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Third-party banking has well and truly hit the mainstream in Australia with close to 50 per cent of all mortgages originating through a broker. This will certainly continue to grow in coming years, but while the industry focuses on growing its share of residential loans, a potentially greater opportunity is in the offing for brokers.
Industry figures show that more than $10 billion of asset finance and approximately $30 billion of commercial lending is done through third-party channels. Asset finance and commercial lending have become too big to ignore.
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There is a golden opportunity for brokers to diversify and increase the size of their loan portfolio outside of traditional ‘bread and butter’ solutions by offering asset finance and commercial lending to small businesses – who can often be an existing client.
Interestingly, many commercial and asset finance brokers have already picked up on this diversification theme and are increasingly looking to meet the personal home loan and investment needs of the business owners they advise, rather than referring these clients elsewhere. These brokers are creating mortgage capabilities within their business or employing mortgage specialists to offer a more diverse service to their client base.
Traditionally, small business owners have turned to business bankers for their financing needs; but with 2.8 million small businesses in Australia and only approximately 5,000 business bankers, getting access to experienced business bankers has become increasingly challenging.
As such, more and more business owners are looking to experienced brokers to package financial solutions for both their business and personal needs.
With the right broker, business owners can not only get a tailored package, they get options in offers and structures from different lenders.
Extending credit advice and services to businesses presents a huge opportunity for brokers to add value to the customer experience. The same aspects of the broker offering that residential customers are increasingly seeking out – quality advice, personalised service and specialist product knowledge – are also factors that business owners are finding difficult to access in an online world.
Many small business owners also already have a pre-existing broker relationship through their residential mortgage so extending this conversation by anticipating other financial needs is often quite logical.
It can often be daunting for brokers to think about expanding their business model into commercial lending, as they may not be confident about providing such specialist knowledge in an unfamiliar field.
However, the industry is starting to catch on by providing greater support, so there are no excuses. The MFAA is holding info sessions to introduce asset and commercial finance to residential brokers. Your aggregator also plays an important role.
At FAST, we actively help brokers introduce other services into their business. For instance, FAST Partner Planner is a referral model that links brokers with qualified financial planners, enabling FAST broker partners to extend financial product advice and services to their customers. Through this model, brokers don’t have to employ a financial planner or invest time in training and qualifications, ultimately saving them significant costs.
When offering commercial and asset finance solutions, it’s critical to consider the whole picture. Brokers can add more value for business owners by anticipating their other finance needs, such as protecting and growing their existing capital.
As the shape of the mortgage broking industry changes, so does the role of the mortgage broker.
There is an increasing opportunity for brokers to diversify from residential loans to have ‘whole of wallet’ conversations with clients. Small business is the lifeblood of the Australian economy – many broker clients are likely small business owners who don’t know the full banking services a broker can offer.
By being equipped to have a conversation beyond a residential loan, brokers can provide an even higher level of service and significantly grow their business. Those who don’t risk shooting their business and themselves in the foot.
