AUSTRALIAN LENDING AWARDS --Recognising the industry’s best

As the second annual Australian Lending Awards draws near, the industry is eager to find out who will be voted the nation’s leading lenders

ON THE evening of Thursday 23 February 2012 at the Sofitel Sydney Wentworth, The Adviser and research house RFi will once again host the prestigious Australian Lending Awards.

The Awards follow the 2012 Australian Mortgage Conference, to be held at the same venue during the day.

The Awards – hosted in partnership with Genworth Financial – are the only accolades of their kind and take into account the views of more than 6,000 consumers and 500 brokers, combined with the assessment of a panel of industry professionals.

This transparent and robust assessment process established last year’s inaugural event as the definitive benchmarking program for Australia’s top lenders.

The array of home loans now available to borrowers has left many feeling overwhelmed. With this in mind, the Australian Lending Awards have helped identify the lenders that lead the field across the full spectrum of mortgage products and services.

Knowing which lenders stand out from the pack is equally important to third party operators, according to Alex Whitlock, group publisher of The Adviser.

“The Australian lending awards cover the whole spectrum of mortgage lending – from wholesale funding and the non-bank sector through to the mutuals and the retail banking sector,” Mr Whitlock said.  

“Mortgage lending has never been more competitive and borrowers increasingly look for guidance as to who leads the field. Mortgage lending is about much more than rate alone and recognition in the most rigorous industry awards in Australia will help clarify who the leading lenders are.”

As the Awards ceremony edges closer, it’s time to reveal – and to congratulate – this year’s finalists.

Of the hundreds of nominations received, only the leading lenders, innovators and personalities across the retail, wholesale and third party channels now remain.

Awards will be presented not only in the 12 categories developed for the 2011 inaugural event but also in two new categories, reflecting the evolution of the mortgage landscape in the past 12 months.

A NEW WAY OF DOING BUSINESS
Opportunities exist in a slow market, just as they do in a booming one. But brokers who want to increase the volume they write for their existing clients as well as attract business may need a new game plan

BROKERS HAVE several reasons to be positive about the months ahead: the prospect of cash rate cuts pushing both home buyers and investors back into the market; the legacy of the majors’ price war – several price-competitive packages – and also the non-majors increasing their market share; and continuing refinancing activity, following the abolition of exit fees.

But all that comes with a caveat. The residential market is still a tough one, and to turn current market dynamics to their advantage, brokers need a savvy business strategy in place as well as a clear idea of how to diversify services, leverage their client database and allocate business spending.
Opportunities are there, but they won’t fall into your lap just yet.

DIVERSIFICATION AND RISK MITIGATION
“Big businesses realise that in difficult times, diversification is always a measure for mitigating risk exposure, and to a large degree that also occurs with sole operators,” says James Hickey, financial services partner at Deloitte and co-author of Australian Mortgage Report 2012: The new normal.

In a tough market, brokers shouldn’t “just entirely focus on the lending side of the equation,” he says.

Daniel Di Conza, CEO of Acceptance Finance, agrees: “We spend a lot of time looking at new markets,” he says. The group not only forges strategic alliances with potential large referral sources, including financial planning and property groups, but also offers financial planning, risk insurances and motor vehicle finance in addition to mortgage broking.

Tim Brown, CEO of Vow Financial, recommends providing information as part of your service offering, noting that Vow now runs seminars on self-managed super funds (SMSFs).

“It’s one of those areas where people have a desperate need to know more,” Mr Brown says. “They don’t understand it; they’re frightened of it. So we’re now holding sessions with our brokers and their clients to give them the information they need to make a decision.”

Whether or not borrowers decide to move ahead with an SMSF, the brokers involved will be viewed as experts in the area, ready to help should an SMSF be considered in the future.

“Brokers need to understand that their borrowers are going to come to them for all sorts of financial advice and if they can’t provide it, then they are letting their clients and themselves down,” adds Stephenson Mansell Group chairman and former Mortgage Choice CEO, Paul Lahiff.

BORROWING FROM THE BANKS
For much of 2011, the major bank lenders campaigned aggressively on price, blitzing the market with advertisements and information, but confusing some would-be borrowers in the process.

As borrowers attempt to chart a course through the messages, offers and loans, brokers should be there to take on the role of trusted guide, says Deloitte’s Mr Hickey.

“Brokers would do well to tap into that pulse of consumer interest at the moment by ensuring consumers really do have the best deal for themselves in the marketplace,” he says.

Anita Marshall, managing director of Advanced Financial Solutions, also sees opportunities with the majors but believes that in tough economic times, brokers should focus on securing borrowers who would normally walk straight into a bank.  

“We need to pick up that extra market share that we’re not currently getting,” says Ms Marshall.
“I think that the key at the moment is to be really proactive. Now is the time to be actively searching for new clients.”

Vow Financial’s Tim Brown agrees. “I think you really need to be out in the market more than ever before,” he says. “Sitting in your office waiting for the phone to ring isn’t going to get you any business.”

MARKETING THAT WORKS
During challenging times, should a business cut spending or boost marketing spend to leverage its client database? It’s a textbook business question and there are passionate advocates on both sides (although more recent thought tends to favour increased marketing).

Mr Brown, however, cautions against buying leads or engaging in a scatter gun approach to marketing. “For me, if you’re going to spend money on marketing it should be targeted; it should be niche; it should be in an area that you understand,” he says.

Mr Di Conza believes “it all depends on what your marketing dollar gets you”, and recommends brokers concentrate on forging closer ties with any referral sources or existing alliances they may have developed.

Ms Marshall, meanwhile, understands the value of meeting and talking to people in the community and she has not changed her marketing budget for 2012. “Getting out and about” is more important than how much you spend, she says.

“In 2012, I’m going to be introducing myself to a lot of agents. I’m going to continue running seminars about different topics and just basically putting myself out into the public.”

She aims not only to increase public knowledge of her own brokerage, “but also of brokers in general, so that we can try and grab some market share from the banks”.

THE ‘POT OF GOLD’
Active management of a broker’s existing client database will be important to their success in 2012, according to Mr Hickey. In fact, in challenging times, brokers shouldn’t constantly be looking to bring in new business, he says.

“I think brokers will find a lot of benefit in proactively re-engaging with their existing customers,” he says. “Brokers may find that supporting their existing customers is a better use of marketing spend in this environment.”

“Existing clients are what I call the ‘pot of gold,’” adds Mr Brown, who believes many brokers shy away from asking for a referral despite their existing clients being their best referral source.

Mr Brown recommends brokers not only ask for referrals but also mine their existing databases, reviewing their current clients regularly.
And while Ms Marshall believes now is the time to nab potential borrowers from the banks, she also agrees with Mr Brown.

“My strategy for 2012 will be to visit clients and aim to have clients for life,” she says. “So we will have lots of emphasis on customer service, lots of information sessions, monthly newsletters, quarterly magazines, birthday cards – all the usual stuff that you do with your client for life strategy.”

SPEND OR SAVE?
There is little agreement in the industry about whether brokers should increase or cut costs to make the most of the current market. But when it comes to marketing, the consensus is clear: If you’re going to do it, make sure it works.

Diversification is also likely to be a key survival tool in 2012, says Mr Hickey, adding that brokerages – particularly those run by sole operators – can be“[influenced] by the amount of personal capacity they can actually put into the business and how many hours they can fit into a day to focus on their business”.

Now may well be the time to think about broadening service offerings and introducing new revenue streams, he says. The banks are advertising heavily and feeling the pressure of tighter margins; they will continue to organise strong promotions to ensure they maintain what little growth there is in the market, he believes.

“That is a good outcome for brokers,” Mr Hickey says. Current conditions will enable them to connect with clients provided they offer the best advice on understanding the price war and how to confront potentially overwhelming amounts of information.

Brokers and analysts alike told The Adviser that cross-selling, diversification, effective marketing and mining or reconnecting with existing customers may well be the key to turning a tough market to their business’ advantage.

What seems certain is that brokers will need to take a fresh look at the way they do business – ‘business as usual’ will no longer be enough.