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Using the non-banks enables brokers to diversify their product offering without having to look further than their current lender panel
=Diversification doesn’t mean having to become a jack of all trades.
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Rather, it can just mean saying ‘yes’ more often by being able to fully utilise the lenders on your panel and learning more about their product offerings. Pepper’s director of sales and distribution, Mario Rehayem, says he hears plenty of brokers claim they rarely have a loan application rejected. However, he urges those brokers to consider how many times they’re saying ‘no’ at interview stage.
“Once you look into it, you are actually able to accommodate more customers by using non-bank lenders,” Mr Rehayem says. “You actually write more business and it’s a win-win situation.
“The customer gets a win because you’re not saying ‘no’ to them just because they’re not a prime loan candidate or they don’t fit traditional lending criteria. And it’s a win for the broker because there is no
broker in the country who is going to tell you they don’t want to expand their business.”
Mr Rehayem says many brokers are looking to diversify into insurance and other product areas, but there is also a simpler approach for those who want to stick to what they know.
“Insurance and the like are all well and good, but that’s taking the broker outside their own skill set. What a Pepper product does for brokers is put them in their element so they’re still doing what they do best, which is offering home loans, doing interviews and collating all the information,” he says.
“We’re asking them to write a normal home loan with an edge – and that edge is allowing them to be able to expand their product specs just outside the norm, outside the traditional lending criteria.”
Offering options
For brokers who want to break into new product areas and expand their product offering, the non-banks are a great place to start, according to Liberty Financial’s national sales manager, John Mohnacheff. “Who brought product diversification to the broking sector? Who introduced asset lending? It was not the banks. They did not bring those distinct channels to the broker channel,” he says.
“Who brought SMSF lending to brokers? The non-banks. Every innovation you can think of has been brought by the non‑banks.
“If you want choice – if you want competition and innovation – you have to use the non-banks.”
Iden director Barrie Gaubert adds that it’s important that brokers take hold of these diverse options – otherwise their business and even the industry could suffer.
“If you only shop at Coles and Woolworths, you are only going to have Coles and Woolworths to choose from. If you don’t give the alternatives a run, you are going to end up without alternatives,” he says.
Mr Gaubert says the broker proposition, much like that of the non-banks, is built on choice and alternatives. If brokers embrace the non-bank lenders, he says, they will have a stronger and more diversified business platform.
Sintex’s general manager, Cathy Dimarchos, says once brokers decide to embrace this strategy, in most instances, they won’t even need to spend much time prospecting for new clients.
“I have always said: start with your existing customer base and keep things simple,” she says. “Most brokers have clients who are self-employed and potentially running their own business.
“Start with them. Let them know that you can offer alternatives for not only their home loan but also their commercial loan or business loan.”
From there, according to Ms Dimarchos, it’s just about using your existing lender panel to its full capacity and catering to more of your clients’ needs.
Stronger business
Mortgage Mart’s Doug Daniell says the future sustainability of the industry will depend on brokers having strong, diversified businesses with solid non-bank relationships.
“Traditionally, non-bank lenders are innovators with new products because they tend to be able to move quicker than the majors,” he says.
“Non-banks can also help a broker expand their business and their bottom line because non-banks have more than one source of funding, which ultimately means more than one credit policy.”
Without the non-banks’ innovative products, the industry would not be able to help as many borrowers – something that would not be good for the industry, the lending landscape or brokers, according to Mr Daniell.
Ballast chief executive Frank Paratore says working with the non-banks and taking full advantage of their product offering will ultimately help brokers build stronger businesses.
“These days, customers and consumers are interested in paying off their loan and looking at the bigger picture of their financial needs,” he says. “They aren’t as concerned about who their lender is and whether or not they have a branch presence. It’s about the solution.
“If brokers can offer their customers more, say ‘yes’ more often and take care of their financial needs, now and in the future, then they will have a strong and stable business platform. Non-banks and diversification can certainly help them achieve this.”
