Many mortgage brokers hate Kiwibank because they can’t access its low interest rates on behalf of their clients, but the government-owned "people’s" bank will most likely begin working through brokers at some stage in the future.
"You need to provide a high level of quality service. They have significantly higher expectations of service than the general public," says Kiwibank chief executive Sam Knowles.
"Brokers have their own risk profile. You need to have the appropriate resources and support structures. You do need to be totally in the broker business, not half in," he says.
"We do expect at some time in the future we will use the broker channel," he says, especially given the trend in the market towards increasing use of brokers across the industry.
He refutes suggestions that Kiwibank isn’t using brokers because its interest rates are so low that it can’t afford to use brokers.
"We’re certainly committed to being the low-cost provider of loans in the market, but there’s no reason why brokers have to be a high-cost channel."
Some brokers "mystery shopping" at Kiwibank have reported poor service quality levels and Knowles admits it has had "some pressure at various times on demand" as the bank becomes established.
But some of the criticism is unfair. The Kiwibank teller, for example, who didn’t know whether Kiwibank offers revolving credit loans – it does.
Knowles suggests such questions asked of any bank’s tellers are just as likely to be met with ignorance.
"Of course there are people out there who want to find reasons to say this proposition isn’t as good as it sounds. It’s to be expected in a start-up situation."
He doesn’t expect brokers’ current resentment against Kiwibank will last.
Once Kiwibank does start working through brokers the resentment should fade. "Brokers are largely driven by the experience of last week or last month," Knowles says.
