In the first of a nine part series, Brendan Wright, CEO at FAST, outlines the opportunities to adapt and thrive through the commercial and business finance market , setting the scene of broking diversification and identifying the arising opportunities for the modern broker.
Last year in Australia approximately $16 billion worth of new home loans were settled by brokers each month. In the same time frame, more than $1 billion per month worth of loans were settled for commercial purposes or businesses. The growth in these two areas continues to be significant for brokers. Over the past three years, at FAST the growth in home lending deals settled grew by 20% per annum, averaging $1.3 billion settled per month. Commercial or business lending settlements have grown on average by 50% per annum and in 2015 FAST brokers settled more than $4 billion in business lending alone, and they are on track to settle more than $6 billion in 2016.
These numbers prove a point, one that we’ve been amplifying to brokers for some time now: for brokers to truly excel, they need to look beyond their bread and butter of residential loans. To put a long story short, residential loans and commercial loans needn’t be mutually exclusive, it’s an “and” story for brokers out there today.
Diversifying your services might sound daunting at first but what brokers often don’t realise is that commercial, asset finance and business lending isn’t a new phenomenon for brokers. In fact, it’s been around for the last 40 years and at FAST, we have a deep understanding of how brokers can tap into it. After all, we’ve been doing it since our inception, now over 15 years ago.
In this blog series, I’m going to help brokers identify different revenue streams, and show you how you can move from mortgages into business lending and vice versa. It’s actually a two way street as there are also plenty of commercial and business lending and asset finance brokerages that have recognised the value in meeting more clients’ needs by doing home loans as well.
Small businesses represent the backbone of the Australian economy. Accounting for 95-97 per cent of all Australian businesses, small-to-medium enterprises represent a significant opportunity for brokers to tap into. And with two million small businesses across the country, employing 49 per cent of the workforce, SMEs are one of the biggest opportunities for brokers to catch. At FAST we have the confidence to say that the brokers who can cater to SME needs, will be best positioned to lead the industry.
In this complex and ambiguous business environment, with more regulatory changes and economic uncertainty, brokers need to help their clients see the wood from the trees. It’s a highly regulated market but brokers shouldn’t forget the value they can provide to clients. The complexity of the market means that brokers have a real opportunity to guide them through it. In fact, domestic and economic uncertainty offers opportunities for brokers to help their clients see through the fog.
There is a real opportunity to tap into this through product and platforms. Lenders and aggregators are working on making it easier for brokers to lodge business lending applications through their respective platforms, in the same way that home loans work. I’m looking forward to sharing our developments in this area.
Whatever you do, the biggest mistake is to sit still, because if you don’t try and tap into this market, someone else will.
Brendan Wright will continue to help brokers across the country learn how to unlock their potential in this blog series.