White label lending - The real lending alternative

Borrowers now come to brokers seeking choice, guidance and – often – an alternative to the local branch of the bank. Being able to offer a white label product increases the available options, differentiates you from competitors and potentially widens your appeal.

White labelling also enables brokers to brand their own products and strengthen their relationships both with their clients and their aggregator.  

With a more active role in the lending process, brokers can thus have more control over their commissions and turnaround times.

Funding challenges and cuts to commissions have also served to increase the appeal of white label products for brokers looking to ensure the longevity of their business.

But as well as increasing brokers’ business and safeguarding their client relationships, white label products are a genuinely viable alternative to the majors.

In this report, The Adviser looks at the advantages of offering white label products, the products and processes involved, the skills necessary to succeed and the economics of white labelling.

WHAT ARE THEY?
Many brokers have spent years dealing with the major lenders and have thus become accustomed to the policies, procedures and processes involved with securing loans through these established institutions.

Indeed, many brokers are comfortable packaging and selling the mainstream products to borrowers.
With borrowers already familiar with the brands and propositions associated with the major lenders, a quandary can arise for brokers who already have a solid panel and who aren’t struggling financially.

Should they make the effort to break into this space?

White label products, however, should not be an imposition. Indeed, offering white label products is simply an extension of what they already do and can increase the profitability and stability of a business – even if it is already successful in its own right.

“It’s important to remember that white label products really aren’t particularly different to the products offered by the major banks,” Brett Halliwell, general manager, Advantedge Distribution tells The Adviser.

“In most instances, the products are similar in rate, features and structure – so from a borrower perspective, they stand shoulder to shoulder.”

ChoiceLend, for example, the white label product offering of Choice Aggregation Services, offers ‘Performance Plus’, with fixed or variable interest rates and ‘Equity Plus’, a variable rate line of credit facility.

Choice’s CEO, Stephen Moore, says that even though not all white label products are created equal, their similarity to mainstream products, combined with their competitive rates, serviceability and relationship management capabilities, make them something all brokers should consider.

SIMILAR, BUT DIFFERENT

Consumers now want to save money, and just as Coles and Woolworths have reaped the benefits of a switch in thinking from big brand names to home brand products, brokers can capitalise on the branding and potential profitability associated with selling their own products.

White label home loan products offer sufficient similarity to mainstream products to appeal to the borrower, but provide enough points of difference that brokers can use the offering to their advantage.

Despite the similarities, however, white label products do offer brokers some unique opportunities, including branding and more control over the process.

Smartline began offering a white label loan approximately 12 months ago, and has benefited from the additional branding. The group now offers its own suite of home loan products branded under the ‘Smartline’ name.

“There are numerous benefits in moving down the white label path,” says Joe Sirianni, executive director of Smartline.

“It’s a branded proposition, so you’re building greater brand awareness with your customer, greater loyalty, hopefully greater retention, more repeat business from the client, and a more personal relationship with your customer because it’s actually branded the same as us as a group.”

Despite connotations associated with ‘home branding’, David O’Toole, acting chief executive at FAST, is keen to remind brokers that in the case of FAST as well as other aggregation groups, the loans are backed by some big names.

“If you’re using the FAST white label, it’s our product, so you have a level of security there,” he says. “So they not only have our strength, but we’re backed by the strength and balance sheet of NAB.”

GROWING POPULARITY
Many borrowers don’t come to a broker set on securing a loan with one of the big banks; rather, they are looking for options and alternatives.

Mr Sirianni also thinks the increasing use of white label products is linked to a shift in the public’s perception of brokers.

“White label products are getting popular,” he says. “I think brokers too are becoming trusted advisers.”

In this sense, when brokers present the white label loan as a solution to a borrower’s needs, “customers are more than happy to accept it”.

“Brokers are constantly looking for a stronger customer relationship and white label products go a long way to empowering the broker in ensuring a positive customer experience,” says Advantedge’s Mr Halliwell.

By offering white label products as a genuine alternative to the mainstream banks, brokers position themselves as the primary contact and their aggregator as the key institution in the loan process.

Marketing is therefore simplified, and channel conflict reduced.

Brokers become less reliant on the banks and can focus on customer care and post-settlement follow ups.

“You can get better service with white label products,” says Mr Sirianni. “It’s more personalised, better service, quicker turnaround times, and a more solid relationship with the client.”

George Agoratsios, director of Build Wealth Finance, offers a white label product through FAST.

Mr Agoratsios believes the increasing popularity of these products is strongly related to what it can offer brokers.

“From a broker’s point of view, the remuneration is a lot more appealing than the mainstream lenders,” he says.

“Having the ability to speak to the credit team direct over the phone or via email also helps those ‘outside the square’ deals. The support you get from the BDMs is excellent as well.”

With so many benefits, and increasing market penetration, white labelling is a lending alternative that brokers should be considering.