Bank grievances inspire finance specialist to start own lender
Unhappy with his own experiences with the major banks, product innovation expert Aaron Bassin didn't write a letter of complaint; he started his own non-bank lender.
It’s one thing to feel disgruntled with the cumbersome processes, slow turnaround times and lack of innovation shown by your local bank, it’s another thing altogether to then go and start your own home lending alternative.
Aaron Bassin, an experienced product innovation expert within the equity and debt capital markets, took his own lack of faith in the banks as motivation to start his own non-bank lender.
Sensing an opportunity to disrupt and reshape the property lending industry, his company Bridgit sprang to life in 2021.
With a focus on existing homeowners, not first-home buyers, 60 per cent of their borrowers are downsizers and 40 per cent upsizers.
“Over the next five years, more than 1.6 million households are planning to downsize,” Mr Bassin told Australian Property Investor Magazine.
“Our product caters to this segment, as these homeowners otherwise would not have a property finance solution.
“A bridging loan suits their needs, as it allows these customers to avoid things like temporary living and spend the time to find the perfect home without having the pressure to get back into the market quickly.”
Starting a home lending business is no easy task but it may come as a surprise that there are around 125 non-bank lenders catering to the Australian home loan market.
The so-called 'Big Four' banks control more than 82 per cent of all loans in Australia. CBA has around 17 million Aussie retail customers, followed by Westpac (13 million), NAB (8 million) and ANZ (8 million).
With more than 100 lenders competing for the remaining 18 per cent of the market, it’s a fiercely competitive space.
This was underscored in June when Volt Bank handed back their banking licence. APRA is closely monitoring the return of funds and all customer deposits held with Volt remain safe and are guaranteed by the government up to $250,000 per account holder under the Financial Claims Scheme.
Mr Bassin said Bridgit was set apart by having a clear focus, investing in technology and capabilities to stay efficient and provide customers with the best experiences at a low cost.
“It’s unfortunate to see innovators and businesses in this position and go through a shutdown, but it's important to encourage innovation and progression in the financial industry to ensure consumers’ evolving needs are met,” he said.
“Our recent research found that 60 per cent of homeowners agreed that banks have slow processes, and one third actually missed property opportunities due to these slow processes.”
What’s in a name?
The process of actually launching a non-bank lender is arduous, as befitting such a responsibility.
Non-bank lenders are regulated by the Australian Securities and Investments Commission (ASIC), an independent commission of the Australian Government tasked as the national corporate regulator. ASIC's role is to regulate company and financial services and enforce laws to protect Australian consumers, investors and creditors.
Mr Bassin’s Bridgit then applied for its Australian Credit Licence, issued by ASIC to ensure Australian consumers are protected and not put in financial hardship.
“There’s ongoing compliance and reporting that needs to be done to maintain the credit licence to ensure customers’ needs are addressed,” Mr Bassin said.
“We’ve invested in our technology to ensure we are adhering to responsible lending regulations that are embedded in our platform.
“What it means to be a non-bank is that we don’t have a licence to take customer deposits.
“In the initial set-up stage of the business my co-founder and I were able to attract investment because of our industry experience, relationships, and an attractive business model and we have now grown it into a business with more than 20 staff.
“It is critical to have this facility so you can lend money to consumers; you go through a process with potential partners whereby you pitch your business model and we were lucky to have brought on some great partners with a shared vision.”
And what about the name?
“We wanted to modernise the bridging loan experience in the market and establish our company as a household brand, like Google.
“When people think about buying and selling homes they think Bridgit; ‘Bridge it to their next home’.”
Mr Bassin said Bridgit’s mission was born from his own personal life experiences and his childhood.
“Having been raised as a first-generation Australian and witnessing my parents’ pride when they bought their first home, I grew up chasing the same ‘great Australian dream’, of owning my own home,” he said.
“Through this journey, I discovered the difficulties in accessing suitable property finance and I knew there had to be a better way for Australians to purchase their dream home.”
“This is when I began designing solutions to fix the overly complicated and largely manual processes used by traditional lenders across the category.”
Mr Bassin believes solving the problem facing this industry is only the first step, and in order to have success and longevity, it was critical to ensure Bridgit’s culture was solid and sustainable.
A passionate family man himself, with a wife and two children under three, he knew creating a positive work culture was extremely important and would be at the heart of the business.
“The culture feeds into staff satisfaction and is what makes a good business an exceptional business,” he said.
“It’s always been important to me to be a progressive and innovative leader.
“I'm passionate about workplace culture and creating a business that leaves a positive influence in the world, from employment equality to environmental sustainability.”
While putting his employees and customers at the core of everything Bridgit does, there is also a significant consideration for the environment.
“Being eco-friendly is extremely important to Bridgit, for every single loan we provide, we plant a tree,” he said.
“Also, our technology allows us to be eco-friendly, being entirely digital means we are a paperless business.”
Mr Bassin also said Bridgit is looking to launch a green home loan program in the future.
“We support local and national sustainability initiatives by planting trees in accordance with the amount we lend out and so far we have been able to support wind power projects and protect and restore rainforests across the globe.
“This includes reforestation in Australia, Peruvian protection of the Amazon, using waste biomass to produce electricity in Chile, wind power project in Mexico, and improving the efficiency of Metro Transport in India.
“Over the past 12 months we have offset almost 110 tonnes of carbon and planted close to 7,000 trees.”
As passionate about finance and technology as he is about his Harley Davidson motorcycle, Mr Bassin said he is focused on finding a better way to do things and challenging the norm.
Building their own technology from scratch, Bridgit’s proprietary Customer Relationship Management (CRM) system is designed to offer a smooth and speedy bridging loan experience for their customers.
Mr Bassin said with the creation and implementation of their own tech in place, they were able to launch their same-day approval bridging product into the market.
“Not only does our CRM allow us to act fast, but it also lightens the load for our team, meaning our bridging loan experts can focus on what really matters - helping our customers,” he said.
“The seamless process also enables homeowners to jump on the best opportunities because they’re never slowed down by tedious paperwork or lengthy questionnaires.”
Mr Bassin also believes innovation and technology will become even more critical within the next few years as more customers explore non-bank lending options.
“Innovation and new technology are what separate good offerings from the bad; the more popular non-bank finance becomes, the better we can tailor our solutions to ever-changing consumer needs,” he said.
“Continuous innovation is critical to meeting customer demands and requirements, especially in Australia where the property finance industry impacts locals in so many ways.”
“Long gone are the days of spending hours waiting on hold; Bridgit solves all this and more with same-day approvals, digital processes and offering a product that the Big Four don’t,” he said.
Additional reporting by API Magazine editor Craig Francis