Non-banks are often considered the innovators of the lending market – so what exactly can they offer brokers and their clients?
Brokers and the non-banks have something of a symbiotic relationship. Lacking the branch and brand presence of the big banks, many non-banks rely on brokers to reach customers and stay in business.
Brokers, on the other hand, rely on the non-banks to boost their value proposition and to help them cater to more borrowers.
In the past, some brokers have questioned the banks’ commitment to the third party distribution channel and whether they’re truly invested in its success. This rarely occurs with the non-banks. Brokers know that the non-banks are keen for their business.
Sintex’s general manager, Cathy Dimarchos, says everyone with a loan – whether it’s with a bank or elsewhere – has benefited from the non-bank proposition.
“The facts are simple: the non-banks have provided every customer of the banks and non-banks the benefit of lower interest rates, better service and more transparency and accountability,” Ms Dimarchos says.
“Competition is important irrespective of the industry and it is no different in the banking industry. It keeps everyone in check and ensures that the customer is always the winner.”
Ballast chief executive Frank Paratore agrees and says the non-banks are essential both to brokers and borrowers.
“The non-banks are without a doubt important to the third party distribution channel,” he says. “The whole broker proposition is centred around choice in the marketplace and we’d have a whole lot less of that if the non-banks weren’t around.”
Ms Dimarchos says the non-banks’ influence has transformed the industry.
“Let’s look back to when the non-banks entered the industry and the benefits that it brought along with it: competition, reduced interest rates and incredible customer service,” she says.
“As far as the non-banks being a genuine alternative to the banks goes, there is no doubt in my mind that the product offerings, flexibility in product and the rates are all a genuine alternative for customers.”
Innovation has therefore become the key draw-card for the non-banks.
MKM Capital’s credit and compliance manager, Mary McGowan, says the non-banks’ ability to be flexible and adapt to case-by-case situations sets them apart.
“The main advantage of the non-banks is their ability to think outside the box,” she says. “They drive innovation and flexibility. We can be more flexible because we look at each case on its merits and we ask questions about what they’re looking to achieve and how they’ve ended up here.”
Mortgage Mart’s Doug Daniell agrees and says the non-banks are nimble and responsive.
“Traditionally, non-banks are innovators with new products because they tend to be able to move quicker than the majors,” he says.
The non-bank proposition, he adds, is all about personal service and long-term relationships, of which the broker is an integral part.
“There is a direct accountability between brokers and the non-banks, which gets lost with bigger corporations,” he says.
This accountability is a key reason Choice Home Loans’ Leith Wickstein deals with the non-banks.
“They’re more responsive and you can talk to their credit people directly. Their credit teams and BDMs can help you get those flexible credit decisions over the line,” he says.
Mr Wickstein says, contrary to some brokers’ beliefs, most borrowers are more than happy to deal with the non-banks and any broker hesitant to deal with these lenders should look at their business model.
“If the product and process ts what the client is looking for, then it should be easy enough to sell or get across the line. The only time I ever have difficulty putting a borrower with a non-bank is if they want to have all their financial products with one institution – so their savings account, credit card and their loan all with one lender.
“But if they’re happy to split their banking across more than one lender, and the product and rate is right – then I never have a problem,” he says.
Sintex’s Ms Dimarchos says with their focus on innovation and service, brokers and non-banks can work together to find the best solutions for borrowers.
“Non-banks have a sense of ‘solutions focus’ and the desire to offer a product that will serve in the best interests of the customer. When you have a partner that gives you direct access to the people that make the decisions and these decisions are transparent in both the processand policy, it provides thebasis of a good, solid relationship,” she says.
Advantedge’s general manager of distribution, Brett Halliwell, says there are numerous reasons brokers should use non-bank products.
“Non-banks add diversity and choice to a broker’s lender panel. They give unique products that other lenders don’t provide,” he says. “Finally, they ensure competition by offering choices and other products that aren’t available through the majors.”
In this Broker’s Guide, The Adviser will look at the non-bank proposition as it stands today. We will also detail how non-bank lenders can help you expand your bottom line and diversify your business offering.
One of the key areas where brokers are unsure is ‘selling’ non-bank products without the backing of ‘brand awareness’ that comes with the major banks. In this guide we will thus detail the five steps to selling and explaining the non-bank proposition to suitable borrowers. We will also look at the importance of business development managers and speak to some leading aggregators about what is happening in this space.
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