E-Loan New Zealand's strategy has sheltered it from the kind of pressures that this week saw its Australian counterpart fire most of its staff, says chief executive Bruce Gordon.
In a week which also saw would-be glamour Australian Internet company LibertyOne dump most of its business ventures to stem losses, E-Loan Australia announced its redundancies in response to poor income from mortgage sales. The Australian online lending broker is said to have spend $A10 million since its launch in February.
Although all E-Loan franchises derive their income from commissions paid by lenders, Gordon says his company, which operates as a stand-alone business, has taken a different approach to development than E-Loan Australia.
"I guess the major difference is the set-up cost and the investment made to establish the business. We know the franchise works because it's functioning successfully in seven out of the eight markets it's in. Japan, for example, has reached profitability in less than 18 months.
"The UK is going well and the US is progressing towards its profitability in the second quarter of 2002 - effectively they continue to lose less money each quarter."
Gordon says the fact that part of eVentures New Zealand, one of E-Loan's owners, is publicly held means he is restricted as to what he can say about matters affecting earnings, but the company is claiming 250 loan applications lodged since its launch in June. With the announcement of another six lenders this week, E-Loan NZ now has 24 on board - compared to only 11 lenders in Australia.
"What I can say is that E-Loan NZ is two months ahead of its business plan in terms of revenue and we continue to track below our expenditure budget," says Gordon. "We've just had a very strong fortnight, which is a combination of us being back on television and the general housing market improving."
Gordon says the Australian company has now set its sights on a similar business model to that adopted here.
"They went out believing they could establish a retail presence through their Web site. Our philosophy has been that we need to do that, but [also] to be ubiquitous as the best online provider of home loan and risk products.
"We've set up the business here as a wholesaler to other distribution points, like Xtra and NZoom, and been able to establish the retail brand in a cost-effective way."
E-Loan NZ announced this week the launch of WAP functionality on its site and the ability to "chat" online with its personal mortgage brokers.
One of its new lenders, Invincible Life Assurance offers reverse annuity home loans, a retirement product, and Gordon says negotiations have been continuing to offer other risk products through its site.
Each E-Loan franchise is a joint venture between the US company E-Loan Inc. and eVentures, a joint venture between Softbank and News Corporation's ePartners. E-Loan New Zealand is 50% owned by eVentures New Zealand and 50% owned by E-Loan Inc. eVentures New Zealand is in turn 64% owned by eVentures Inc, 16% owned by Sky Television founder Craig Heatley, 6% owned by corporate shareholders and 15% owned by public shareholders.