Selling home loans is a highly commoditised market, and a market in which there is significant cynicism and distrust of banks. Routinely, media coverage outlines how with rising house prices there is an increasing affordability issue emerging. And at the same time there is coverage about ever-increasing profits for the “big” banks. Combined, this media coverage portrays an environment in which banks are seen to be self-serving and only concerned with meeting their obligations to their own shareholders. And it’s going to get more competitive with different attitudes from newer entrants to the market (e.g. Millennials), and the coming emergence of Fintech providers set to empower a wider brokerage market that disenfranchises traditional banking relationships.
So, a strategy that uniquely differentiates Kiwibank by tangibly bringing their purpose of “Kiwis Making Kiwis Better Off” was brought to life for their customers.
It provides better transparency for customers about how home loans work. It’s a response to many customers not knowing how they can accelerate the growth of this equity while decreasing the amount of interest they pay over their loan term.
It’s a smart strategy. In an environment where home lending products are increasingly commoditised, taking this approach allows Kiwibank to clearly stand apart from other banks with whom they compete directly, and also retains direct relationships with their customers without being disenfranchised by brokers. It’s an approach that’s not easy for other banks to replicate as it means a short-term reduction in income earned. And even if they could replicate what Kiwibank is doing, they still deliver on their purpose. It will mean even more Kiwis will be better off.
This programme also demonstrates evidence-based planning. A comprehensive review of a highly successful pilot enabled a more focused, more impactful programme to be delivered.