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Brokers lose appetite for banks

by Reporter6 minute read
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Fresh research has identified how brokers really feel about the lenders they deal with and where the banks are falling short in their third-party offerings.

Momentum Intelligence’s Third-Party Lending Report: Non-Bank Lenders 2017, the latest survey forming wider research into third-party sentiments on Australia's lending institutions (including major banks, the survey for which is open until tomorrow (24 February)), has revealed that while brokers believe the banks are still leading in terms of product range, non-bank lenders are catching up in other areas.

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Nearly 600 brokers were surveyed in the Third-Party Lending Report: Non-Bank Lenders 2017, and were asked to complete a self-administered questionnaire via an online survey portal. Brokers were asked to rate lenders that they had declared they'd written business with in the past 12 months between Very Poor, Poor, Average, Good, Very Good. A score between one and five was then assigned appropriately.

Majors on top for products

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The headline results show that the majors received an average broker score of 4.04 for product range, followed by non-banks with a score of 4.00 and the non-majors with 3.96.

For product pricing and policy, the big four were only slightly ahead of the non-banks (3.92) with an average broker score of 3.94. The non-majors fell behind in this category with an average broker score of 3.85.

The major banks also took the lead in training and education (average score of 3.79), outperforming the non-majors (3.71) and the non-banks (3.45).

Non-banks outperform on service

But the non-banks came out top for service, with brokers rating the non-banks higher than both the major and non-major banks for turnaround times, BDMs, credit assessment staff, client support and commission.

The Momentum Intelligence findings show that non-bank BDMs received the highest average score across all categories: 4.10 (compared to 3.93 for the majors and 3.91 for the non-majors).

In addition to outshining the banks with their BDMs, non-banks were also favoured by brokers for the quality of their credit assessment staff.

In this category, brokers gave the non-banks an average score of 3.99, well above the non-majors (3.69) and the big four (3.81).

The non-banks also came out on top for turnaround times, with an average broker score of 3.90, beating both the major (3.88) and non-major banks (3.47).

Speaking of his thoughts on why non-bank lenders are important to Australian borrowers, Dugald Powe, director of Kapowe Finance, commented: "Everyone deserves an equal chance when obtaining finance. Not everyone fits the big four or second-tier lender policies, so non-bank lenders have a vital role to play in the market to help people realise their dreams and get ahead in life."

Melbourne-based broker Mark Davis of the Australian Lending & Investment Centre also highlighted the strengthening non-bank offering, telling The Adviser that he was turned onto the non-banks after having trouble placing his investor clients with the majors.

“The service levels can be stronger through the non-banks, the rates are better and we can have better communication,” Mr Davis said.

“If we can get a better, nicer relationship under the older style of banking where you have a chat, and they sit at the assessor’s desk and we work out whether it's a deal and those types of things, that's what we need, as a business, to write the volumes we do.

“If we're getting that from the second tiers and the mortgage managers, that's gold. The larger banks will lose market share incredibly if they don't change back to the way they were and be more personable.”

The full findings from Momentum Intelligence’s Third-Party Lending Report: Non-Bank Lenders 2017 are available to purchase from Momentum Intelligence head of client services and sales research Andy Scott. 

[Related: Major banks' broker offerings in the spotlight]

Brokers lose appetite for banks
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