Leading peer-to-peer (P2P) lender RateSetter has seen significant growth in broker referrals, with almost one third (30%) of its business now coming through the third party channel.
Speaking to Australian Broker, the chief executive of RateSetter, Daniel Foggo, said that the broker channel is an important avenue of growth for the P2P lender, which specialises in providing personal loans, and he expects business referred through brokers to make up around half of its business volumes in the next year.
“We have 50 brokerage firms referring applicants to us, which reflects around 500 different brokers. They are now referring about 30% of our business volumes to us – so it is quite significant and we see it as an avenue of significant growth for us,” Foggo said.
“We identified [engaging with brokers] quite early on as an opportunity for a broker to provide another service to their customers in a very light touch way. About a year ago we initiated some conversations with brokers about the opportunity. That percentage keeps growing so we expect it to be up around 50% in a year or so.”
There are different referral models a broker can use when referring a client to RateSetter, according to Foggo, depending on how ‘hands-on’ the broker wants to be.
“The first model is very simple for the broker, they literally just send a web link to their customer and the customer thereafter fills out an application form and the broker is kept entirely up to date as to how that application is progressing,” Foggo told Australian Broker.
“The broker is also provided a portal where they can log on anytime to see the status of any application and how much money they have actually made through referring people to us.
“The next model is slightly more hands on the for the broker and in less than a minute they can actually perform a rate estimate for the customer which basically requires them to provide a name and address and some brief details and we will give the applicant an indicative loan rate and it is up to the broker then whether they proceed with the application themselves on behalf of the customer or whether the customer does it directly.”
But whilst RateSetter is seeing significant growth from the broker channel, Foggo told Australian Broker that there is still a common misconception that P2P lenders pose a threat to the market.
“I think, generally, there is a perception that P2P lenders might be a threat over time, but really, we definitely see them as being an opportunity for brokers to broaden out their offering. We don’t think [P2P lenders] are ever going to disrupt their core brokerage market of residential property but we might be able to complement it with personal loans and other areas. It really just adds another strength to the bow of the broker.”
