No more 'us versus them' for banks and brokers

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Brokers and banks must let go of an "us versus them" mentality as the third party channel becomes crucial to the success of the industry.

NAB Broker general manager of distribution John Flavell has argued that banks no longer have an adversarial view toward the broker channel. Instead, Flavell says banks have now truly embraced the broking channel as a means of cooperative distribution, and a critical part of the banking matrix of the future.

“Our expectation at the NAB group level is that brokers will continue to provide a broader range of products to a larger proportion of the market,” he says. “Other channels will certainly grow as far as online and telephone are concerned, though the branch network will probably diminish over this period of time. That’s the trend that we see,” he says.

For lenders, Flavell says integrating brokers into their distribution model will enable them to reach more of the market and is crucial to the future success of their business.

“If lenders are out to shut brokers out of the market place - well that’s one thing they might endeavour to do. But if you’ve got consumers who are actually voting by their actions and making it very clear what their preferences are as far as where they access services and who they deal with, well then if you turn your back on 50% of flow then you’re doing so at your own peril,” he says.

Stepping back in time, Flavell said that lenders had initially tried to compete with brokers in the late 90s on price, and subsequently by providing more convenient service. However, he said that banks could not shut out the channel and it had increasingly grown market share.

“Back in ’97 lenders probably thought they could make a difference and close the brokers out, but it wasn’t true then and it’s even less true today,” he says.

In fact, brokers are now performing the same as banks – or even better – on key profitability metrics, such as conversions– which Flavell says is a ‘feather in the cap’ of brokers.

“If you look at some of the key indicators in terms of how a portfolio will perform, then there is the proportion of applications that are system approved, and between the broker channel and the proprietary channel there is no difference in that,” he said. Statistics show in 2011 64% of deals through third party were system approved, compared with 63% for proprietary.

“In terms of the quality of the applications being submitted there is no difference between the proprietary channel and the broker channel, and I think that is a feather in the cap for brokers. They have numerous lenders policies and processes to understand,” he says.

  • JBJB on 6/07/2012 10:17:51 AM

    When a Bank starts making inroads into the broker channel eventually the accountants step in and try and milk it for all they can, witness Westpac. NAB will be no different, once they get to their goal, they will take a step back and try to refocus on their branch channels, increase their margins, and tweak the broker commissions/clawbacks. They never learn and they rely on Brokers to have short memories. Beware giving too much to NAB/Homeside.

  • KT on 5/07/2012 1:46:57 PM

    Nicole, really??? I purchased my PPOR with a Homeside Loan last year....something doesn't sound right with your argument

  • 1martym1 on 5/07/2012 11:05:41 AM

    @ozboy you are on the money. Actions speak louder than words and HSL has backed up these words by turning around that once ugly beast. Now if they would just pay trail in year 1 even if it meant a a bit less at the back end I am sure they would get a heap more volume (if they want it).

  • ozboy on 5/07/2012 9:51:40 AM

    If the lenders have the attitude of most of the brokers who commented above (in the negative) then we will never move forward together. I agree it has taken SOME lenders a very long time to embrace the broker channel (albeit in their own way) but we have to start somewhere. Having the head of a major come out and offer continued support (and stand up for us against the criticism CONSTANTLY hurled at us from one of the others) is HUGE step forward, let's embrace it, work with it and see if the actions match the words. I personally would never have thought Mr Flavell and the team at HomeSide could ever have turned that beast around but in a couple of years they have and so far so good. It really shows that the RIGHT senior manager can make a positive difference.

  • Vast on 4/07/2012 10:31:57 PM

    the truth is, if you ever referred your clients to nab, you will lose that client, for sure. i would never do the stuip thing again by sending them any $1 deal.

  • Andrew Campbell on 14/06/2012 6:36:52 PM

    Once again - and to his credit - Flavell just gets it. Empathy with his business partners and an intinate and practical understanding of the space. Well done John - I can't fault you. Maybe a move to St George?

  • TigerGold on 14/06/2012 12:53:20 PM

    In 10 years of broking I can honestly say I have met only a handful of genuine BDM's. The majority have brown tongues. Extremely disingenuous and they always bang on about process with hardly ever trying to ......wait for it..........develop the systems and from that business. Ironically, just two weeks ago I lost a deal because a BDM did not even return my call to work through retaining an existing client of the bank. Lenders employ people who pretend to have manners. It will always be 'them V us' because the industry employs crap people.

  • Nicole on 14/06/2012 12:31:12 PM

    John Flavell says a lot of things about how Nab Broker value Brokers etc etc BUT THEN.....did you know that NAB Broker does NOT trust brokers to write their own home loans? No they DON'T, and in fact you cannot lodge your own application with Homeside because Brokers cannot be trusted to make an honest and reliable assessment of their own financial situation. It is no good looking for this clause in their Policy Documents...it is not there...just another behind the scene truth!!

  • Loz on 14/06/2012 11:31:08 AM

    When the banks stop undermining brokers at a branch level or even with discount internet based offers then their will be a reduced us and them mentality.

    Further, when bank staff come to regard brokers as an essential part of the banks business and stop treating them like imbeciles rather than valued business partners on the phone then there will be a reduced us and them mentaility.

  • Rob on 14/06/2012 9:54:35 AM

    No "us v them?" Does that mean I can now sell the NAB SMSF loans and get paid a trail and full commission? That's awesome,please advise how I get accredited to do that? And of course,as there is no longer an " us v them " mentality I assume it's now possible for us to offer our high earning and net worth clients the same rates and deals from the NAB Private banking division and get full commission on those too? This is just the breath of fresh air we need to break down the barriers that have existed till now!!

  • Elle on 14/06/2012 9:42:30 AM

    I can't tell you how refreshing it is to read this, finally! Lets hope the other banks will take a leaf out of NAB/Homeside's book!

  • John Robbo on 14/06/2012 9:34:23 AM

    "banks no longer have an adversarial view toward the broker channel" - oh how benevolent. Now you realise that you need us - you think that we should flock back to the banks & "work together". I'l tell you what. Since you need us, how about the banks reinstate the commission reductions that they applied to us brokers & THEN we might have some trust of the banks. You expand your margins everytime the RBA move rates & expand your margin further by taking it away from broker commissions. Repair what you have broken & then we shall see.

  • phil.gt3 on 14/06/2012 9:16:57 AM

    It is refreshing to read sensible comment about the broker channel...

  • Country Broker on 14/06/2012 9:02:33 AM

    At last a senior banker with an attitude that is so right , Homeside will be getting more business

  • A Broker on 14/06/2012 8:58:21 AM

    Good luck with that. Somehow I can't see brokers and branch lenders sitting down smoking a peace pipe and singing 'Kumbaya' together any time soon.

  • Patrick on 14/06/2012 8:51:49 AM

    Whilst ever NAB denies broker access to its NAB branded products (brokers can only distribute Homeside brand to earn full commission) this statement is hypocrisy.

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