The results are in! Brokers have voted for their favourite non-bank lenders across six different niches. The Adviser sat down with a handful of this year’s leading lenders to discuss their success
Between 28 November 2016 and 23 December 2016 Momentum Intelligence adopted a quantitative research method, asking participants to complete a self-administered questionnaire via an online survey portal.
Brokers were asked to rate non-bank lenders they’d written business with in the past 12 months across eight key metrics. Brokers were only allowed to rate lenders that they had declared they’d written business with in the past 12 months.
Surveyed brokers were sourced from The Adviser, Mortgage Business and research partners’ digital databases. The survey was also made available to all brokers in Australia via theadviser.com.au, The Adviser’s media partners and social media such as LinkedIn.
Survey reach and confidence level:
Survey responses were carefully assessed, measured and validated through statistical data analysis (SPSS) by an external market research professional. Responses were only included for respondents who indicated they were a broker/loan writer (mortgage/ finance).
This data validation process resulted in a total usable sample of 591 brokers. A sample of this size provides an excellent confidence level for the study. The margin of error for a sample this size is ± 3.93% at a 95% confidence level, indicating a 95% confidence interval for the true population value.
The full rankings in each competitive set and the underlying research data is available for purchase through Momentum Intelligence.
"This is the fourth year in a row and it vindicates our hard work and our focus in the space"
Specialist short-term secured asset lender Assetline beat out competition to win the category of best non-bank lender for short-term lending. Assetline co-founder and executive director Nick Raphaely tells us his thoughts on the win.
How does it feel to have won?
Obviously, we are gratified to have won the award. This is the fourth year in a row and it vindicates our hard work and our focus in the space. We haven’t tried to be all things to all people in our business; we’ve really focused on accessible, flexible, and fast property-based bridging finance solutions and the business has grown year-on-year; the book has grown and the broker support has grown.
Have you seen a rise in brokers using Assetline recently?
We have definitely seen an increase in the number of new brokers and also loyalty from existing brokers; it’s a combination of supporting those and bringing new brokers on board. We are one of the lender sponsors at the Better Business Summit covering five cities in five weeks, with hundreds of brokers in every city. That is a tremendous opportunity for us to continue to grow the broker network… But a lot of our business is from brokers that bring us one deal every two years, so our model is to build a big database of brokers that will know us and we are always sending out emails reminding brokers of our product. Essentially, because we’re not an everyday product (it’s something that calls for a specific situation) it’s just about making everyone understand that when the day comes, they can come to us. The banks have got tighter and slower and that has resulted in us doing more business. When I talk to my peers in the market, they think that 2017 is going to be a really busy year because they don’t see the banks loosening up. So, they think the well-capitalised and well-established private lenders have a very good opportunity.
What are you particularly proud of in your service offering?
I think we’re good to deal with, we’re reasonable and commercial. We offer at — in some cases — the pointy end of the market which sometimes attracts the wrong sort of lenders and I think brokers still feel like Assetline is a place that they can go where they’re comfortable with the people that they speak to, the people deliver on their promises and if they can’t help they’ll tell you straight off that they can’t do it — they don’t change their word at the last minute or let you down. I think doing all these things has really helped the business to grow.
What are your plans for the year ahead?
I think we’d like to increase our turnaround times so that they are even faster. We can generally give an on-the-spot answer. So, that answer comes immediately and then, if the application comes in with the right supporting documents, we can get a loan fulfilled inside a week – around four or five working days. If you consider that a bank could take three months and then you still don’t know until the last few weeks if it’s going to get there or not, I think people really value the fast turnaround, it’s a real selling point. We’d also like to offer up bigger loans. We’re currently lending up to about $5 or $6 million, and I think we’d like to get that to about $10 million by the end of the year. It’s an interesting process. If you tell the market you write $100,000 loans that is what brokers will bring you. If you tell them you write $500,000 loans that’s what they will bring you. But you can’t say you do $500,000 loans, brokers bring them, and then not write them. Because then you lose your credibility. So, you have to be able to deliver on what you do. And that’s what we intend to do.
Commercial property finance specialist Thinktank moved up one place to take the title of best commercial lender. Jonathan Street, co-founder and CEO of Thinktank, reveals some of the commercial lender’s key highlights over the last 12 months. How does it feel to be considered the best commercial lender in the country by mortgage brokers?
It is wonderful to receive this sort of independent recognition of the sort of business we do and the relationships we have across so many brokers and we are very appreciative for such a resounding vote of support from the industry.
What has been your core focus over the last 12 months?
We tend to keep it fairly simple by maintaining focus on providing high quality service and outcomes to our brokers and their clients while always looking for new and different ways to offer further value where we can. We’ve spent a good deal of time working closely with our aggregators to deliver meaningful training, mentoring and upskilling to their broker members who feel they can benefit from what we can offer and thereby assist them to grow their business and revenues.
Have you experienced an increase in the number of brokers writing commercial finance?
The market for commercial finance is significant and offers brokers a great, ongoing source of potential business across their self-employed and SME clients. SMSF lending in particular has been a major area of activity with an increasing number of brokers building out a recurring stream of business.
What have been some of the biggest highlights for Thinktank over the last year?
Completing our second securitisation of $280 million in November was an important milestone and we’ll probably now follow that with a third later this year. Exceeding 35 per cent year-on-year growth in loan volumes has been a tremendous achievement for the business which included a new high when we settled 14 loans on the one day. Introducing a second relationship manager, Joel Harrison, in Melbourne and also adding five more staff to key positions in Sydney highlights the sort of growth we have been experiencing. And to now receive the best commercial lender recognition is a sensational way to top the year off.
How competitive is the commercial lending space at the moment?
It is always competitive though, for the time being, the intensity of competition seems to have ebbed slightly. With some lenders being more selective in the sort of exposures they want to take on and also pricing to reflect variations in the cost of funding capital, there seems to have been a little less aggressive energy around competition for new opportunities. That being said, all lenders still need to put their best foot forward on pricing, product, service and reliability to win deals and that still makes for a pretty competitive environment as we speak.
What opportunities does commercial lending offer for mortgage brokers?
Firstly, there are potentially significant additional and rewarding revenue opportunities. With up-front commission of up to 1.0 per cent and trail up to 0.50 per cent, commercial lending can be lucrative especially when considering average loan sizes are roughly double the typical home loan. Secondly, and perhaps just as importantly, it is a direct way to deepen and broaden client relationships by becoming closer and more valuable to clients. By being able to service a client’s needs across more of their personal, business and wealth management interests, brokers become more essential and have a more natural position in which to maintain, and defend, those relationships for longer.
What are your key priorities over the next 12 months?
Our priorities will see us enhancing our platform of education which is fundamentally predicated on providing relevant information and insights to help brokers identify, capture and convert more business opportunities. The year ahead will see the launch of a series of strategy sessions intended to solicit market feedback and suggested enhancements on product development. We will also be continuing on our expansion path by adding headcount in our Melbourne division and we are excited to announce we will be opening a Brisbane office in the next quarter.
Non-conforming specialist Bluestone Mortgages was recognised by brokers for its product and service offering. Bluestone’s national sales manager Royden D’Vaz explains why the group is sticking to its niche of providing specialist solutions for self-employed clients. How does it feel to have brokers rate you the best specialist lender in the country?
I’m proud to be part of a business that has progressed so well. If you look at last year’s result [when it was ranked 5th] it’s a massive leap. We are extremely proud of that. From a business point of view, it vindicates the strategy that we have put in place. Specialist is the area that we play in. That is our strategy. We don’t want to get distracted by doing other things. We are very excited and looking forward to the next 12 months. We won’t rest on our laurels. We will keep doing what we do best.
What role does education play in Bluestone’s offering?
We like to show brokers the opportunity that exists in this market. If you look at our marketing over the last 12 months it has all been about showing brokers the size of the opportunity for specialist lending. Our product manufacture has been linked to that, concentrated on that self-employed piece. It is not so much about education. It is more about removing the fear and uncertainty and the doubt that brokers have around specialist lending. It is about navigating brokers through the credit process. It is all well and good educating brokers about what is available to them, but it is more important to guide them and support them when they get that specialist deal, because they don’t see them that often. Guiding brokers through the process is critical. Education needs to be at the point of sale. We have increased our BDM team on the ground so we have the capacity to provide that support.
How does Bluestone use broker feedback?
Everything that we do comes from our feedback from the field. Whether that is through our BDMs and what they hear from brokers or through chatting with brokers directly. We went around the country last year and did what we call boardroom lunches. We got some of our top brokers in the room, grabbed some lunch and got their feedback on what we were doing well, what was working, what wasn’t and what we could improve on. The resounding feedback that we got from all states was that the ability to talk to the underwriters directly was a major positive. They loved that – to have that direct contact with the decision makers. Getting the feedback from brokers is one thing but actually doing something and executing it is another. We are really happy that we concentrated on doing that and giving the brokers that support. Feedback from brokers helps us continually improve and develop our business.
Has the specialist lending space become more competitive over the last 12 months?
The other players in the market have done a great job giving this segment a bit of profile. There is some crossover in what we offer and what they offer. But I think there is enough business out there for everyone. It will come down to the relationships that BDMs have with individual brokers. There will be competition and it is healthy – it keeps us all on our toes. But I don’t think the competition is any more than it has been previously. If anything, I would say the market has grown. I don’t think we have taken market share from the others. The other thing is the market in the prime space has diminished a bit. In the past brokers have had so many deals on their desks that they have been a bit busy to look at the deals that fall outside the box. Now it is becoming more and more difficult to get leads into their pipeline and specialist lending is a great diversification strategy.
What are some of the key priorities for Bluestone over the next 12 months?
We will continue to gather feedback from brokers. We will also continue to grow our BDM team. We want to continue to come up with more products to help self-employed customers. Growing the profile of the business is another key priority. Showing brokers the opportunity that exists in the market and helping them seize that opportunity. We want brokers to know that we are the speciality lending experts and if they see a specialist deal they know who to call.
NLG Leasing, which provides outsourced asset finance aggregation and referral services for financial services professionals, came out top of the crop in the Equipment, Leasing and Business category of non-bank lenders. NLG’s director of aggregation services, Frank Crombie, reveals why he thinks brokers rate this company over others. How do you feel to have won this award for a second year in a row?
Last year, we really saw it as a great honour to have won and to do it back-to-back is great. I’m really grateful. We have a great, supportive group of brokers who clearly enjoy what we do and get out there and vote for us so we’re honoured to have such great people to work with. It’s awesome.
How have mortgage brokers taken to asset finance?
Our business has been in this space for three and a half years and it’s a business that was built by brokers, for brokers. We now have about 600 accredited brokers. When we were first anticipating this space, mortgage brokers would turn their nose up at asset and equipment finance and vice versa so there were lines of delineation between one side of the business and the other. Now there is much more diversification and those lines have been blurred and we’re seeing a lot more mortgage brokers enjoying that diversification of alternate revenue streams.
Why do you think brokers value NLG Leasing?
One of the big pieces of what we do, and I think adds enormous value to our business and their business, is the education piece. Our back-end support and scenario support is one of the areas that we saw as key to a broker being able to have a conversation with their clients and not feel abandoned. We have constant conversations with them about scenarios and identifying opportunities and what to do next and what to look out for, so we task that. A mortgage broker is data based, is client based, that’s the asset that he’s building up so he can’t afford to ruin his reputation. We’re saying ‘you don’t need all the answers to all the questions. You just need to know where to go to get those answers. And that’s through us.’ We help brokers through our BDMs and through training days, which we run most days.
What plans do you have for the year ahead?
We’ll be looking at our internal processes and how we can improve turnaround times going forward. I think we spend quite a lot of time putting together a good and diverse lender panel so we want to make sure this year that the support and education continues. One of the objectives that we have is to go back over our database and revisit those brokers who are perhaps not as active as they could be and help support them in the process — find out what they need. Rather than being reactive we want to be proactive about assisting them to identify those opportunities.
Despite being a relative newcomer to the lending scene, three-year-old company Moula has made its mark in brokers’ minds through its cash flow and debtor finance offerings. Moula co-founder and CEO Aris Allegos talks to The Adviser about how they did it. Why do you think Moula won this category?
For us, we tried to provide a product to market that is a trusted and responsible lending solution and one that brokers specifically can offer alongside their more traditional lending products. I think the two things that resonate are the transparency and speed of loans. Transparency means that they know they are getting a price that is commercial and is through a lending platform that they can trust. And, getting funding into a somewhat convoluted trust structure within 24 hours is something that typically floors brokers and customers at the same time. We have massive customer advocacy because of the turnaround times. We’ve worked really hard to ensure that our product has been built with respect and to win an award like this is a reflection of the effort that we put into that.
What role does broker feedback have on the company’s plans?
The value of feedback is immense and benefits businesses like ours which is relatively new — we’ve only been lending now for about three years. We have built our platform effectively from the ground up so there are no legacy systems. We made a call very early on that we wanted to build the platform end-to-end and very much in-house so, accordingly, the evolution of that platform is very iterative… Whatever we’re hearing we’re trying to adapt and iterate so that the offering out there is best in breed and best with respect in fulfilling the specific requirements of those brokers.
How do broker channel customers differ from direct customers?
Within our business, we’ve maintained almost a 50/50 split between channels i.e. broker and direct. We’re ambivalent in respect to where business comes from. So, that 50 per cent is a growth opportunity for the brokers. Those guys should be channelling into that market, the direct market — the same as they did with residential mortgages 20 years ago — and taking that for themselves. If anything, what we find through the broker channel is that there is a lot of pre-qualification going on. So, the broker channel provides an opportunity for us to take leads that have been through some sort of sanity check and accordingly conversion rates are a lot higher.
Do you have any new products or services coming out this year?
Also, the loan size is typically higher through the broker channel, and by virtue of being a bigger ask, the situations are also typically more complex. Even though we are using technology to provide rapid fulfilment of loans, it doesn’t change the fact that businesses can be quite sophisticated in terms of how they are set up. Accordingly, brokers enable us to have a discussion with the customer that has one of these convoluted structures in a more efficient manner.
Obviously, the broker understands the situation they are in, they have all the relevant information that we are legally required to ask for, so that we can do a proper compliance check. Ultimately, we have a large proportion of business that comes through where the situation isn’t vanilla and the broker is typically in the best position to be able to then manage the process through a platform whether it be ours or anyone else’s.
We’ll be launching the next generation of our broker platform in April. That will be a pretty sophisticated referral platform that brokers will be able to utilise to do a lot of interesting stuff – not just refer loans but market into their database and utilise our internal tools to price and assess loans. We’re trying to utilise technology to empower the broker community. But then similarly, we want to be in the position where we can offer more than just the unsecured type capability, so we have other products that we envisage presenting to the market going forward like line of credit-type overdraft facilities.
"THE BROKER CHANNEL PROVIDES AN OPPORTUNITY FOR US TO TAKE LEADS THAT HAVE BEEN THROUGH SOME SORT OF SANITY CHECK AND 'ACCORDINGLY' CONVERSION RATES ARE A LOT HIGHER"