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Non-banks winning back market share

by Staff Reporter12 minute read
The Adviser

Jessica Darnbrough

Proving they are not out of the game, Australia’s non-bank lenders are clawing back volume from the nation’s leading lenders.

According to the Australian Mortgages Monthly Wrap, the banks’ share of owner occupied loans decreased 0.5 per cent from 91.7 per cent in April 2011 to 91.2 per cent in April 2012.

While the decrease is marginal, it is a good sign for Australia’s non-bank lenders who have struggled to find their place in the market in years following the Global Financial Crisis.


Since the onset of the GFC, Australia’s non-banks have lost considerable market share to the banks, with many borrowers believing the banks are a “safer” option.

In addition, tighter funding conditions has, in the past, prevented the non-bank sector from competing on price.

And while for many non-bank lenders this is still the case, the sector is optimistic that it can continue to snare market share away from the banks so long as it continues to focus on its point of differentiation.

“Non-banks always talk about service, but what is that?” National Mortgage Company’s chief executive, Angelo Malizis said at a recent non-bank roundtable in Sydney.

“We need to show brokers exactly what our service proposition is so that they feel comfortable sending us business. We cannot compete on price with the majors all of the time, but we can certainly beat them on service. To do so, however, it is critical for us to define what service means.

“Customers are fickle – customers are chasing rate – so we need to really push the service proposition. We need to show them that they can have deals approved within 48 hours and that their customers can receive the best post-settlement service there is.”

But while Mr Malizis is confident the non-bank sector can grow its market share further still in the coming months and years, it seems not everyone is quite as bullish.

RFi director and author of the Australian Mortgages Monthly Wrap, Alan Shields, said the non-bank sector is unlikely to grow its market share much more.

“Banks’ share of owner-occupied loans is likely to remain steady in the future, with entrenched consumer perception that larger financial institutions are safer.”

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