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CBA’s direct to consumer play

May 25, 2024

Data released during the week revealed that in March 2024, total wages and salaries in Australia reached a record $99.5 billion, a 2.1% increase from February and a 7.1% rise from March 2023.

The Australian Bureau of Statistics (ABS) attributes this growth to a combination of higher wages, increased hours worked, periodic bonuses, and employment growth.

Notably, bonuses in the healthcare, mining, financial, and manufacturing sectors significantly contributed to this rise. While all states and territories saw increases, New South Wales and Western Australia experienced the most substantial gains, driven by industry-specific bonuses.

In this week’s newsletter, we take a look a move by CBA to lure borrowers away from brokers, and the knock on effect this will have on bank branches.

The Commonwealth Bank of Australia (CBA) is poised to launch a digital-only mortgage product specifically for external refinancers. This development has fuelled speculation about whether this is part of a broader strategy to maintain mortgage flows amidst decreasing broker channel volumes and a shrinking branch network losing experienced staff.

The new digital refinancing product marks CBA’s first exclusively digital mortgage offering under its primary brand, available only to consumers and not through its branch staff or brokers.

Why are they doing this?

CBA, Australia’s largest lender, operates around 728 branches—the most extensive branch network of any Australian bank. However, the number of branches has been steadily decreasing.

While CBA has committed to halting all regional branch closures (which constitute about 40% of all CBA branches) until the end of 2026, it recently announced that its subsidiary Bankwest would close all remaining branches to transition to a fully digital bank, noting that 97% of its transactions are already conducted digitally.

The decline of bank branches.

During a Senate inquiry into regional bank closures, the Australian Prudential Regulation Authority (APRA) reported a reduction of 424 bank branches across Australia in the 2023 financial year (11%), including 122 branches (7%) in regional and remote areas.

Over the past six years, 2,106 bank branches have closed nationwide, with 798 closures in regional and remote areas. Approximately half of these were branches of major banks.

Lenders attribute the reduction in branch numbers primarily to the shift towards digital banking.

For instance, in CBA’s half-year results for the 2024 financial year, around 95% of loan applications from both proprietary and broker channels were settled digitally, meaning, without the need for human intervention. Additionally, about 70% of the bank’s proprietary applications were auto-decisioned in the first half of 2024 using an automated credit rules engine.

What does this mean for brokers?

The CEO of the Mortgage Finance Association of Australia probably summed it up best, expressing that brokers are frustrated with this announcement.

Borrowers still need to receive impartial advice about the best loan product for their needs, and a bank has no obligation to provide this. Furthermore, borrowers will still require the advice and support of brokers when securing a mortgage.

Borrowers should have the freedom to choose their mortgage products. While lenders have the authority over the commercial design and pricing of their offerings, it is disappointing that a major bank is not making this particular product available to clients of brokers.

The MFAA advocates for channel parity in the lending market wherever possible. We believe that borrowers will continue to prefer mortgage brokers given we act in their best interests – but we also believe that this development is a very deliberate ploy to have consumer deal directly with the bank, which is a bad outcome for both brokers and borrowers.


The rates below are based on a $500,000 loan, with the borrower making principle and interest payments with a loan term of 30 years. The rates quoted may vary depending on the borrowers LVR.

1 Year Fixed

The rates below are based on a $500,000 loan, with the borrower making principle and interest payments with a loan term of 30 years. The rates quoted may vary depending on the borrowers LVR. At the end of the three year fixed period, the borrowers interest rate will revert to a standard variable rate for the life of the loan.

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