The Adviser Third Party Banking Report 2013 - Non-Major Lenders reveals the smallest of margins is separating Australia's non-major banks
Australia’s non-major banks play a very significant role in the third party distribution channel.
Most importantly, they inject competition into the mortgage market. Without them, the role of the mortgage broker would be severely diminished.
Since the inception of the third party distribution channel, the broker proposition has always been founded on choice.
Brokers deliver choice to borrowers, offering them an array of products from an array of lenders.
If more than half of those lenders weren’t present in the market, the broker proposition would be adversely impacted – a fact brokers understand.
According to The Adviser’s Third Party Banking Report 2013 – Non- Major Lenders, the second tier lenders play a critical role in the market and continue to offer a variety of competitive products that is only matched by their excellent service. In fact, this year the survey found brokers are happier than ever with the products and service they receive from the non-majors, suggesting these players will be around for a very long time.
But while the non-majors excelled in a number of areas, the report also highlighted the areas where they could perform better.
Overall, the battle for first place was hard fought, with the smallest of margins separating most of the lenders.
I would like to congratulate all of the non-majors for performing so well in this year’s survey. Nearly all of the lenders managed to improve upon last year’s score – suggesting the non-majors really are going from strength to strength.
Editor, The Adviser
A TRUE CHALLENGER
The competition to be named Australia’s leading non-major bank stepped up a gear this year, with the smallest of margins separating Australia’s lenders
There is no denying that competition between all of Australia’s lenders is fierce at the moment.
Many of Australia’s major and non-major lenders have entered into a price war in a desperate bid to attract borrowers and grab more market share.
And while price will always be an important consideration to brokers and their clients, it is not the only factor at play.
Brokers and their clients are, more than ever, looking for products that meet their holistic needs.
In addition, they are looking for a good level of support and speed of service. And, according to The Adviser’s Third Party Banking Report 2013 – Non-Major Lenders, Australia’s second tier lenders provide just that.
When comparing the non-majors’ scores against the major banks, it is clear Australia’s second tier lenders outshine their larger counterparts across many business metrics – most notably BDMs, credit assessors and business support.
As such, it is hardly surprising to see this section of lenders greatly increasing their market share.
According to the latest AFG Monthly Mortgage Index, non-major lenders account for more than one in four home loans processed.
The index revealed that non-major lenders increased their collective share of home loans from 20.7 per cent in March 2013 to 26.4 per cent in July 2013.
AFG’s general manager of sales and operations, Mark Hewitt, says this figure is significant.
“This figure may seem unexceptional by international standards, but in Australia, more than 90 per cent of all home loans are with only four lenders and their subsidiaries,” he says.
“To be seeing competition at this level is encouraging because it offers greater choice and helps keep rates down.”
Mr Hewitt’s comments were echoed by several brokers.
According to broker comments left on The Adviser’s Third Party Banking Report 2013 – Non-Major Lenders, Australia’s non-majors have improved their positioning in the marketplace of late, helping them to grab a larger share of the mortgage pie.
One New South Wales-based broker said he was starting to send more business to the non-majors as they improve their pricing and product policies.
“While the big four still monopolise the mortgage market, there is starting to be a swing towards the non-majors, especially as they become more competitive across all metrics, including pricing, policy and service,” he said.
Another broker commented that pricing was a driving factor in his clients’ lender decisions, and that is an area where the non-majors are picking up their game.
“Pricing still seems to be a major driver of customer choice, but thankfully the gap has narrowed in this regard. All things equal, my preference is to deal with a non-major,” the broker said.
In this report, The Adviser analyses broker perceptions of the 10 non-major banks that distribute funds via the broker channel.
This is the first time The Adviser has included Heritage Bank and ME Bank. While both of these lenders do not command the same level of market share as some of their fellow non-majors, The Adviser thought it was essential to incorporate these two very important banks into the ranking.
SOME TOP PERFORMANCES
ING DIRECT was the standout performer, ranking first in 11 of the 17 categories, including product range, pricing, online lodgements, BDMs, credit assessment staff and client support.
The business development team at ING DIRECT received significant applause from brokers, with many going to great lengths to espouse the brilliance of their particular BDM.
“I have good relationships with all my BDMs, but Stuart Moore from ING DIRECT is a standout for me,” one broker said.
“Stuart constantly goes above the call of duty for me and my business. Because of him, clients are kept very happy.”
And Stuart Moore wasn’t the only ING DIRECT BDM to receive praise.
New South Wales-based BDM Vanessa Boudib also received more than a few compliments from her brokers, with one loan writer referring to her as “excellent” and “the main reason I support ING DIRECT”.
“My ING BDM, Vanessa Boudib, is excellent and the main reason I strongly support ING. I also like that I have just one person as my contact for all things ING. To me, Vanessa and ING DIRECT are unbeatable,” they said.
But while ING DIRECT’s attention to detail and excellent BDM force managed to impress brokers from across Australia, it wasn’t the only standout performer in the ranking.
In fact, it could be said that the true fairytale story belonged to Macquarie Bank.
Two years ago, Macquarie Bank returned to the broker market after its GFC-fuelled hiatus.
In 2011, The Adviser included Macquarie Bank in the Third Party Banking Report 2011 – Non-Major Lenders for the first time.
Unsurprisingly, given that the lender had just returned to the market, the lender placed last in the ranking.
Many brokers were worried about doing business with the bank again because it had made the decision to leave the market once before.
Since that time, however, Macquarie Bank has managed to go from strength to strength.
In last year’s ranking, the bank catapulted itself up the ranking, to secure fifth place overall. This year, the story is even better.
After a further 12 months of product enhancements, price cuts and a stronger commitment to the broker channel, Macquarie Bank has managed to jump from fifth place last year to second place overall in the 2013 ranking.
Broker praise for Macquarie Bank revolved around the lender’s products, pricing, policy and ongoing support.
One New South Wales-based broker said he had experienced no channel conflict with Macquarie Bank.
“I have never experienced any kind of channel conflict with Macquarie and the times I have used other non-major lenders over the last three years, the experience has been much the same, which is why I prefer the non-majors over the majors any day,” he said.
And while one broker was impressed with Macquarie’s lack of channel conflict, two more brokers were equally impressed with the lender’s range of products.
“Macquarie has streamlined their range and it is much easier to understand,” one Queensland broker commented.
This sentiment was supported by a Victoria-based broker, who argued that Macquarie’s “simple product list” made the bank “easier to deal with”.
Overall, it is fair to say Macquarie had a stellar year. Not only did it lift its position in the ranking, it increased its overall satisfaction rating by 5.86 points – the biggest jump of any bank.
In July and August 2013, brokers who subscribe to The Adviser BULLETIN, the daily email from www.theadviser.com.au, were invited to rate the lenders across four main areas of product, service, technology and remuneration.
The 10 lenders covered were also given the opportunity to offer brokers who write their products the chance to participate.
The survey was promoted twice and remained open for two weeks.
A total of 756 brokers participated in the Third Party Banking Report 2013 – Non-Major Lenders.
Each participant was asked to rate the lenders on a scale of 1 to 5 (1: ‘very poor’; 2: ‘poor’; 3:‘average’; 4:‘good’; and 5:‘very good’) across a total of 17 metrics covering product, support, technology and commissions.
For example, a rating of 3.5 would indicate the bank was between ‘average’ and ‘good’ in terms of broker attitude.
The battle for best ‘product suite’ was closely fought this year, with less than one point separating the top five performers
A Lender’s product suite is critically important to brokers and their clients.
A suite of products that are too complicated or highly priced will no doubt put brokers and their borrowers off.
Thankfully, it seems none of Australia’s non-majors have fallen victim to this, with brokers complimenting the range and pricing offered by smaller lenders.
Adelaide Bank’s 100 per cent offset account on fixed rate mortgages won the acclaim of one broker who called it a “clear winner in today’s tumultuous environment”.
“In addition, they still have nil monthly and annual fees, which is simply fantastic,” the South Australian broker said.
“Suncorp’s unique multi-offset is also fantastic, but I would love to see the line of credit back at variable rates.”
These positive comments flowed through to almost every other lender, proving the non-majors are definitely a force to be reckoned with when it comes to product innovation.
Better yet, the positive broker comments were reflected in the broker satisfaction ratings, with each bank seen as “above average” when it comes to their product range, policy and pricing.
Product range is quintessentially important.
No two borrowers are the same. As such, it is important for lenders to have a good range of products that can cater to the needs of many.
Of course, a good product range doesn’t necessarily equate to a lot of products – quite the opposite.
Brokers are constantly calling out for product simplicity. Sometimes, lenders with just a few, well-featured products will do better than others, as was the case with Macquarie.
“Macquarie has streamlined their range and it’s much easier to understand,” a Queensland broker said.
Perhaps it is for this reason that Macquarie managed to jump from seventh position in this category last year to second place in 2013.
Macquarie wasn’t the only lender to receive broker compliments.
One WA-based broker applauded Heritage Bank’s flexibility.
“Heritage has been exceptionally good over the last 12 months,” the broker said.
“Their policy is flexible and they are not afraid to workshop deals.”
Even though Heritage placed eighth overall in this particular category, the lender was only 0.6 points behind the category leader, ING DIRECT.
According to brokers, ING DIRECT’s products are simple yet effective.
“ING DIRECT has a good product range and clients like what they offer. They are easy to deal with and their range is becoming more flexible by the day,” a New South Wales-based broker said.
“Best of all, ING DIRECT’s back-end processes are second to none. All of the staff know the products and know what works and what doesn’t. If a deal isn’t going to work with them, they will let you know straight away, which saves us a lot of time and hassle.”
ING DIRECT’s product range has always been a favourite amongst brokers, with the lender placing first in this particular category in both 2012 and 2013.
Pricing has always played a huge role in where brokers place their business.
And while it is not the only factor at play, it has become increasingly important over the last 12 months.
Every lender across Australia, from the majors right through to the non-banks and mutuals, are competing on price.
In August, the Commonwealth Bank of Australia said it would undercut all of the majors on fixed rate pricing for seven weeks.
This dramatic move highlights just how important pricing has become to the majors – and the non-majors are no different.
Bankwest, ING DIRECT and Macquarie Bank were considered by brokers to be the leaders on price.
Being the biggest banks in the non-major space, this is hardly surprising.
But while ING DIRECT, Macquarie and Bankwest dominated this space, their small competitors were not far behind, with brokers agreeing that the non-majors have all dramatically improved their pricing in the last 12 months.
“Although pricing isn’t everything, it is the main thing the client sees,” one New South Wales broker said.
“While the non-majors have traditionally lagged behind the majors, I am pleased to see the margins reducing.”
A Tasmania-based broker concurred and said some of the non-majors are currently offering excellent fixed rates.
“I get good pricing deals from Suncorp Bank and St George, but Suncorp's current fixed rates are market leaders,” the broker said.
And that wasn’t the only praise Suncorp Bank received, with another broker saying Suncorp Bank’s pricing for LVRs under 80 per cent was “almost unmatchable”.
AMP was also recognised for its competitively priced product range, with one broker describing the lender as “keenly priced”.
“Their basic 5.15 per cent product is really strong, especially for refinancers,” the New South Wales-based broker said.
Bankwest was considered the standout performer in terms of policy, with the lender receiving a broker satisfaction rating of 3.77 out of 5.
But despite Bankwest’s excellent broker satisfaction rating, it seems the bank still has plenty of room for improvement, with one Western Australia broker calling on the lender to take an “annualised income position”.
“Bankwest’s policies are really good, but they definitely could be better,” the broker said.
“Personally, it would be good to see the bank take an annualised income position like the majors, as dealing with the non-majors is often a 'case by case' situation, which is not something I want to deal with as a broker.”
Just as the Western Australia broker would like lenders to take an “annualised income position”, others said they would like the non-majors to be a little bit “more flexible, especially when it comes to valuations”.
Furthermore, brokers said they would like it if the lenders’ interpretation of policy was more “consistent”.
“Often, the policy will say one thing and the credit assessor will say something else. If I could guarantee that the interpretation of loans was not going to vary substantially, I would send more business the non-majors way,” a New South Wales broker claimed.
As the industry evolves and the borrower becomes increasingly financially savvy, brokers understand more and more the value of cross sell.
Not only does cross selling help brokers retain their clients for longer, it also helps increase the revenue they can generate from each new borrower.
But while brokers understand the importance of cross selling, they don’t seemingly want to do it through the non-majors.
According to the comments in the survey, the non-majors’ additional products are very hard to sell and often provide brokers with no monetary benefit.
“Although St George has products available, there are no broker benefits or rewards for referring these,” one New South Wales broker claimed.
This sentiment was reinforced by a Victorian broker, who said they would like to see “greater remuneration” for cross selling lender products.
“Non-majors need to compensate brokers for the time taken to explain and sell their other products. Brokers generally do what's best for the client in terms of recommending other products, but generally don't get any reward or recognition for doing it,” they said.
Looking at the broker comments, it is easy to see why none of Australia’s non-majors managed to perform well in the cross sell category.
Even the overall winner of this category, Bank of Melbourne/St George/Bank SA, was considered by brokers to be fairly “average”, with the lender achieving a broker satisfaction rating of 3.6 out of 5.
Overall, scores fell as low as 2.93 out of 5 in this particular category, suggesting the non-majors haven’t quite hit the mark in the area of cross sell.
While the non-majors have made significant enhancements to their software platforms over the last few years, there is still a lot of room for improvement, according to brokers
Over the last decade, most of Australia’s non-majors have significantly improved their online capabilities. Today, they allow brokers to send their applications electronically, rather than by fax.
In addition, many have launched iPad and iPhone apps to make doing business with the lender just that touch easier. These apps can help brokers work out a client’s borrowing capacity while they are on the road, or provide them with detailed property reports.
But while these enhancements have no doubt made a broker’s job a lot easier and more environmentally friendly, there is still work to be done. The third party channel agrees that the non-majors’ specific technology platforms are only “slightly above average”.
ING Direct was, once again, the standout performer in this category, receiving a broker satisfaction rating of 3.73 per cent – significantly higher than its nearest rival.
After ING DIRECT, most of the lenders managed to score slightly above 3, suggesting there is still plenty to do in the online space.
One broker complained that the Bank of Melbourne’s serviceability calculator didn’t line up with credit.
“Because of this, I have honestly wasted hours of my time and my client’s time,” the Victoria-based broker said.
Another concurred, saying St George/Bank of Melbourne/ Bank SA need to sort out their serviceability calculators and online lodgement system.
“Please get your technology sorted out,” the New South Wales broker pleaded.
“Having portfolio loans and standard loans on different platforms creates too many problems. For example, a portfolio loan primary account cannot have interest capitalised even if the client has a primary standard loan.”
Bankwest and Citibank also copped some criticism for their outdated online lodgement systems.
“Citibank’s use of fax in this day and age is in the dark ages,” one broker complained, while another said
“Bankwest needs to upgrade its system to allow e-lodgement of applications and supporting documents”.
At the end of the day, it is clear that all of the non-majors have some work to do if they are to match the majors in the technology space. While these lenders do have more money to play with, having a good, functioning software platform will no doubt help the smaller players mark their territory.
It wasn't just the lenders’ online lodgement systems that were critiqued, with many brokers saying the non-majors could stand to make some adjustments to their web presence.
“All lenders could improve their web service further by providing more detailed tracking, so that at each stage there is no need to call the support line, as all comments relating to application are tracked,” one Victorian broker said.
This sentiment was echoed by a South Australian broker, who said tracking should play an essential role on a lender’s broker website.
“Detailed online information and tracking is essential to a broker’s business, especially if the lender uses larger (or overseas) call centres where the wait times can be enormous. This is an investment to the lender, as it reduces the number of incoming calls,” the broker said.
Once again, ING DIRECT claimed the win in this category and by a significant margin – receiving a satisfaction rating of 3.7 out of 5.
While this score is still largely considered to be “slightly above average”, it was significantly higher than its nearest competitor, Suncorp Bank, which received a satisfaction rating of 3.51 – 0.19 points behind ING DIRECT.
According to brokers, all of the non-majors need to simplify their broker portals, so that users don’t have to open a new window every time they want to look at a different area of the website.
“Having to open up new windows in broker portals to get into a new area instead of just being able to navigate to any page from anywhere on the site is frustrating,” one Queensland broker said.
“The Excel version of St George’s servicing calculator locks out any other Excel worksheets that we are working with.
“The online servicing calculator is great, but it would be excellent if the Excel version was just as good.
“More positively, the ATOMS mobile site is a great innovation. As long as real time tracking happens, this is a great little tool.”
Brokers are still largely unsatisfied with the commissions they receive from their lender partners
Commissions have been a sore point for brokers for many years.
Arguably, under the National Consumer Credit Protection Act (NCCP), brokers are doing more work and more due diligence than ever before. Yet, they are being paid less for the privilege.
The global financial crisis (GFC) saw broker commissions fall by 30 per cent and many lenders understand that to win business, they can use commissions as leverage.
Despite knowing this, few have chosen to do so, preferring to win broker business by way of excellent turnaround times, good policy, products and pricing.
As such, it is unsurprising to see many brokers rate the commissions offered by Australia’s non-major lenders as “average” or “slightly below average”.
Moving forward, many industry pundits believe brokers can expect to see commission enhancements as the battle for market show intensifies.
nMB’s managing director, Gerald Foley, told The Adviser earlier this year that he could see broker commissions increasing – just not in the immediate future.
According to Mr Foley, margins are returning to lending, so there is no reason for Australia’s banks and non-banks to hold back on lifting broker commissions.
“There is continual pressure on the banks to grow market share and as long as they can remain competitive in terms of product and price, I think there is some room to move,” he said.
“It will be a brave lender to lead that charge, but once it does, the rest will find a way to follow.”
Until then, however, it really is a case of watch this space.
Macquarie led the field in this particular category, claiming a broker satisfaction rating of 3.7 out of 5.
Daylight then separated Macquarie from its fellow competitors, with ING DIRECT and Citibank 0.11 points behind, on 3.59 respectively.
According to the survey, a majority of brokers felt the non-majors’ commission structure was “average” or “slightly above average”.
Brokers said a simpler approach to commissions would benefit the lenders, with many asking for a flat commission structure.
“It would be easier if the commission structure was a little more plain and simple. Say, a flat commission rate, irrespective of what you did the month before,” one Victoria-based broker said.
“If the commission structure was flat, it would make it easier for the broker to know what they will receive in terms of remuneration.
“The uncertainty of not knowing what payment you will receive when lodging a Suncorp Bank or Bank of Melbourne deal is extremely frustrating. I know I would use these lenders more if I knew what I was going to get paid every time I lodge a deal. I cannot stress the importance and need for change in this area with these lenders.”
These comments were largely echoed by a New South Wales-based broker, who added that more regular commission payments would also be a “nice touch”.
“Commissions, along with service, have become a big factor in my business. As long as there is no disadvantage to the client, I will check to see what commission is being paid. I also think commissions should be paid twice monthly. If a loan settles early in the month, it is another six weeks before we are paid,” the broker said.
“That can be on top of the month we've already been assessing and processing loans. With customer service, if you can't give me good service, you won't give my clients good service. That impounds on my decisions as well.”
Macquarie also claimed the top spot in remuneration. However, this time the margin between first and second place was much closer.
Overall, brokers considered the remuneration paid by lenders to be “fair”, with all of the lenders receiving a broker satisfaction rating above 3.
According to the comments left on the Third Party Banking Report, clawbacks continue to be a big bugbear for brokers, with many saying they prefer to put their business with lenders that don’t have clawbacks in place.
“Clawbacks are still the biggest issue for me,” a broker commented.
“I don't get them a lot, but when I do, it hurts. I shy away from short-term funding, but there are always instances like marriage splits, branch conflict, that you can’t help. And to have money ripped off you 18 months and sometimes two years later is paramount to theft.”
This sentiment was echoed throughout the ranking, as was the call for greater remuneration.
Many, if not all, brokers believe they should be paid more in today’s market, given that they now have the legislation to contend with.
“With compliance issues, it now takes double the amount of time to process loans,” a Western Australia broker complained.
“I think it is time for lenders to look at not only what work they are getting through and settling from brokers, but what brokers do to sort out the tyre-kickers. Brokers are spending hours to stop bad loans from hitting the system. Because of this, I believe upfront and trail commissions need to be reviewed.”
According to the third party distribution channel, Australia’s non-majors continue to go above and beyond when it comes to service
While product pricing no doubt plays a large role in where brokers place their business, the value of support cannot be underestimated.
In today’s economic climate, the banks are competing heavily on price to the point where all comparable lender products are, in most cases, separated by just a few basis points.
When this happens, the service provided by the lender comes into play.
Brokers must consider how good the service offered by each lender is and then ultimately place their business with the lender that boasts fast turnaround times, flexible credit assessors and excellent BDMs.
So which non-major lender is leading the pack when it comes to service?
While ING DIRECT managed to claim victory in six of the nine support categories, it must be said that the race for first place was closely fought.
Macquarie, Suncorp Bank, Bankwest and Citibank all challenged ING DIRECT at one time or another. As such, any lender truly has the ability to claim the crown next year.
Ask any lender what makes their mortgage business successful and they will respond, “Our BDMs”.
BDMs aren’t just responsible for getting business through the door, they are responsible for keeping business, which can be very hard, especially when competition runs hot and all of the lenders are engaged in a price war.
Of course, the right BDM can keep business running regardless of market conditions – a fact that Macquarie Bank understands.
The lender spent a majority of last year focusing on its BDM recruitment – a tactic that has paid off, with the lender climbing from fifth in the 2012 ranking to second in 2013.
Just 0.04 points separated first and second place in this particular category, with the lender achieving a broker satisfaction rating of 3.95.
“Ben Walker at Macquarie and John Kenny at Bankwest are a refreshing change to the usual BDM model,” one New South Wales broker claimed.
His sentiment was echoed by another New South Wales broker, who said Macquarie’s BDMs have the “power to influence processing and approvals – a quality that is lacking in some other organisations”.
Of course, Macquarie’s BDMs weren’t the only ones to receive broker praise.
All of the lenders were mentioned for their excellent BDM teams, which suggests the non-majors are very much on the money when it comes to recruitment.
Citibank’s Chris Christofilos and Ross Cacozza both received numerous mentions, with brokers applauding them for “returning calls immediately”.
“Having a BDM that takes and returns all your calls, knows his products and goes above and beyond to move a deal through the pipeline really makes our job so much easier. There have been a couple of occasions where Chris has jumped in and fought credit decisions that we both didn't agree with. Both deals went to formal approval. That's what makes a great BDM,” one New South Wales broker said.
Further honourable mentions must be paid to ING DIRECT’s Vanessa Boudib, St George’s Joe Nehme and Bankwest’s Stephen Guest and Natalia Banaszek, all of whom were applauded by numerous brokers for their ongoing support and assistance.
CREDIT ASSESSMENT STAFF
Inflexible credit assessment staff can be a real bugbear for brokers, especially when their client is looking to purchase in the very near future.
According to brokers, credit assessment staff need to be well educated, knowledgeable and very reactive.
“The quicker they can turn deals around, the better,” one Queensland broker said, while a New South Wales broker believed open communication was essential in good credit assessors.
“Rather than declining a deal unless it’s very poor, they should try and speak to the adviser and clarify before coming to a final decision like other lenders do. This avoids wasting time and the need to re-submit an application,” the broker claimed.
Reflecting on this, it is fair to assume ING DIRECT’s and Macquarie’s credit assessors are not only good communicators, but very flexible in their approach to deals, with the lenders leading the pack in this category.
St George’s credit assessors on the other hand, were considered largely “inflexible” by brokers, with the third party channel offering the lender a satisfaction rating of just 2.99 out of 5.
“I am seriously considering not using St George ever again due to the incompetence of assessors,” one New South Wales broker bemoaned.
This sentiment was echoed by a Queensland broker who complained that St George’s assessors show a distinct lack of accountability and consistency.
Brokers go out of their way to deliver the best customer experience to their clients. They check up with them post-settlement and contact them on a frequent basis to make sure they are happy with the loan.
And while it is important for brokers to provide good client support before, throughout and after the loan transaction, it is also important for the lenders to provide a similar level of service.
If a lender’s client support is not up to scratch it can affect the client and effectively undo all the hard work the broker has done.
As such, it is important for brokers to send their clients to lenders they know will offer premium service and support.
Once again, ING DIRECT was the standout performer in this category, with the lender achieving a satisfaction rating of 3.86 out of 5.
While this is a very good score, a majority of the lenders scored in the low 3s, suggesting there is more work to be done in terms of client support.
According to brokers, all of the lenders need to be more ‘reactive’.
“Often, variations will go in and are never heard of again. As such, it requires constant follow up, which wastes my time and my client’s time,” a Western Australia broker claimed.
“Banks need to provide the client with the same level of support as brokers. It is not fair to the client or the broker to see the bank offer limited or little support.”
There is no denying broker communication is essential.
In today’s competitive environment, the banks are often tweaking their product policies and pricing. As such, it is important they keep brokers in the loop.
The more brokers know about a certain lender’s policy and pricing, the more likely they are to have any deal they send to the bank approved first time.
Of course, there is a fine line between informative communications and too much information, according to brokers.
The Third Party Banking Report 2013 – Non-Major Lenders found some of Australia’s banks send far too much information to brokers.
“Lenders send through way too much! This means I do not read them. I would prefer just important information that is necessary, not an overkill of marketing emails. It’s a real put off,” a South Australian broker said.
This sentiment was echoed by a Queensland broker who complained that some lenders, like Citibank and St George, send up to six promotional and update emails a week.
“They are now not effective, as I just delete them. I am sick of getting so many emails from the lenders. One comprehensive update per week would be enough,” the broker said.
Another broker commented that while the promotional or product updates could be a little less frequent and a little more comprehensive, greater access to client flyers outlining the benefits of using a non-major lender would be welcomed.
When analysing the results, it appears ING DIRECT has mastered the fine balance between good information and too much information, with the lender receiving a broker satisfaction rating of 3.92.
Not to be confused with broker communication, broker interaction is what a lender does to convey to brokers when there are turnaround time and application delays.
All of the lenders were considered to be quite good in this area, with brokers perceiving the interaction provided by the non-majors as “above average”.
That said, brokers still managed to submit a few constructive points for lenders to take on board.
Many brokers said personalised emails would be better than receiving standard automatic replies.
“Standard emails and automatic emails are often confusing, as they do not communicate effectively the action required by the broker and it often requires a call to clarify what is needed,” a Western Australia broker lamented.
Brokers also said it would be better if they could have access to some of the more senior staff from time to time, especially if a loan has been declined without appropriate reasoning.
“I never have access to senior staff, and on the few occasions I did copy them into an email, I was berated by the BDM who threatened that if I continued, the (little) service I was receiving would become non-existent,” a Queensland-based broker said.
ING DIRECT was considered the best in this category, with brokers admitting that the lender provided them with communication that was easy to understand.
More importantly, brokers were pleased that when they needed additional information on why an application had been delayed, they could get hold of their relationship manager straight away – something that doesn’t happen with every lender.
According to the results of the Third Party Banking Report 2013 – Non-Major Lenders, brokers weren’t highly impressed with the level of business support they received from the banks.
Overall, brokers believe the non-majors provide “average” or “slightly above average” business support.
Looking at the comments left on the survey, regional brokers felt as though they missed out on receiving a high level of support from their lender partners.
One regional broker based in New South Wales complained that “only Sydney brokers get support or training”, while a Queensland broker said they had not “seen their BDMs for years”.
“We are based in Mackay, so it is very rare that we are actually visited by our BDM. Because of this, we don’t have the help and support we need to take our business to the next level,” the Queensland broker said.
This sentiment was reinforced by a Western Australian broker who said he didn’t receive the high level of support he needed because he is based out in the regional suburbs.
“The banks haven’t helped me build my business. They say they will, but they never do,” he said.
Moving forward, brokers said they would like to see their lenders engage with the third party distribution channel on a more continual basis.
In addition, they said more roundtables or ‘think tanks’, where they are exposed to some of the senior executives, would help them in their business.
Most of Australia’s non-majors performed incredibly well in the area of channel conflict.
While in the past some brokers may have had issues with the major lenders when it comes to channel conflict, it seems the non-majors do not have the same issues.
Client poaching is not an issue amongst the non-majors, as these lenders rely heavily upon the broker channel for client engagement.
ING DIRECT was the standout performer, followed closely by Macquarie Bank.
Both lenders were applauded by brokers, with the third party distribution channel agreeing these banks understand the value of the broker/client relationship.
“No channel conflict from Macquarie and the times that I have used other non-major lenders over the last three years has also been good, which is why I prefer the non-majors over the majors any day of the week. They understand the relationship is primarily with the broker,” a New South Wales-based broker said.
A South Australian broker admitted to “never having issues” with channel conflict, while a Western Australian broker said while he had “experienced problems with Bankwest in the past, these have since been addressed”.
TRAINING AND EDUCATION
Training and education often forms a key pillar of the non-majors’ service proposition.
Lenders know the more support they provide to their broker partners, the better they will do.
This support can take many forms, including training and education.
By training and educating brokers, non-majors can be assured they are well versed on the products when it comes to selling and recommending them to clients.
Macquarie Bank led the field in this category, with a broker satisfaction rating of 3.49 out of 5.
While this score suggests there is still room for improvement, it must be mentioned that Macquarie has significantly lifted its placing in this category over the last 12 months.
In last year’s Third Party Banking Report 2012 – Non-Major Lenders, Macquarie placed fourth in the training and education space, with a broker satisfaction rating of 3.14.
According to brokers, Macquarie’s BDMs have helped the lender improve its training and education methods.
“My Macquarie and ING DIRECT BDMs visit me and offer personalised training tips. This is very effective and beneficial to me and my business,” one New South Wales broker claimed.
And while the compliments were free-flowing from brokers in this particular category, there was still some constructive criticism offered, with several brokers indicating they would like lenders to provide more “video training sessions”.
With little separating the lenders on price, brokers are often forced to look at the turnaround times of each lender before deciding who to place their business with.
If a lender has long turnaround times, brokers will often opt to go with someone else.
Thankfully, most of the non-majors boast very fast turnaround times.
According to brokers, upfront valuations have dramatically helped speed up turnaround times.
“Overall, I haven't had too many hurdles with turnaround times this year. Upfront valuations help with this. File driving is still crucial,” a South Australian broker said.
Another broker commented that they had nothing but good experiences with the non-majors when it came to turnaround times.
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