Selling non-bank products doesn’t have to be difficult, provided you follow these five basic steps ...
A majority of brokers believe non-bank credit policy is complex and confusing and as such, they are hesitant to write non-bank products.
While there is no denying the Australian non-bank lenders’ product suite is a lot broader than that of the majors, this should not be considered a negative thing.
In fact, it should be seen as a positive, according to Homeloans’ Greg Mitchell.
Many non-bank lenders are funded by a variety of banks, says Mr Mitchell, and while this can make their product proposition a little confusing, ultimately it helps to create a “wide and flexible” suite of products.
“Non-banks have a lot to offer,” he says. “We can not only cater to vanilla home loans, we also have a lot of niche products in our suite.
“We have a lot of prime and near-prime mortgages, as well as non-conforming and specialist lending products. We can basically cater to every borrower in the market”.
On top of that, says Mr Mitchell, non-banks are very aggressive in their pricing and can easily go “toe-to-toe with the majors”.
“We are very competitive on price because we understand that we have to be.
“At Homeloans, we understand that our products have to be competitive in terms of pricing and features, otherwise we don’t have anything to offer our broker partners,” he says.
However, Mr Mitchell accepts that many brokers can find the non-bank proposition confusing.
“Before brokers use a non-bank lender, I think they often look at us, see how many products we have and think that dealing with a non-bank is too hard,” he says.
“They become overwhelmed by our product offering and believe that writing a mortgage will take too much time and effort.”
But of course, selling non-bank products doesn’t have to be put in the ‘too hard basket’.
There are five easy steps brokers can follow to ensure they can sell them with ease.
Move #1: engage your BDMS
If a broker wants to sell a non-bank product but is worried they are not familiar enough with the lender’s products and policies, they should engage their BDM.
As Liberty Financial’s national sales manager, John Mohnacheff, explains, BDMs are critical to the success of non-banks.
“I can honestly say that if Liberty did not have a BDM force – which is currently 40 strong – we would be absolutely and completely irrelevant,” he says.
“The only way we can get cut-through is by having more soldiers on the ground. Business walks into the banks, nothing walks into ours. We have to charge and battle. We have to invest heavily in our BDMs. We want the brightest, the best. BDMs are the cog – they are our window to the world.
“They will help brokers understand which products may be suited to their client. On top of that, non-bank BDMs strive to be more than a conduit for information, they strive to be a trusted adviser – someone who can help their brokers take their business to the next level.”
Mr Mohnacheff says brokers who engage with their BDM will find the non-bank proposition less confusing and will see that these lenders really do offer solutions for all occasions.
Move #2: know your client
Once a broker has established a strong, trusting relationship with their non-bank BDM, it is important they understand their clients and their needs.
What do they want from you? Are they after a non-conforming, low doc or specialist mortgage and does a non-bank have a product that can cater to their needs? Do they want a home loan or an investment loan? Perhaps they are also after car finance?
Once a broker has clearly identified their client’s preferred financial path, they can start thinking about which products/lender might best suit their needs. Perhaps they don’t want to deal with the major banks – research by Roy Morgan shows customer dissatisfaction with the majors is rising month on month.
“I truly believe that if brokers take the time to explain that there are companies out there that are genuine alternatives to the banks, with great products at great prices, most people would be happy to be aligned with them,” says Mr Mohnacheff.
“If you can compare a major’s product beside a non-bank product, borrowers will be more than happy to use a non-bank lender.
“It is all about positioning the products in the right light.”
Move #3: embrace marketing tools
As most non-banks do not have strong consumer brands, it is fair to say most borrowers are unlikely to know of the lender the broker is trying to sell.
However, Advantedge’s Brett Halliwell says brokers should embrace several marketing tools to help educate the client.
“If brokers use point-of-sale marketing tools, they will help their borrower feel more comfortable with the idea of being put in a non-bank product,” he says. “Show your clients websites and brochures that they can look at in their own time.
“Once they see that the lender you are trying to put them with is backed by a reputable funder, they will be more than happy to progress.”
Move #4: use their language
In some instances, a major’s prime product won’t be the right product for a borrower.
They may have a few blemishes on their financial record, they may be self-employed and not have their current financials. At the end of the day, there are a variety of reasons why majors may choose to decline a loan.
If and when this happens, brokers may choose to put their clients into a non-bank product.
Pepper’s director of sales and distribution, Mario Rehayem, encourages brokers to have an honest “chat” with their clients before worrying them with non-bank jargon and the spectre of slightly higher interest rates.
“Let them know the reason why they have been declined and then talk about other possibilities,” he says.
“If a client indicates that they are hesitant to be put into a non-bank loan, show them why the non-bank lender’s product is right for them. Talk to them in a way they will understand.
“Don’t discuss interest rates, discuss payments. If your client gets paid once a month, then tell them what their monthly repayments on the mortgage will be.
“Once they see that they can service the loan, they will be more comfortable progressing through to application and settlement.”
Move #5: always diversify
That said, a broker will, of course, find it very hard to sell a non-bank product if they don’t include these lenders in their discussions with clients.
Liberty’s John Mohnacheff says when brokers are discussing the various product options with their clients, they should always include a non-bank lender.
“Our research suggests that when brokers show consumers real choice, they take it,” he says. “Instead of highlighting CBA, ANZ, NAB and Westpac, try putting another lender on the screen. Show them real alternatives. After all, that is the job of a broker.”
Mr Mohnacheff says brokers who embrace non-bank lenders will find that their business benefits as a direct result.
“Non-banks will bend over backwards for their broker partners. So, if you support us, we will support you,” he says.
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