Chris Thomas is an expert on commercial lending.
With nearly four decades of experience in Australia's finance and broking industries, the executive for commercial broker and equipment finance at National Australia Bank (NAB) knows that successful brokers thrive on two things: deep industry insight and strong relationships.
"Mortgage broking or residential lending has an expertise that's required and there's a professional standard. Commercial lending is exactly the same formula; it's just a different clientele," Thomas told Australian Broker. "The main difference at a very high level is the type of customer you're trying to understand, and the investment you therefore have to make in trying to understand that customer."
Thomas added that to succeed, commercial brokers must bring a combination of technical expertise and relationship-building savvy to the table.
"You really do need them both," he said. "Relationship management and building rapport, opens up business opportunities. All of that is critical in the market to create the flow that comes to you. But when it does come to you, that flow requires problem solving. It requires solutions that add value, and to that end, there's that technical element that is just so, so critical."
While residential mortgage brokers dominate the home loan space – writing 77.6% of new loans in the June quarter – commercial lending remains a largely untapped frontier. With brokers accounting for an estimated 30% of the commercial market, there’s a clear opportunity for those looking to diversify and unlock new revenue streams.
Australian Broker sat down with the Melbourne-based executive to hear his thoughts on Australia's growing commercial finance sector and what it takes for brokers to make the leap from writing residential home loans to becoming successful commercial brokers.
For Thomas, curiosity isn’t optional; it’s a core skill that separates average brokers from exceptional ones.
"When you're looking at business customers, from a broking or a banking sense, there is a deeper understanding that is needed to not only understand the people and the individuals and what they're trying to achieve: the owners of the business, their aspirations, their family aspirations, the industry. You have to understand the economic environment they operate in, what are the forces they are contending with as they try to achieve their business goals," he said.
"The first thing I say [commercial brokers] need to have is genuine curiosity and interest about what the customer is trying to achieve," Thomas continued. "When you've got that curiosity you can ask questions to understand, such as what are they trying to do? What are the obstacles? How do you help clients through those obstacles? And you want to hear their story. That's really important. You want to understand what the strategy is and create thought-provoking questions, such as, why do you do it that way? What options do you see if you want to expand this borrowing money?
"And there's other things that you might be able to undertake as well, such as managing debtors and creditors in a different way that creates free cash," Thomas said. "These are all options that a good banker and a good broker put on the table. And suddenly it starts to open up different solutions. And ideally, great bankers and great brokers are great listeners. And you take all that information away, and you come back and say, 'Look what you said you wanted is this. What I would recommend is you look at this, this and this, which can actually solve more than just the one problem.'"
It's important to note that different business owners have different versions of success, Thomas said.
"Everyone thinks our business owners are entrepreneurs, so they're always after growth," he explained. "Well, not always. They could potentially be after sustainability; they may want to keep a strong business to hand it over to another generation. They might be after aggressive growth. They might actually be after consolidation, and perhaps even making the business smaller and more efficient.
To be successful in commercial broking, Thomas recommends playing the long game: building relationships that can last.
"There is tremendous value in building long-term relationships with these clients," he said. "Clients go through cycles and it will take time to fully understand the business. You're not going to understand the business completely in the first meeting, and you'll never be the expert they will be. But over time, you walk in their shoes and see how the ebbs and flows of that business are, the obstacles they face; you ride that with them and start to appreciate more and more about what the customer has been saying.
"I see that so so often with our great, greatest brokers and bankers, where you can see they're physically riding the bumps with those clients," Thomas continued. "Very rarely does anything in business go smoothly. There's so many bumps and twists and turns in the road, and you've got to be in that mode to work with the client in that way. And if you're prepared to do that, and you're prepared to go that distance and look for those long-term relationships, you'll be a terrific commercial broker and a terrific commercial banker, because that's sort of what it takes."
For commercial brokers, the path to new revenue streams often starts with one business owner – with one connection leading to many more.
"The opportunities are enormous," Thomas said. "Because a business owner has got a clear level of entrepreneurialism in their DNA. And they're driving their business towards that strategy. They will, over the course of that time, see other opportunities, and they'll start to branch out into those opportunities. Sometimes they're good opportunities; sometimes not so good. And sometimes the role of the great brokers and bankers is to advise that we're not sure that's something that you really should borrow money for. Sometimes saying no is just as important as saying yes.
"But the one thing that entrepreneurs do extremely well is that they create relationships and connections with other business owners as they're partnering. So they've got a lot of businesses supplying into them," the executive continued. "They have a lot of connections, and they hear and talk to a lot of people. That in itself – when you're a trusted advisor to that client – provides enormous opportunity for referral business."
