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Brokers are what banks ‘pretend to be’, says CEO

by James Mitchell5 minute read

The head of a major mortgage aggregator says brokers are dominating the Australian mortgage market by integrating themselves into their local communities in a way that big banks can only pretend to.

Yellow Brick Road CEO of lending Tim Brown pointed to the JP Morgan Australian Mortgage Industry report, released last week, which revealed that ANZ has been steadily reducing its branch presence since 2011, in favour of increasing its broker usage. 

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The report also highlighted that the broker channel may be perfectly placed to capture greater market share with 75 per cent of refinancers expected to use brokers.

Mr Brown said YBR’s strategic vision to dramatically increase broker numbers is being reinforced by the actions of the big four bank and by statistics showing the popularity of brokers with property purchasers.

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“If we look to trends overseas, a move towards utilising brokers for a larger percentage of lending has already been happening for some time,” he said.

“In the UK, 76 per cent of loans are done through a broker and 87 per cent of the actual loans are through mutuals, building societies or regional banks. That same trend is now beginning here as banks realise old ways of operating aren’t working.”

Mr Brown said there is no doubt that the traditional bank structure plays into the hands of intermediaries.

“In this day and age, people want to have access to service providers outside the typical nine to five business day. Our brokers at Yellow Brick Road and Vow Financial don’t work limited business hours. They are driven to take care of the customer’s desire for convenience and that means being flexible with the time and place that suits the customer’s needs,” he said.

“Brokers also have a small business mentality that banks just can’t compete with. They are integrated into their communities in a way banks can only pretend to be. They work harder because that way they build a reputation and make more money.”

Mr Brown said running the bank’s capped income model is never going to be as popular with consumers as the alternative of a broker who is incentivised to give better service, work longer hours, bring more customers in and provide customer-centric service.

In the latest strategy update, YBR announced its goal of growing to 300 branded branches and 1,000 broker groups by 2020.

“Hearing that one of the big four is forgoing its branch presence in favour of a greater emphasis on the third-party broker channel reinforces the increasing consumer popularity and effectiveness of brokers,” Mr Brown said.

[Related: ANZ closing branches with firm eye on broker channel]

Brokers are what banks ‘pretend to be’, says CEO
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James Mitchell

James Mitchell

AUTHOR

James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.

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