Wizard At Work

He’s Australia’s mortgage magician who, in less than a decade, built a small home lending business into a behemoth turning over hundreds of millions of dollars. Camille Howard talks to Mark Bouris, the marketing genius behind Wizard Home Loans.

Seven years in a chartered accountants firm and seven years in a law firm (with know-how about banking and structured finance) in the 80s and early 90s was all the experience Mark Bouris needed to get Wizard off the ground. Well, that plus contacts with a few reputable mortgage brokers, a "modest" personal investment, and a lot of "luck". Some might add, a bit of magic.

It all began in 1996, when he approached some mortgage broker friends who were sharing office space. "I said if you put your skills together with my investment, I’ll use my background to take us into the origination market [underwritten loans]."

It was the market the John Symond-led Aussie Home Loans was already making a mark in, and thanks to the booming property market there was plenty of room for other players. "I just knew the origination market was going to take off. It was a new segment within the financial services areas and it was in a rising tide—property was starting to take off, money was becoming far cheaper, relatively speaking, because of the competition, and I knew as a result of that the property market was going to take off," he says. "Well, I didn’t know there was going to be a property boom, but I suspected there was."

His instincts proved right, and thanks to the increasing popularity of non-bank lenders (the most public one of the time being Aussie), Wizard grew beyond Bouris’ expectations. As the first investor, he retained 40 percent of the business. Over the years, that percentage grew as he bought the brokers out—only one remains today. "I had the instinct, but I had to have the opportunity, too," he adds.

A big part of that opportunity came in the form of fanciers with deep pockets. "You can’t be a non-bank lender unless you have a financier behind you. And you need big, deep wholesale market financiers to do it." Over the years, his backers have included the Kerry Packer-led PBL, Deutsche Bank, ABN Amro, and GE Money, who finally bought Bouris out a few years ago.

The secret for any non-bank lender to attract this kind of backing, similar to that of financial advisers, is to have a good distribution model that wholesale financiers would be attracted to fund. Thanks to that funding, Wizard was able to roll out its first campaign in 1998.

While he concedes that the John Symond-led Aussie was a marketing success that helped draw attention to non-bank lenders, he denies Aussie’s success paved the way for Wizard’s. "There were a number of organisations who were looking to have their wholesale money loaned out to as many non-bank lenders as they could, and they had lots of them," he says. "But Aussie was the first one that became a brand. Symond spent a lot of money on marketing and advertising. I wouldn’t say he paved the way for me, or anyone for that matter, but he was by far the biggest brand—he became the biggest brand by marketing his business."

What the financiers invest in, Bouris says, is the distribution model, which is where Wizard was able to stand out from the crowd. "What John [Symond] had was a great distribution model, that’s where he paved the way. He had a system of what they call mobile lending units, we never adopted that but that was something he did very well.

"Our wholesale funder recognised that our non-bank branch distribution model was a good way to distribute, and in turn they decided to fund us to build our brand as well," he says. "There are hundreds of thousands of non-bank lenders who don’t go down that route because they want to stay boutique, or don’t have a business model their wholesale funder wants to back."

Although the launch of three branches simultaneously wasn’t exactly a boutique style of business, Bouris had no idea it was going to grow to its current size. There are now around 250 Wizard branches across Australia and New Zealand, and there was a launch into the Indian market earlier this year. This growth was only achievable thanks to the growing stable of investors. "The capital from one investor allows more branches to open, which makes it more attractive to other investors, making it easier to roll out more branches and attract still more investors," he explains. "Then, the income from the branches should provide you with the cash flow and the ability to grow your branches."