Mortgage brokers to battle banks for 'wallet' share

by Adam Smith04 May 2012

“Share of wallet” is set to be the next battleground for brokers and lenders, but the two may be at odds on what the concept means.

National Mortgage Brokers managing director Gerald Foley has told the aggregator’s national conference in Hamilton Island that both banks and brokers must strive for “share of wallet” with every customer interaction.

“Share of wallet is going to become the bigger focus now, and that will become the dilemma for the broker/lender relationship,” he said.

Foley explained that share of wallet entailed servicing a client across a variety of different products, but said banks and brokers may not see eye to eye on how this share is divided.

“My share of wallet is quite different to your share of wallet as a lender, and that will be a dilemma that will cause a little bit of discussion and debate,” he said.

Whereas banks look to own a customer across a variety of proprietary products, Foley suggested that brokers would offer the same products to clients, but often from different sources.

“From the bank view, share of wallet is a client taking a loan and maybe one or two other products with the same lender. The broker share of wallet view is you come and arrange your loan, maybe insurance and maybe something else on the side as well, but not necessarily all from the same lender,” Foley said.

Foley commented that it was vital that brokers stay ahead of the curve in offering a variety of services to clients in an endeavour to carve out their own “share of wallet”.

“It’s not a matter of I’ll deliver you a loan and receive commission and the rest is a free kick. It’s not going to be that way, and brokers have to be in front of that and offer more than one product to the client,” he said.

“If it makes sense to use the same supplier, of course you do that, but it doesn’t always have to be that way,” Foley added.

Related stories:

Aussie's NMB buy just the beginning

Our brokers now ahead of the curve: Foley

NMB brokers split on Aussie sale


  • by ChrisC 4/05/2012 9:43:23 AM

    That's called healthy competition - just as long as the Banks don't make it a condition of the loan. They know they can't under the Trade Practices Act and they will not put it in writing but they do pressure for it. I have just recently had 3 commercial deals (ANZ & NAB) where they made it a very strong pre-requisite to settlement that all the clients accounts were to transfer or be opened at that Bank - this locks the client in - and if they did not, they held up the approval and pricing processes on the loan. In the end, I redirected all 3 loans to WBC & CBA who to their credit, did say they would like all their business but did not condition the loan or pressure for it. The accounts naturally followed. If the Banks continue this line of pressure marketing, they will simply miss out on the business (well, my business anyway).

  • by Broker Tony 4/05/2012 10:07:30 AM

    Most banks don't pay commission for other product referrals and the broker receives no benefit whatsoever for leaving the client to arrange their insurances etc through the bank. If a broker has access to good products that also compensate them for the effort (usually marginal but at least something) then they should go for it. The banks have no entitlement to any of a client's business even if they do fund the home loan. It is time they put their money where their mouths are and offer reasonable remuneration for the effort brokers need to commit to write related business with that lender.