E-LOAN Australia, a joint venture between News Corp subsidiary eVentures and Japan-based Softbank, launched earlier this week claiming access to more than 60 per cent of the local credit loaning market.
John Magee, E-LOAN's CEO, said his company's free service enabled users to make speculative and comparative calculations on the Website. E-LOAN would be paid by its partnering banks, not by its customers, he said.
However, neither the Commonwealth Bank of Australia (CBA) or the National Australia Bank (NAB) have agreed to partner with E-LOAN. According to a recent Merrill Lynch study, CBA had an 18 per cent market share of all credit loans taken out in Australia in December 1999. NAB, with 17.6 per cent, had the second largest share.
According to CBA's head of personal financing, Dhun Karai, E-LOAN approached CBA in pursuit of a partnership deal. She said the bank was not convinced E-LOAN could offer anything CBA's existing online financing service could not.
"E-LOAN is a new entrant . . . We've had a lot of these [Internet loan brokers] come in over the last six months, and some of them have basically disappeared without a trace," she said.
She cited the bank's own research into online mortgage consumer takeup, which found less than 2 per cent of Australians would consider taking out a home loan via the Internet. "This only means they would consider trying it [taking out a loan via the Internet]. They're not actually applying for it," she said.
Karai said that although CBA already ran its own online lending service, the bank was reluctant to invest in resources that were disproportional to the service's success. "To put in the investment, management and time . . . no one has the volumes to show for it. That's our big issue."
An NAB spokesperson said the bank had also decided not to partner with the broker. There was little incentive to partner with an intermediary party because of the resulting decrease in profit margins, the spokesperson said.
"There's quite a few of these [Internet loan brokers] around. We get approached by hundreds of these companies every day."