How non-banks provide flexible, competitive solutions

Q. What are some of the ways non-banks provide flexibility for customers?

Traditionally non-banks have been used or at least referred as a second choice to borrowers. Nowadays however, with flexibility across product offerings compared to what they used to be, brokers are looking toward non-banks as a first choice.

This may be the case when the broker is assisting the borrower in forward planning and it might be clear that the borrower doesn’t fit with the requirements of traditional mainstream lenders from the outset.

In many cases, rather than a non-bank lender being a plan B, now they end up being a plan A. The fact that they’re more flexible and they provide a larger range of products, actually helps their customers keep ahead of what they need to object to, compared to what it used to be in the past.

In many cases, rather than a non-bank lender being a plan B, they end up being a plan A
Dean Koutsoumidis, managing director, Equity-One

Q. What trends are you seeing in non-bank finance at the moment?

Driving a lot of the change we are currently seeing in the finance industry is the need to keep up with technological advancements. We’ve seen success from leveraging technology in instances of easy online application submissions and unique portal accounts for our investors. However, a challenge for the industry soon will be how to best utilise AI. There will be a lot to learn if the time comes when non-banks fully embrace AI, but may also clear the way for better internal working relationships, work/life balance and consistency across performance.

Q. What forces have shaped these trends?

Working from home allowances, a new generation of workers who want to see a better work/life balance, and the appetite for personalised financial services across a diversity of clients are just some of the factors shaping emerging and current trends.

Q. What qualities make non-banks easy to work with? How do these qualities help brokers?

Speed, efficiency and flexibility go a long way when clients are eager to settle and brokers are searching to find the best deal. Uncomplicated low-doc requirements and voice-to-voice dealings are two of the strongest features we stick by to keep the process neat and simple. Starting that back-and-forth conversation with the broker from the outset means we can workshop a deal as soon as possible. Equity-One’s extensive knowledge of the industry, specifically the broker community makes these interactions easier. It’s about making the process as smooth as possible, where possible.

Q. How can brokers use non-banks to find solutions for SMEs?

Most SMEs will have short-term financing requirements at some point in their business life. We find that brokers may only need a cache of three or four reliable non-banks to keep as an extra string in their bow. Non-banks are often regarded as the second option when a mainstream lender cannot help, or help in time, however with a bit of forward planning, brokers may find that non-banks are the better first option, given the circumstances of their client.

Q. What innovations have non-bank lenders embraced?

Certainly all things digital. Non-banks try to keep things simple and efficient with their brokers and borrowers. I believe that digitisation of processes can greatly contribute to creating that outcome.

Q. What is the opportunity for brokers to write non-bank finance? And what do you see this space doing in the future?

Brokers focus on procuring the right outcome for their clients. As they understand their clients’ needs, a non-bank option would form part of the strategy discussed. Whether they do a lot of non-bank work, or the occasional transaction, a good relationship with a couple of non-bank lenders will be very helpful to a broker when considering the best solutions for their clients.

Q. If they aren’t already, why should brokers write this type of finance?

It is a way to keep their connection and relevance with their client. It is a missed opportunity if brokers do not offer non-bank options, because when the borrower is bank-ready once again, they will still be the first in line to write that new deal.

How does Equity-One provide fast and effective solutions for brokers and borrowers?

The way we’ve approached borrower outcomes has remained fairly static over the last 30 years. Often borrowers who needed a non-bank solution tended to only need a short-term solution. Now, short term can mean anything from two months to two or three years. Ultimately, the goal for the borrower is to eventually land in a major mainstream lender and eventually secure that long-term loan.

The way we try to help borrowers is by offering a flexible, competitive second option that allows them to sort out whatever they need to at the time, but doesn’t penalise them, or make it difficult for them to eventually switch over to another product when the time is right.