Shedding Light on the Brighten Story

Publication Date: Friday 23 May 2025
This article originally appeared in Australian Securitisation Forum.

Brighten has achieved significant book growth despite the proliferation of nonbank lenders across all segments of the Australian credit market. Jason Azzopardi, Brighten’s Sydney-based chief executive, discusses how this growth has been achieved and the nonbank lender’s plans in term funding markets.

Brighten has grown its lending book significantly despite operating in what is clearly a very competitive origination environment, especially for nonbank lenders. How has this been achieved?

In a market of commoditised products, I certainly believe our diversity of product offering – from prime full-doc through to a broad range of niche products – is something that sets us apart from other brands.

Brokers will often use Brighten for the first time due to our broad range of niche products and then move through to the deeper markets – prime alt-doc and prime full-doc. Or they start in a prime full-doc loan – perhaps because they want to use us for a certain attribute in our policy, for instance borrowing capacity – and this allows us to help grow brokers’ customer bases by making them aware of niche products they might not write or didn’t know Brighten offered.

A broker might give the option of a nonbank lender to one in 20 of its customers. If there are 2–3 nonbank brands in the suite, Brighten is increasingly featuring as one of the top three. This is in part due to our breadth of product offering. But we know we also need to be a lender that is easy to deal with, displaying attributes such as speed and consistent application of credit policy.

The latter aspect, consistent application of credit policy, is crucially important to all brokers, as is regular communication throughout the funnel. The settlement process can be quite stressful for customers, so we aim to remove the friction. This has been a big part of our growth story.

More recently, during the last 18 months, we have accelerated funding optimisation. These efficiencies are only possible with time and AUM [assets under management] scale where we have been able to demonstrate consistent performance and credit quality.

What are Brighten’s future growth targets and in which segments does it believe there is most potential? Are there any sectors of the lending market that remain under-served?

It is hard to say any areas are under-served, although there are some products with fewer brands, which offers the opportunity to originate in a less competitive market. These include nonresident products or those that are securitised under their own shelf.

We took the opportunity a few years ago to create a dedicated programme for nonresident investors. The underlying security remains in Australia and credit enhancement is robust.

When it comes to other niche products, the construction space is less crowded, particularly alt-doc construction. Overall, the market is highly competitive – new brands are regularly entering and each has its own strategy, whether it is price, service or niche.

In this environment, it is imperative that our products are supported by a service offering that gives brokers confidence to recommend our brand to their customers.

Brighten sought to improve broker experience with tech developments in 2024 – specifically, adopting NextGen’s ApplyOnline and upgrading its own broker and customer portal. Have these enhancements paid dividends and, if so, in what ways?

Our new core banking system went live in March 2024. This represented a huge leap forward for the business and further demonstrates how Brighten is maturing as a lender after several years in the market. This was previously outsourced, and we are using a much more user-friendly, in-house customer servicing system these days – which has greatly enhanced the post-settlement experience for customers.

Going back to my comments about being a brand that is easy to deal with, NextGen covers more than 90 per cent of the broker market with an API [application programming interface] for applications. It was important to bring the broker application experience with Brighten in line with market expectations. This has also improved the quality of applications we receive, which in turn helps our conversion rate.

Our originations system and the broker portal are on Salesforce. Each broker has their own login and can track an application throughout the process, providing full transparency. Again, it comes down to being an easy-to-deal-with brand – we believe that if we follow this path, we will achieve the top-line growth we are seeking.

Brighten has successfully established two residential mortgage-backed securities programmes – Solaris and Orion – in the term funding market. What is the business’s funding strategy and outlook?

We very purposely use different programmes for different loan types, because of the depth of products we offer. We have been careful not to muddy the waters for investors on the different types of assets we are securitising.

The Solaris programme is purely nonresident loans. We started this in 2021. Orion, which is a nonconforming programme that incorporates alt-doc and near-prime loans, was introduced in 2022. Until now, we have included prime full-doc under this shelf. Collateral in the Orion programme has, until now, had the credit enhancement of a nonconforming loan but investors have benefited from it being effectively a mixed pool of collateral.

Given Brighten’s growth in the last 12 months, in 2025 we are planning to launch a new, 100 per cent prime full-doc programme. The Gemini pool will not contain alt-doc loans and will be marketed accordingly. As such, investors will be able to compare this on a like-for-like basis with the established, full-doc issuers in the market.

Our issuance regularity in the term securitisation market will increase in line with our growth, and we would like to place three deals each year. Whether or not we will be in a position to issue annually from Solaris will depend on the size and depth of the nonresident market at the time, but we plan to issue at least one transaction annually off the Orion and Gemini programmes.

Brighten also now has a commercial lending business, offering four commercial products, and I am looking forward to the day that we can issue our first commercial term deal. This won’t be in 2025, however it could be in 2026.

How do you consider the tradeoff between size and frequency of issuance?

It is important to make sure that our growth is sustainable. It might be easy to grow originations, but we need to grow the maturity of the funding programme in a measured way.

Our first deals were for volume of around A$350 million (US$223.9 million) while most recently we issued a A$700 million term securitisation. We expect the days of issuing smaller term deals are gone so we need to make sure demand remains robust. We are working hard in the background on investor relations, including nondeal roadshows during 2025. I expect A$700 million to be a minimum transaction volume going forward and we aspire to issue A$1 billion as soon as this year.

Given Brighten’s growth in the last 12 months, in 2025 we are planning to launch a new, 100 per cent prime full-doc programme. The Gemini pool will not contain any alt-doc loans, unlike some other programmes, and will be marketed accordingly.

It would be interesting to hear about the focus areas for Brighten’s ongoing investor relations work, including the extent to which it is looking outside Australia for investment capital. Does the fact that the business is preparing a full-doc-only securitisation programme have any impact on plans?

We have been educating investors about our prime programme for about a year now, as onboarding new investors takes time and requires a level of trust on their part. We have been speaking with Asia-based investors and engaging in nondeal roadshows in the last 12 months, which we will continue to do this year.

Brighten’s brand recognition has increased materially in the broker market and we want to emulate this in the capital market.

We have a good mix of investors from Australia and Europe in our books. However, measured growth in our funding programme is as important as measured growth in our AUM. To achieve this, we require further diversification of our investor base.

Offering a prime-only programme opens a new prime-only pool of investors. Our arrears are low, our collateral and credit risk disciplines are strong and we are confident that, when investors are making comparisons between different lenders and programmes, Brighten’s offering will be attractive on a risk-adjusted returns basis.

Speaking of collateral, can you give some colour around arrears performance across the various areas of Brighten’s book? Are any segments under notable pressure or performing unexpectedly well? What are the main drivers of performance for Brighten?

Our conservative approach to credit is reflected by our low arrears compared with some of our peers. We are confident about the performance of our book going forward because much of our growth has been in the last 12 months – during which time it has been assessed at peak cash rates and with a 2 per cent servicing buffer. We also rarely originate loans at more than 80 per cent loan-to-value ratio.

In all honesty, there aren’t any specific areas that are giving cause for concern. We remain bullish on book performance and on the origination market that will fuel Brighten’s growth moving forward.