Banks may be at odds over the viability of segmentation strategies – but top tier brokers who’ve experienced them are all for it.
On today’s The Big Story, we speak to Daniel O’Brien of PFS Financial Services, James Green of Oxygen Home Loans and Moshe Moses of Niche Lending, to hear why they appreciate banks who have put segmentation models in place.
How can brokers make the most of the top tier offerings available to them? What are the drawbacks of these segmentation models? And what impact does segmentation have on commissions and remuneration?
Find out on Australian Broker News TV – your home for industry news, opinion and analysis.
Video transcript below:
Donna Sawyer, Australian Broker News TV
Donna Sawyer: Hi, I am Donna Sawyer and you are watching the Big Story on Australian Broker News TV.
Banks may be at odds over whether to segment or not, but it seems brokers are all for it. Daniel O’Brien of PFS Financial Services says there are big benefits for brokers and home buyers when applying for a home loan from banks which have a segmentation strategy.
Daniel O’Brien, PFS Financial Services
Daniel O’Brien: If you are giving a lot more volume than the guy down the road, you should get priority, I mean that’s business 101, you reward the loyal supporters or loyal customers with better service or something that the guy down the road doesn’t have.
Moshe Moses, Niche Lending
Moshe Moses: Segmentation has brought in efficiency. It’s obviously for the banks, likewise for us. But again it’s also given us a service delivery platform that we can obviously provide to our clients.
Daniel O’Brien: It’s preferential service for us really and we deal with a lot of customers buying properties through Mgrar etc. So it’s very important that sometimes we need to deliver them a turnaround in a very short period of time. If we use traditional channels, we can’t sometimes meet those very fast required time frames that are given to us by those borrowers, so segmentation allows us to deliver a rapid turnaround time to those urgent borrowers that we couldn’t get normally.
Donna Sawyer: But James Green of Oxygen Home Loans says there are some drawbacks to the segmentation system particularly for young capable brokers.
James Green, Oxygen Home Loans
James Green: The big drawback to segmentation is the disadvantage to new entrants and particularly competitors within the same office environment. So we might have two brokers in the same office, servicing the same referral. Now if one has the preferential service offering and one doesn’t then the one that doesn’t is usually looked past and all the business goes to the other broker and that is a really big disadvantage, specially when you got a really good up and coming young gun, someone that really is hungry and wanting to do the business and isn’t able to deliver the same preferential deal that the person seen right to them can.
Daniel O’Brien: It’s something that we have all had to build our way upto and I think the lesson there is, there is only so many ways we can reinvent the wheel as far as our home loans. So I think any good broker should have handful of banks that they use. I mean I don’t think there is any real need to be supplying loans to 20 different banks, but if you are getting loans to 5 or 6 generally you can build up a better stronger relationship, but you have got to start from somewhere and those aren’t at the level where they can get into a flame at St. George, it gives them something to aim towards I guess. But you know, they can still communicate the necessary time frames to their clients.
Donna Sawyer: Moshe Moses of Niche Lending says although being highly regarded by the banks is good for business, segmentation has the potential to impact commissions.
Moshe Moses: Two banks who are not in favour of segmentation and there are other who are. Likewise the brokers are also in the same mindset, because obviously segmentation brings along the issues of controlling of commissions, but then again it also ensures a service delivery that we can provide to our customers. So at this current stage until the market does turn around is one where I think there are positives and negatives towards segmentation as a whole.
Donna Sawyer: For more on segmentation and other industry news, click around the Australian Broker News website. I am Donna Sawyer and I will see you again next week with the Big Story.