Non-bank lenders: innovative solutions

“As multibillion-dollar institutions, the banks cannot efficiently provide the customised, responsive, flexible solutions of the non-bank sector,” says Ray Hair, general manager for national sales at Homeloans Limited.

Credit scoring is an example of systems and scale being applied at the expense of establishing and understanding a customer’s story, aspirations and capacity, he adds.

Furthermore, the non-bank sector generally has the people, experience and desire to provide solutions to borrowers who fall foul of the heavy production approach favoured by the banks.

Smaller non-bank lenders take more time to focus on the individual borrower and their own specific story.

“So, rather than being categorised as a particular type of borrower, every application is dealt with on a case-by-case basis,” says Royden D’Vaz, national manager
for sales and marketing at Bluestone Mortgages.

This can often result in a better solution for the customer. Cory Bannister, vice president and head of distribution at La Trobe Financial agrees.

For him the sector’s leading edge is driven by a hands-on approach to transactions: fast turnaround times, increased BDM support for brokers, and direct accessibility to the credit team decision-makers.

“Non-banks are often able to innovate and implement solutions for brokers much quicker than the major banks. At La Trobe Financial we provide flexible
solutions for brokers on the spot as our credit analysts and BDMs all have credit approval mandates. This is a powerful tool,” says Mr Bannister.

He says brokers and their customers appreciate the hightouch service that the non-bank sector provides.

“Often once a broker has dealt with a non-bank they will insist on dealing with them exclusively for future transactions,” Mr Bannister adds.

Worlds apart

Murray Cowan, managing director at Better Mortgage Management believes there is a world of difference between banks and non-banks in terms of service. The major banks, he says, tend to send everything off-shore and rely on overseas call centres to assist their clients, which is not always in clients’ best interests.

And then there’s the impact of technology.

“Technology plays a role throughout the loan application process; with brokers either submitting directly or by using ‘Apply Online’ via their own aggregation software,” says Resimac’s chief commercial officer Allan Savins.

But while technology helps by increasing efficiencies, there will always come a time when brokers or borrowers need to talk to an actual person. “This is where non-bank lenders really excel,” says Mr Savins.

Mr Cowan agrees, and adds that customers and brokers can usually speak to the same person every time they call, which is actually a bigger deal than it sounds. The person who takes the call will remember what is happening with the scenario from one day to the next.

Mortgage broker Nathan Daniell, managing director at Simplify Your Mortgage certainly endorses this. His clients raise a query with him directly and he then contacts his non-bank on their behalf.

“This may sound insignificant but when was the last time you called your bank, fumbled through their phone systems only to finally talk to someone who couldn’t assist after you have told them your name, date of birth and account number three times over?” he says.

Banks, like all big institutions, cannot provide a true personal level of service, says Mr Daniell.

“They may try but I have never experienced it. I have tried contacting a big bank on behalf of my client and was told, ‘Please get your client to contact us directly’.”

Positive impact

Another, not insignificant, value add for the sector is simply the ability to write more business, as non-banks give brokers access to a broader product range than the major banks generally provide.

“Ultimately this makes a positive impact on a broker’s bottom line,” says Mr Bannister.

Add to this is the non-bank sector’s overarching penchant to find ways to get to a positive outcome.

“Dealing with a lower volume of business gives us the opportunity and ability to look at every deal,” says Mr D’Vaz, adding that there is no such thing as a scorecard that restricts product choices or pushes the underwriter down a particular path.

And, with the non-banks, it’s personal. “Non-banks tend to get to know their broker and his or her business, resulting in them generally more prepared than banks to work with the broker on difficult loan applications,” says Mr Cowan.

The sector is very comfortable with the idea that each client is different and may require a niche solution.

“We never lose sight of the fact that there’s a real person at the end of the transaction and always aim to provide a loan approval as fast as possible,” says Mr Savins.

Mr Hair agrees. “Those brokers who forge a relationship with non-bank lenders have a business partner that will listen and respond,” he says, adding that the sector relies almost exclusively on brokers, so must find ways to add value to their business.

Choice and flexibility are another two of the non-bank’s key differentiatiors.

“One of the main areas Resimac can offer a solution to brokers is we are more flexible than the banks when it comes to our employment requirements and
the income we will recognise to service a loan,” says Mr Savins.

“In many cases we will even offer clients a rate discount for continued good loan conduct to reward borrowers for demonstrating perfect repayment history.”

This is particularly beneficial for short term self- employed borrowers.

Price and product

“While major banks clearly cater for the lion’s share of the market, it is important to note that non-banks also suitably cater for much of this business at a competitive price," says Mr Bannister.

That said, pricing is not always a factor as there are times when the non-bank sector cannot compete on price.

“In saying that, generally non-banks have a little more flexibility with funding options for their brokers and are able to assist with harder-to-place deals at reasonable rates,” says Mr Cowan.

This is because non-banks have access to more funding lines, but also because they have access to some products that the banking sector does not have.

While all non-bank lenders can generally source funding from a variety of sources and provide competitive pricing, each non-bank lender seeks to differentiate itself with brokers and customers.

At Homeloans, according to Mr Hair, it’s providing a range of products with a single application form.

Then complimenting this with ready access to BDMs and a credit team. It’s a solutions focused approach, he says.

And it is this solutions focused approach that attracts many brokers to the non-bank sector regularly – to the benefit of both their businesses and their customers.