Brokers like to be ahead of the game when it comes to knowing their lenders: each has a panel that they know inside out.
Aggregators need to play both sides, knowing the needs of their brokers and knowing what their options are with lenders.
But, as was revealed in their results last week, there is one aggregator playing both sides of the aisle to superb success.
Beneath the headlines of AFG’s $43 million NPAT and $500 billion in settled loans, there was one figure that stuck out: AFG Home Loans, their own proprietary lending arm, now has a trail book of $11.2 billion, on the back of a 7% spike year on year.
They lent out $3.39 billion in FY21, making AFG Home Loans a serious playing the non-bank sector.
“Aggregation is a competitive environment, and the ability for us to continue to invest means that we need to diversify our income streams,” explains AFG CEO David Bailey.
“We’ve always talked about AFG Home Loans being a home loan product built by brokers for brokers. We understand brokers, and it was an obvious step out from us to generate additional margins and allow for continued investment.”
“On the basis that the product that we’ve offering the broker – who is then offering it to the client – is suitable for their best interests, then we’re happy to provide that product.”
AFG Home Loans are often provided as a white label option, either through themselves or through Volt, the digital bank that they signed an alliance with in June.
“I think we punch above our weight, and that’s because we have that connection with brokers,” said Bailey. “For us, a broker seeing a client is all about certainty of credit decision, consistency of credit decision and a good turnaround time. That’s what we’re providing.”
“If 70% of a broker’s business is coming from referrals, it makes it a better proposition for a broker to know that if they submit a proposal to AFG Home Loans, they’re going to know what the answer is going to be and they’ll know that the turnaround time is going to be good. We’re in the top five turnaround times across our lender panel.”
It’s a unique addition to the branch v broker debate, as AFG Home Loans essentially represents a proprietary loan within the broker channel. For Bailey, it is just another option that their brokers can choose from.
“The important distinction is that, at the end of the day, the broker is required to put the customer into a loan that is in their best interests,” he said. “We compete with every other lender in the marketplace, in terms of price point and turnaround times, but we do have a deep knowledge of the broker market, and we have a deep knowledge, driven from data insights, of our distribution.”
“We continue to invest in data analytics to understand the home loans that are being written and demands from broker and their customers around those home loans. That, in some ways, gives us a competitive advantage.”
Read more: Meet AFG’s new Head of Broker Experience