2/17/23, 8:58 AM Macquarie’s secret to superfast mortgage growth

Companies Financial Services Cloud

The secret behind Macquarie’s superfast

mortgage growth

James Eyers Senior Reporter

Feb 13, 2023 – 5.00am

Macquarie believes its fast-growing retail bank’s focus on technology gives it

distinct advantages when competing against the major banks. Advantages that
now see it writing about 5 per cent of all home loans in Australia.

Ahead of Commonwealth Bank’s interim results on Wednesday, which will

highlight the cutthroat competition in mortgage markets as interest rates rise,
Macquarie is confident it will continue to win share, after its mortgage book – now
$105 billion – expanded by 4 per cent in the December quarter.

Macquarie is just a few months away from having all of its banking technology
systems running in the public cloud, including the core ledger that records
deposits and home loans which was shifted into Amazon Web Services a year ago.

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2/17/23, 8:58 AM Macquarie’s secret to superfast mortgage growth

Michelle Perera, head of delivery for Macquarie’s retail bank, with Richard Heeley, chief information officer,
in Sydney on Friday. Natalie Boog

In a rare interview providing a peek under the hood of its retail division,
Macquarie’s technology executives say the shift of all customer data into Amazon
Web Services and Google data centres has created a more resilient and agile
offering.

While new banks such as Avenue are cloud native, Macquarie has become the first
mainstream lender to roll its core banking ledger, which records mortgages and
deposits for more than 1.7 million customers, into the public cloud.

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2/17/23, 8:58 AM Macquarie’s secret to superfast mortgage growth

“It is about agility, resilience, speed, security and cost,” said Richard Heeley, chief
information officer of Macquarie Banking and Financial Services, which makes 13
per cent of Macquarie Group’s net profit.

Macquarie has 680 applications running in AWS and Google, 91 per cent of its IT
systems, and “we are looking to conclude on our public migration in the next few
months,” he said. “We can see the end now.”

The performance speed of its application programming interfaces (APIs), which

connect customers to their banking data, is 20 per cent faster in AWS’s
environment. Macquarie uses data in the cloud to approve loan applications
submitted by mortgage brokers, including income and expense assessments.
Customers can open a savings, transaction or offset account in five seconds.

Safer and more profitable customers

Speed has been one of the drivers of its loan book growing by $21.7 billion in the
past 12 months, 18 per cent of the market’s total. To the chagrin of the majors, its
focus is on safer and more profitable customers with lower loan to value ratios (less
than 80 per cent), who can also get access to Macquarie’s wealth and asset
management services.

In deposits, growth has been even stronger: $20.5 billion in the past six months, or
29 per cent of the market’s total. Its total deposits of $125.7 billion are 8 per cent
higher for a market share of 4.8 per cent.

Macquarie had a good starting point for its public cloud journey: in 2013, it
switched on new core banking, origination and payment systems. Migration to
cloud started in 2014 and accelerated in 2018, as Macquarie Group adopted a “cloud
first” strategy in all its business units.

The investment has made it easier to attract engineering staff. Michelle Perera,
head of delivery, said that “moving to the public cloud has taken a lot of the
operational work away from our engineers who can do what they like – building
new, innovative features and being closer to the front end”.

One of the new features is an ability to add a hashtag to a transaction to make them
searchable; the most popular has been #tax. Natural language searches at tax time
can then make claiming deductions easier.

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2/17/23, 8:58 AM Macquarie’s secret to superfast mortgage growth

Mr Heeley said Macquarie will continue to tap AWS and Google to “offer unique
personalisation functionality to our customers” by drawing on their powerful
algorithms, including artificial intelligence.

Unlike some major banks, which have been “lifting and shifting” apps to a cloud
server, the focus at Macquarie has been building new services from the ground up.

“We have spent a great deal of time on [data quality]. There is no point having great
machine learning and AI if the data is not good enough,” he said.

Open banking creates additional opportunities. If the regime gets up, Macquarie
plans to use it to aggregate accounts customers might hold at other banks, showing
them their full financial position in Macquarie’s app to encourage switching.

Macquarie’s retail bank has 1500 technology staff, many of them hired from major
banks.

“We have great brand strength and are very well known in the market from an
engineering perspective,” Mr Heeley said. “We have been able to meet our
expectations in terms of recruitment.”

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James Eyers writes on banking, fintech and technology. Based in our Sydney newsroom,
James is a former Legal Affairs and Capital editor for the Financial Review Connect with James
on Twitter. Email James at jeyers@afr.com.au

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