Adding white label solutions to your armoury can have more benefits than injecting a bit of extra competition into the market, as The Adviser reveals.
There are many benefits associated with writing white label products, including faster turnaround times, direct access to credit assessors and competitive commissions.
But there is another underlying benefit in which all brokers should be interested.
Offering a client a white label solution can help them build a stronger relationship with the client. So, how does this work?
With white label products, the banks are not directly involved in the transaction. As such, the borrower’s direct and number one contact is the broker.
If something were to go wrong with the loan, or if the borrower has a question regarding their finance, they will not call up their lender for advice.
Instead, they will call the broker. Because of this, it is unlikely that borrowers with a white label home loan solution will walk into a bank branch and emerge with a refinanced loan.
The primary contact
Advantedge’s general manager for distribution, Brett Halliwell, says that by offering brokers the opportunity to position themselves as the primary point of contact for the borrower, they are able to build a strong relationship that will likely evolve into repeat and referral business down the track.
“White label offer brokers complete control of the relationship,” adds Smartline’s executive director, Joe Sirianni. Because Smartline’s white label products are branded accordingly, borrowers will come back to the broker in the first instance, he says.
PLAN chief executive Brett Mansfield says that giving brokers control over the entire relationship ultimately eliminates channel conflict – a considerable benefit for the broker.
“There are many benefits associated with writing white label products, but eliminating channel conflict has to be one of the more significant ones,” he says.
“Channel conflict has long been a problem for the third party distribution channel, but with white labeling, it doesn’t have to be.”
Indeed, when The Adviser asked brokers whether or not channel conflict was an issue for them in their business, an overwhelming majority said yes.
Of the 129 respondents to an online survey, 82.2 per cent said channel conflict was still an issue for them.
Respond Finance’s Mitchell Blackburn is one broker who believes channel conflict represents a problem for the third party channel.
“I definitely think there’s still an issue with channel conflict. I think a fair bit still needs to be done from the top down to change the culture,” he says.
Mr Blackburn understands branch workers’ predicament: “They have their own KPIs that they’re trying to adhere to or meet,” he notes, but adds that some bank branches suffer from inconsistency.
“The rotation of staff within the banks is quite high, so what might be the ethics of one branch where a staff member has been may not be the ethics of another.”
With white labeling, however, the source of the problem is removed, leaving brokers with the opportunity and the ability to develop strong relationships with their client base.
A genuine alternative
In addition to building strong relationships with clients, white labeling can also help brokers connect with clients who are averse to using the services of a major lender.
In Australia, the big banks are under attack, including at high levels. In 2010, for example, then Prime Minister Kevin Rudd accused the banks of “gouging their clients”.
As a result of the criticism and negative attention that the majors have received, many Australians now prefer to borrow from a non-bank, a mutual lender, building society or other genuine alternative.
That said, the global financial crisis has also left borrowers cautious, and while willing to embrace a lender other than one of the big four, they nevertheless want one with the stability and strong funding lines that a major bank offers.
This is where white label loans come in.
Funded by some of the largest lending institutions in Australia, borrowers can rest assured that their asset is in good hands, while at the same time remain comfortable because they are not partnering directly with one of the big four.
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