The unprecedented impact of the COVID-19 pandemic on the global economy is pushing many businesses worldwide to the brink – and the lending sector is feeling the heat.
In Australia, where low interest rates and strict regulations are already creating difficult conditions for lenders, containment measures to curb the spread of the virus present an added challenge.
The situation has prompted many lenders to devise strategies to protect themselves and their clients in today’s “new normal.”
How COVID-19 has turned the lending sector on their heads
After registering an uptick at the second half of last year, Australia’s anticipation of continued economic growth was dampened by the disruptions brought about by the COVID-19 pandemic.
As government-mandated lockdowns drove many businesses to halt operations, rising unemployment and imminent corporate defaults are expected to hurt banks’ capital and profitability.
A recent study by data and analytics firm GlobalData predicted that, because of the financial impact of the COVID-19 pandemic, short-term bank profits “will plummet, loan growth will stagnate and impaired loans will rise, all of which will push the financial services industry to further consolidation.”
The report also said that government efforts to provide temporary income to the millions thrown out of employment will “work in the short term and hold down the impaired loan ratio for the first half of 2020, but pressure will be on lenders for many months following.”
The priority right now is helping existing clients during the “new normal”
The pandemic has pushed many brokers into unchartered territory – and during these challenging times, helping existing clients navigate the uncertainty must be their number one priority. The ability to keep the lines of communication open is key and the success of any response to a crisis of this magnitude hinges on the exchange of sound and timely information.
Brokers play a critical role in identifying important updates, distilling the information, and translating it in a manner that provides tangible and actionable insights for clients. If there is one opportunity that the COVID-19 outbreak provides to brokers and agents, it is showing their value to clients by keep them informed and operating during the crisis.
Strengthening existing client relationships drives lead gen down the line
How well brokers handle existing client relationships during the pandemic will also dictate how well they will attract new clients and businesses in the long-run.
The more help they can provide their clients now, the more they can build relationships that can generate leads down the line.
Strengthening lines of communication with clients must also be a constant endeavour, and it would be a great benefit to brokers to set up communication systems now to keep them connected with clients.
Following up with clients you have helped after three, six, and 12 months, for instance, will not only deepen relationships – it may even open up new business opportunities, such as assisting with a refinance once the situation has improved.
Ultimately, this is about playing the long game. With the right communication strategy, brokers can reap the bounty of growth when this challenging time has passed.
To learn more about driving growth in the time of COVID-19, join Broker Connect – Australasia’s first and only virtual event dedicated exclusively to mortgage professionals. Sign up for this free event today!
