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Astute Financial’s Sam Ayliffe says the non-major lenders are important to the industry since they create competition, which results in better value and service for customers
Why are the non-major banks important to the broker proposition?
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Australia is actually quite lucky to have four main banks with different policies, pricing and packages. However, having alternatives in the form of the non-majors who offer a point of difference is important to allow competition to remain strong.
What do the non-majors offer brokers and borrowers?
The non-majors offer an alternative way of banking. They offer great, fast processing – although the majors seem pretty good at that too. The non-majors offer great access to credit assessors and tend to make consistent decisions which make the lives of brokers a lot easier. Some non-majors also offer great conditions such as unlimited ATM access (for withdrawals over certain amounts) and some offer lending on security that the majors might not like (eg. display homes, dual-key property, SMSFs).
Are clients comfortable taking a loan with a non-major bank?
Usually, yes. Often they have heard of them already, so the client feels comfortable. At the end of the day, they may even have some of their products and not know it (insurances, super, etc) plus it is the client that has the bank’s money after all – but they do want a trusted brand.
Is there enough competition in the lending market at the moment?
Yes, I think there is. There are plenty of options for consumers with the four majors, the second tier banks that are backed by the majors and the rest of the non-majors. If you look at the car industry, there may be less car manufacturers in the world than previously, but people still have plenty to choose from. While Ford owns several car brands there is still plenty of competition and I think it’s the same case in the banking sector.
What would you like to see from the non-major banks over the next 12 months?
I’d like to see consistency in pricing and better evolution of other banking products, such as credit cards. I’d like to continue to see consistency in credit decisions, which has actually been very good. I hope the non-majors keep broker commissions strong as the third-party channel generally offers these banks around 45 per cent of their market share while lowering their overall costs at the same time.
