Clock ticking on ‘broken’ mortgage market: Tic:Toc boss warns

Of course, plenty of non-bank lenders and foreign banking giants have sought to challenge the might of the big four’s in retail banking before, with limited success.

Tic:Toc is different in that it is not trying to manage the balance sheet risk. Instead, it provides software that approves loans that are then held by Bendigo and Adelaide Bank. It makes most of its revenue by receiving a margin on top of the cost of funds it receives from Bendigo.

‘Over five years it went bang [in the US] I think it’s going to happen here. I think it has started here.’

Anthony Baum, Tic:Toc founder

Evans and Partners analyst Matthew Wilson says the disruption facing Australia’s mortgage market from the likes of Tic:Toc will be slower than the US, but it is still likely to occur over the next five to 10 years.

“If you can do something really efficiently, and it’s all on your handset, that’s going to really appeal to generation Z and generation Y,” Wilson says.

“Tic:Toc is a very efficient factory,” he says. “That very efficient factory could be used by multiple players to distribute home loans.”

The company is also notable for the financial institutions it counts as shareholders, including Bendigo and Adelaide Bank, Insurance Australia Group, Genworth Mortgage Insurance, alongside Baum and the management team. The fintech expects to be profitable this financial year, and Baum says it is eyeing a sharemarket float in the next two to three years.

Born and bred in Adelaide, Baum launched Tic:Toc after a career that included stints in investment banking in London, as an executive at Adelaide Bank, and at a fintech called ThinkSmart. A keen surfer, he has been married to Vicki for almost 30 years, and has two young adult daughters.

After training as an economist, Baum got a taste of the risks in banking as a graduate, when he joined the State Bank of South Australia the same year it collapsed.

Former ME Bank chief executive Jamie McPhee, a friend and former colleague who is also from Adelaide, has known Baum for at least 20 years. “He’s got a good head on his shoulders, he really understands risk, he’s got quite an entrepreneurial spirit,” McPhee says.

McPhee, who is also an investor in Tic:Toc, says there is a big opportunity to improve the customer experience in mortgage lending, and recent gains in market share have gone to lenders that can approve loans quickly.

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Baum says Tic:Toc’s fastest full loan approval was in 58 minutes, and quick approvals like this will become much more common once a data regime known as open banking is more widely used.

”As open banking evolves, and as our data enrichment and automation models get better and better, then absolutely we will be at the point where the majority of Australians can do a paperless home loan in real time in an hour,” he says.

So far, Tic:Toc has a market share of about 0.5 per cent of loans issued each month, roughly on par with the share of flows going to foreign banks such as…