5-Star Non-Banks



After a difficult year brought on by COVID-19, brokers and their non-bank counter-parts showed remarkable resilience. They worked together to assist their clients in riding out the pandemic, putting in place loan deferrals and other support to ensure homeowners and businesses could recover. 


That high-level focus on customer support and the cooperation between non-banks and their broker partners is paying off. Non-bank lenders are increasing their market share, and more brokers are attracted to their competitive rates, flexible credit policies, fast turnaround times, innovative technology, and ability to offer alternative solutions for those clients who don’t fit the ideal of vanilla or prime loans such as self-employed business owners whose incomes can often fluctuate. Non-banks also offer a diversity of products, covering residential, commercial, asset and equipment finance and loans for self-managed superannuation funds. 


These points of difference from their major bank competitors will serve the non-banks well as the property market across the country grows at a rapid pace, employment levels rise and confidence returns to small businesses, signifying an economy in full COVID recovery mode. 


Australian Broker recently launched its inaugural 5-Star Awards series, starting with the non-banks. And who knows non-banks better than brokers, who make up the majority of their customer base? 


“As non-banks boost their market share, so, too, do brokers. Together we can offer service and solutions that the majors simply can’t match”
-John Mohnacheff, group sales manager, Liberty



More than 400 brokers across the country from Australian Broker’s extensive audience database were surveyed through in-depth telephone inter-views and asked to select their top 5-Star-rated non-banks. Brokers were asked to determine the features most important to them when it came to non-banks, including loan processing and approval speeds, customer service, fees and rates and online banking. The brokers were then asked to rate non-banks across nine criteria – their ability to communicate with brokers, training and development of brokers, BDM support, products and interest rates, commissions, credit policies, technology, and turn-around times. 


Brokers picked seven high-profile non-bank lenders as the best in the industry from a shortlist of more than 20 non-banks. 


Survey insights 

The non-bank 5-Star Award winners performed universally well in two areas: credit policy and BDM support. All seven winning non-banks were recognized for their excellence when judged on these criteria. 


The next categories in which six non-banks scored highly were broker communications and turnaround times. Four winners were recognized for their good commissions and interest rates, while three scored highly in the brand recognition category. Brokers rated two non-banks highly for their broker training and development, as well as for digital experience. 


The survey elicited some great broker feedback on the top non-banks. 


“Our BDM is very good and they have a good product selection,” said one broker about Pepper Money. 


Other comments about Pepper included that the non-bank was “solutions-oriented and they have good turnaround times”. 


“In my opinion, Pepper is even better than the big four. They have great service and competitive rates,” was one response. 


Brokers praised La Trobe Financial for having flexible credit policies, along with great BDMs and commissions. 


“They know their products and they are very easy to deal with.” 


Another said, “Great people ... and they look outside the box.” 


Liberty’s broad product range, good credit policies and interest rates were rated highly, as well as their BDMs. 


“Their accessibility is great as they are easy to get hold of,” said one broker. Another said, “Their interest rates are very good for a non-bank lender.” 


Referring to Resimac, one broker said, “They give us the tools we require, like upfront valuations, and they have a solution-based mentality.” 

Firstmac was praised for having “really good policies and good serviceability”. 


Non-bank trends 

According to the Reserve Bank of Australia, non-bank residential mortgage lending has grown by 15% per annum in recent years, up until COVID-19 hit – well above growth in lending by banks. 


Almost all non-bank mortgage lending is funded by issuing residential mortgage-backed securities (RMBS), and non-bank issuance of these securities trebled from 2016 to 2019. 


While COVID-19 put a pause on growth last year, the RBA, in its April 2021 Financial Stability Review, says non-banks’ home loan lending has grown since late last year. As funding conditions have improved, issuance of RMBS by non-bank lenders has risen to high levels, and spreads have declined to the lowest levels since 2007. 


Credit quality at the non-bank lenders has remained sound, in both the residential and commercial lending sectors. 


“Brokers are the lifeblood of our lending business, so we would like to thank them for their ongoing support over many decades. Together we have made a difference to many”
-Cory Bannister, chief lending officer, La Trobe Financial



Non-bank winners’ views 

Cory Bannister, chief lending officer at La Trobe Financial, says the company is delighted and honored to receive such positive feedback from its customers – brokers. 


“Brokers are the lifeblood of our lending business, so we would like to take the opportunity to thank them for their ongoing support over many decades. Together we have made a difference to many,” he says. 


Bannister says the major banks are pursuing a narrower and borrower-specific segment of the market: the ‘super prime’ home loan. 


“This focus is likely to intensify should the responsible lending guidelines be repealed as per the recent government announcements, a positive for that specific cohort; however, it leaves a large segment of the mortgage market overlooked and underserved.” 


Bannister says non-banks are “terrifically positioned” to cater for this underserved segment affected by the pandemic, because they can understand customers’ unique positions and provide appropriate tailored solutions to meet their objectives and requirements. 


“We expect to see broker share holding above 60% and retargeting the 70% milestone, and we hope to see the non-bank financial institution market share heading back to 10% and beyond. 


Liberty group sales manager John Mohnacheff says it’s always reaffirming to receive recognition from business partners, and the 5-Star Non-Bank Award validates the diligent work of Liberty’s BDMs, underwriters and settlements team. 


“Knowing the award is based on direct feedback from brokers is something we’re incredibly proud of, and there is no greater testament to the value of our work,” Mohnacheff says. “We’re incredibly grateful to all who took time out of their schedules to share their experiences, as surveys like this are important to help us learn how to best serve our business partners and clients.” 


When it comes to growth of the non-banks, Mohnacheff says the partnership between brokers and non-banks has always been a fruitful one, because both groups understand just how vital it is for customers to have access to flexible options  “As non-banks boost their market share, so, too, do brokers. Together we can offer service and solutions that the majors simply can’t match.” 


Resimac general manager of distribution Daniel Carde says it’s an exciting time for the non-banks. 


“Customer needs and perceptions have changed; they now view non-banks and other innovative lenders as credible alternatives for their financial needs,” says Carde. “This has been a hard-won battle against the incumbents, with non-banks proving they’re able to be agile and adapt to changing consumer demands.” 

Carde says the non-bank sector can expect “growth, growth, growth” in the next 12 months. 


“As the Australian economy continues to make a strong recovery and consumer confidence increases, we expect to see a surge in demand for lenders who can offer compelling financial products, including competitive rates in the prime space and real solutions in the non-prime space, enabling our sector to grab a bigger piece of the pie,” he says. 


Bluestone chief customer officer James Angus says brokers provide the only distribution channel for the majority of non-banks, so they demonstrate their respect for the channel in several ways. 


“Customer needs and perceptions have changed; they now view non-banks and other innovative lenders as credible alternatives for their financial needs”
-Daniel Carde, general manager of distribution, Resimac


“Non-banks don’t just rely on a credit score; they offer a more personalized service and take the time to understand each customer’s unique circum-stances,” he says. 


Angus says non-banks have maintained market-leading turnaround times and competitive products and “have really got behind their brands in a way that has generated a connection for consumers and brokers”. He predicts that non-banks will continue to take a bigger market share because of their strong service proposition and because brokers now want to use non-banks. 


Chris Calvert is RedZed’s executive general manager of distribution, lending solutions. He says non-banks market share continues to increase in line with the sector’s growing reputation for understanding its target market, being nimble in changing conditions, taking an innovative approach and leading technology advancements, having a strong customer experience focus and providing strong competition. 


“We obviously predict and expect the non-bank sector to continue to flourish,” Calvert says. 


“All the fundamentals and foundations are strong, access to capital and pricing of it is better than ever, and technology advancements and challenger support services continue to come to the table. This, coupled with our flexibility and nimble-ness, will be a catalyst to continued strong results in a post-pandemic industry.” 


5-Star Excellence Awards


Market-leading’ is a phrase many non-banks like to use when describing their products and services and trying to stand out in the increasingly competitive residential and commercial loans industry. Now, seven Australian companies can claim that title on the back of hard market research results from a survey of the people who matter most: mortgage and finance brokers.


To select the best non-banks in 2021, Australian Broker conducted in-depth phone interviews with more than 400 brokers across Australia between January and March to gain a keen understanding of what brokers think of current market offerings and the lenders’ depth of relationship with their brokers. Brokers were quizzed on their most preferred non-bank and were then asked how the lender rated across nine attributes.


Non-banks were measured on the strength of their communication with brokers, training and development of brokers, business development manager support, product range, interest rates, credit policy, turnaround times, digital experience and commissions. The 5-Star Non-Bank Awards are presented to the non-banks that achieved over 80% ratings across all criteria.




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