of use cases for, “Well, you’ve got these amazing AI models. We want these models, and integrate that into our technology as well, as a SaaS product.” So really, our strategy is aligned to that, in a way, componentization of what we already do.

Jennifer Harrison: (38:33)
It’s the un-bundle to re-bundle approach to fintech of late. Wonderful. Thanks, Anthony. Melissa, I’m curious to know from you, when you were making the decision to go and take the job offer at 86 400, what from a personal perspective was exciting or maybe a little bit concerning for you to take that move in your career?

Melissa Christy: (38:59)
When I was approached via LinkedIn for this role, it was a no-brainer for me. I knew I wanted it. A bit of background is, I’ve worked in financial services for over 20 years, specifically in mortgages for about 15 or a bit more. In the UK, I worked on two new online banking startups, and I worked on their mortgage propositions. That was the best role I’d ever had, to start something from a blank piece of paper. And now I just worked on what that proposition would look like and started them off. I was contracting at the time in London, and I left those businesses. I also went to Virgin Money to start up their mortgage business.

Melissa Christy: (39:46)
But I guess for me, I was following companies like Adambank in the UK and things like that for a long time, and I know I really wanted to have a go at setting something up from scratch end to end and get it live and see it thrive. So when this came through in LinkedIn, I had no idea who it was. In the first interview, I had no idea who it was. It was called Project Sparkle. I turned up. I didn’t know who I was speaking to.

Jennifer Harrison: (40:12)
Sorry, did you say Project Sparkle?

Melissa Christy: (40:14)
Correct, yeah.

Jennifer Harrison: (40:15)
Project Sparkle. Okay, fantastic.

Melissa Christy: (40:17)
Yeah. So I turned up at Project Sparkle. I had an interview. They said, “There’s nothing here. Nothing’s done. It’s a blank sheet of paper.” And I went, “Right. That’s what I want to do.” Worked out by the second interview that Cuscal were backing it, so that did give me a little bit more comfort. And never looked back. I knew that that’s what I wanted to do, to have that influence over an end-to-end process and do it right the first time. Well, maybe not right the first time, we’re still getting there, but you know what I mean. Have that influence and being able to influence how the credit policy and the systems and everything works together. That was crucial for me, and yeah, I can’t wait to even make it even better than it is today.

Jennifer Harrison: (40:59)
Yeah. Well look, I think 86 400, it’s extremely impressive. The overall strategy, the launch of product. I’m an 86 400 customer myself. I love the app. And look, I think the acquisition by NAB is just a huge congratulations to you and the rest of the team, and massive validation as to what you’ve achieved and also the power of fintech.

Melissa Christy: (41:21)
Yeah. Thank you.

Jennifer Harrison: (41:24)
Tony, I’m curious to know from you, as a Stone & Chalk resident, and Stone & Chalk are one of our foundation supporters at the Proptech Association of Australia, and they are our event partner for the Proptech Panel, can you tell us a little bit about what does it mean to be part of a coworking space like Stone & Chalk?

Tony Haris: (41:42)
Look, I think the best thing I’ve been involved in Stone & Chalk as a founder way back in 2016. Look, it’s great to have the support, because as we know, as all the panellists know, startups are pretty tough. It’s a bit of a tough gig, and it’s pretty lonely, and you’re questioning yourself all the time if you’re really on the track. I love that saying of Seth Godin, “Fail fast.” I think sometimes I think I’m failing slow, and so that having the network of Stone & Chalk and the support that’s here is really important. It’s been a big plus. I think it’s helped me keep going, because if you really believe in something and you’re passionate about it, and you really believe that you’re solving a pain point, I think you need all the help you can get. So yeah, it’s great to be involved. I love Stone & Chalk being involved in proptech. It’s obviously a new association, and to have that backing of Stone & Chalk is really important, so I’m looking forward to some really good things that Proptech Association is doing.

Jennifer Harrison: (42:50)
Thank you, Tony. Okay, last call for live questions using the Q&A function on the webinar. Otherwise, I might come for the final round of questions, and before we say our thank yous and goodbyes, to say is there anything else that you’d like the viewers to know, that we haven’t covered already? Anthony, can I come to you first?

Anthony Baum: (43:12)
I think the first thing that I would say is, if you’re involved in property technology, the importance that the digital channel will represent for your customers. Today in Australia, remember that start digital home loans, finished digital, is still only about 6% of the market. But if you roll forward five years, I’d expect that if we follow the US trends, where it’s now 35% of the market, we will be in that spectrum as a segment. We’re really at the start of the transformation of the customer behaviour change, the scale of the channel opportunity, and how it will really be important to the Australian economy that we continue to be the developer of really good proprietary digital propositions and technologies, because they’re going to capture that market. Our doors are open to support anyone that is trying to achieve that, within the bounds of what’s feasible for us commercially. But we’re here to be part of that ecosystem and that change.

Jennifer Harrison: (44:47)
Yeah, wonderful. Digital is really only just getting started. Digital is by no means done. Anthony, and also possibly Melissa, a question has come up in the chat relating to compliance. I know, Anthony, you’re adamant that what you do at Tic:Toc actually improves regulatory outcomes and compliance. The question is, is some of the resistance that we might see in the industry rooted in concerns around compliance?

Anthony Baum: (45:16)
Look, our belief is that technology with human in the loop provides, at a fundamental macro level overall, better compliance with policy, because humans forget to do things. Technology does not forget to do things. So yes, you need the ability in certain circumstances to put a human in the middle of the regulatory aspects of the process, just like any other, but by and large, you can build really strong regulatory frameworks using technology. That transformation started 20 years ago when products like Green ID started replacing humans looking at physical licences to validate person from a KYC perspective. So the reality is, is that the whole process at a macro level, regulatory compliance can be better and more consistently applied when technology is leveraged in that process extensively.

Anthony Baum: (46:43)
And then the other thing I’d say is, it’s such a shame, and I am very outlier on this, I know, that we’re actually not leveraging the technology to make having the responsible lending legislation in place viable from an industry perspective. We’re saying, actually, just remove the legislation, as opposed to using the technology that exists to solve it. For us, getting to a specific thing that we’ve been focused on, but regardless, that first broader principle, whether it’s responsible lending or APRA rules or ASIC rules, otherwise, whatever it is, we see regulation being better for the fact that technology exists.

Melissa Christy: (47:35)
And just to add. I totally agree with what Anthony said. From my point of view, I think our process is actually more compliant. With a traditional lender, you’re relying on a customer to declare what they spend. Customers actually lose track. They tap here, they tap there, they don’t have any idea how much they spend. And what we do as part of our process is we scrape all your accounts from all your institutions and present back to you, this is what you spend in all these categories. Now you tell us if that’s not right and why that’s not right. We start from fact and then we work from there.

Jennifer Harrison: (48:13)
Yeah, I think the obsession with asking people to fill in forms to say how much they spend on postage stamps every fortnight, look, I don’t get it.

Melissa Christy: (48:23)
Does anyone look at postage stamps?

Jennifer Harrison: (48:29)
Melissa, anything else about 86 400 that you’d like the viewers to know, that we haven’t already covered?

Melissa Christy: (48:34)
No, I just think, look, for us, it’s been a tough journey to break through with brokers in particular, because what we do is so different. And I know the other lenders at some point will catch up to what we’re doing, and I think we’ve just paved the way for them, because brokers don’t like change. But we’ve got so many brokers on the 86 400 drug now that it’s fantastic, and we’re going to be welcoming more aggregators very soon.

Jennifer Harrison: (49:04)
Fantastic. And Tony, anything about that we haven’t covered that you’d like people to know?

Tony Haris: (49:10)
Look, Jennifer, I think you raised a really good point about the bank of mom and dad. And the reality is, as baby boomers get older, they’re getting to the point where, oh my goodness, I’ve given X amount of dollars to my children or mortgaged my house, and I think I need the money back. I think that’s going to be, going forward, a really difficult conversation to say, “Hang on, I’m getting a bit low on cash, and I’ve got to continue my life. What am I going to do?” I think also that we’ve identified that can help in that situation as well, because we can actually take the bank of mom and dad out.

Tony Haris: (49:47)
We can refinance the bank of mom and dad, and that obviously would, I believe, take an enormous amount of pressure off families when mom and dad have been generous in the early days before they’ve retired, then they get into their 70s and go, “Oh my goodness, I think I need the cash.” That’s something that we’ve realised only quite recently, that we can really be helping that problem going forward.

Jennifer Harrison: (50:13)
Yeah, that’s very interesting, Tony. Very interesting indeed. Well, I think we’ve about reached time, so I think it might be behooving on me now to say thank you to Anthony Baum from Tic:Toc.

Anthony Baum: (50:27)
Thank you.

Jennifer Harrison: (50:30)
Thank you to Melissa Christy from 86 400.

Melissa Christy: (50:32)
Thank you.

Jennifer Harrison: (50:33)
And thank you to Tony Haris from

Tony Haris: (50:38)
Thanks, Jennifer. I really enjoyed listening to Melissa and Anthony. They’re doing some great things. And thank you to Proptech Association and Stone & Chalk.

Jennifer Harrison: (50:46)
Likewise. Thank you to all the panellists. If you follow us on LinkedIn, you’ll see some follow-up posts on the panel, and the link of the recording of this will also be made available. We’ll advise you when that’s available on the Proptech Association Australia LinkedIn page. If you’re not already following us, please do. Thank you very much, and I’ll see you next time. Bye Bye.

Anthony Baum: (51:09)
See you.

Tony Haris: (51:09)

Melissa Christy: (51:09)