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Funding challenges and cuts to commissions have left many brokers feeling disillusioned and looking for alternative income sources.
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Enter white labelling, which allows originators and brokers to brand their own products and control the pricing offered to clients as well as the level of commission they earn.
The ability to control his commissions – as well as the service he is able to deliver to clients – is one of the main reasons Greg Collins was attracted to white labelling.
According to Collins, a director of NSW-based brokerage First Point, having control over the entire loan transaction from beginning to end means clients can have “the whole deal signed, sealed and delivered within five working days”.
“For an extra couple of basis points on the interest rate, we can deliver a ‘whole of service’ approach that our customers truly appreciate,” says Mr Collins. “The customers can get small bank treatment while retaining big bank confidence.”
Brett Hartley of MAS Wholesale agrees that the ability of brokers to deliver an end-to-end service means being able to provide a better customer service experience – and have greater control over the client relationship.
“Brokers are kidding themselves if they believe they are their client’s number one point of reference,” Mr Hartley says, adding: “If something goes wrong with a loan – the client will almost always contact the bank first, which destroys the role of a broker.”
By having more control over the process, brokers are also able to deliver better servicing times, a key broker value proposition.
In the past, brokers have watched on helplessly as lender turnaround times have blown out to up to a month.
At the start of June, Heritage Building Society, for example, decided to withdraw its basic variable and professional package products from the broker channel until servicing times improved. Three months on and the problem still hasn’t been resolved – highlighting the level to which some lenders are struggling to meet broker servicing needs for some products.
As well as improved servicing times, white labelling also allows brokers to set their own commission structure and introduce new profitable revenue streams with no claw backs, Mr Hartley says.
Mr Hartley also believes brokers or mortgage managers with ‘white label’ products can choose to take a greater upfront commission or no upfront and a trail – another advantage of white labelling.
With white labelling, a broker owns the client in the true sense. As Sintex’s general manager Cathy Dimarchos observes, white labelling allows mortgage managers to “manage the client right through from cradle to grave. It gives them the opportunity to service their clients and nurture them”.
Ms Dimarchos says Sintex – an Australian owned company that specialises in commercial wholesale funding – restricts its lending to those with a proven track record in the industry.
“Some lenders do not have the necessary facilities or infrastructure in place to sell their own ‘white label’ products,” says Ms Dimarchos. “They have to be able to provide their clients with all the customary bells and whistles that come with bank products.”
Ms Dimarchos says the control a white label mortgage manager has over the loan process and the client relationship is good for both broker and client. For example, the client can decide to keep their home loan separate from their commercial loan – a comforting thought for investors because as soon as one loan is paid off, that property is secure and stable, irrespective of anything that might happen to the other loan.
If an address needs to be changed, the mortgage manager or broker is also responsible for changing it. Having that responsibility can be another major benefit associated with white labelling, according to Ms Dimarchos, adding that another is in the branding opportunities it presents to commercial loan providers.
Just like Aussie and Wizard have done, white labelling allows mortgage originators and brokers to build up their own brand presence.
Such is white labelling’s growing popularity that Sintex has recorded a sharp increase in the number of enquiries about white label products over the last few months.
While Ms Dimarchos says the interest is largely due to the business opportunities white labelling provides brokers, it is also the result of continued economic uncertainty.
“The banks are providing short term solutions for long term commercial lending. Sintex on the other hand offers brokers long term solutions and stability in a time of economic uncertainty.”
