Having recently seen a surge in commercial business coming in through the broker channel, ING DIRECT has highlighted the significant benefits of breaking into this new revenue stream.
Speaking to The Adviser, ING DIRECT national partnership manager - third-party commercial, John Kolyvas, highlighted that the lender has seen an uplift in commercial business coming in through the broker channel.
Mr Kolyvas explained that the main reason for this is the emphasis that ING DIRECT has been placing on building solid relationships with brokers, providing them with more support and education on how to structure commercial deals.
“Rather than having brokers just flick the deal to us, we’re trying to coach them on how to do it themselves,” Mr Kolyvas elaborated. “The reason we’re doing that is [so] brokers are able to identify more opportunities.
“Historically we were getting maybe one deal a year from residential brokers, now we’re starting to see two or three a year because they’re identifying more opportunities.”
Mr Kolyvas emphasised that by diversifying into commercial lending, “a lot of the time [brokers] are doubling, if not tripling their potential revenue stream”.
“There’s a lot more lending in commercial lending,” he said, “and in your average SME or small business there might be more than one director. So, instead of picking up one home loan, you’re picking up a second home loan and the business is borrowing as well.
“Generally, small businesses have more borrowing needs on a more regular basis, so there’s a lot more revenue… that’s one of the main reasons for doing commercial lending: trying to pick up all the business from a particular customer.”
Mr Kolyvas noted that often the greatest challenge that brokers face in terms of branching out into commercial lending is a lack of confidence, which can be overcome by attending training and running through potential scenarios.
He sees commercial lending growing further in the future, as “more and more aggregators are pushing asset finance as a soft entry point for residential brokers wanting to move into commercial”.
“I think with that drive coming from the banks and the aggregators then it’s inevitable that the market will keep growing and we’ll be getting more and more business from residential brokers,” he said.