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Although diversity is extremely important, most lender panels look largely the same; it’s other things, like white label offerings, that can set an aggregator apart
Access to a diverse lender panel is exceptionally important for brokers since it gives them access to more products – and therefore more solutions – to satisfy their clients’ needs.
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The more solutions a broker has to hand, the greater their value proposition.
Very few brokers can survive simply by servicing basic prime loan customers and as such, most brokers need access to a variety of options, such as specialist and short-term lenders. The larger and more diverse the lender panel, the larger and more diverse the potential client base.
According to John Kolenda, managing director at Finsure, access to a diverse panel is necessary for brokers to provide top-class service and to fully meet their clients’ needs. “I think the underlying value proposition for customers is the fact that brokers actually have access to a broad panel of lenders and that they can actually identify the customer’s needs and match up products that are going to be most appropriate – it’s quite a valuable proposition,” he says.
Brendan Wright, chief executive of FAST, adds that access to diverse lenders and products is fundamental to the health of the third party channel.
People use brokers because of their access to and knowledge of a diverse range of loans. Brokers who offer only a few products from a select few lenders are not much more attractive than a bank branch.
“For a broker’s value proposition, the role of an aggregator is to ensure they have a lender panel that enables them to meet the needs of their clients,” says Mr Wright. “Brokers having access to a lender panel across residential, commercial and asset finance in the view of FAST is critical.
“It goes back to enabling brokers to meet the needs of their clients, so majors, small lenders, niche lenders – including white label products – all provide different types of solutions, pricing options and risk appetites, which gives the broker the right type of options to meet the differing needs of their clients, whether they be first home owners, investors, upgraders etc.”
The rise of white labelling
While the importance of having a large, diversified lender panel is undisputed, some in the industry believe it’s no longer a point of differentiation between aggregators. In fact, most groups have very similar lending panels.
Many now believe the group’s white label offerings are more important than the number of lenders on the panel. Ballast chief executive Frank Paratore is one industry leader who subscribes to this view.
“The lender panel itself is probably becoming less and less of an issue these days because I think that most of the aggregators now have virtually all of the lenders on their panel,” Mr Paratore says.
“I think that where a few differences are appearing is probably on the mortgage management side of things with the white labelling products now on offer.
“We have our own product, Ballast Lending Central, that is only available to Ballast brokers – it’s not available to the market in general.”
Mark Hewitt, chief executive of AFG Home Loans, agrees that white labelling is now vitally important to an aggregator’s value proposition.
According to Mr Hewitt, the right white label product can prove to be very effective in securing a strong client-broker relationship.
“A white label offering, especially one that allows a broker to utilise their own brand, provides a broker the ability to enhance the affinity they have developed with their customers and protects the customer from external lender marketing,” he says.
“Ideally, the broker should be looking for a solution that has them as close to the funding source as possible. Some aggregator white label programs are re-badged mortgage manager offerings and these severely dilute the level of influence a broker has over the customer experience.
“Look for a provider who has their own secure funding source and is not totally reliant on others,” says Mr Hewitt.
Also, different aggregation groups target different borrowers with their white label products and so a broker must fully understand their aggregator’s offering.
According to FAST’s Mr Wright, it is important for aggregators to provide all necessary information and training around their white label offerings to ensure brokers can identify the clients who will benefit most.
“It is critical that its value proposition and the type of borrower it’s suited to are clearly articulated, and that it’s priced and serviced in an efficient and effective way so the broker can deliver outstanding service to their clients and meet their needs,” Mr Wright says.
Many aggregation groups will in future be competing for broker clients based on their white label offerings. It is an area growing in popularity and a space ripe for innovation.
Ballast’s Mr Paratore says the company is already looking to expand its white label offering.
“One of the things we are looking at is to be a little bit different – we don’t want to just be a ‘me too’ lender in regards to our white label offering. The products that we are now looking at are centred around self-managed super funds,” Mr Paratore says.
“That is really where a lot of our passion lies – with the financial planning and the super as well as the aggregation – so we probably understand the superannuation and the SMSF industry better than a lot of others and a lot of our clients have an extensive background in these fields,” he says.
