Design teams will look at where criteria could be altered and amended and where flexibility could be introduced into a product.
The idea will then be taken to a lending partner with a client base that is best suited to the new idea and the new product or feature will be talked through. Is this the kind of thing that might sell? Could it be improved? What would help make it more appealing to clients?
Once the fine tuning has been completed, the product might then be tested on an exclusive basis with a key mortgage intermediary partner and depending on its success, a decision will be made as to whether or not to release it into the market generally.
In this way, lenders use exclusives to test ideas out and then use selected partners to help launch them into the market.
For products which are complicated, or targeted at a very specific type of borrower, it is maybe easier to work with one specific partner rather than try to develop certain features or products in the whole market.
It also makes it easier to assess how they perform and receive feedback as to what further tweaks might be needed.
Distributor contribution
However, it is not just lenders that come up with the ideas behind their exclusives, most will and certainly should welcome ideas and suggestions from their partners.
In some instances, a distributor might ask for help in meeting the needs of a certain client group and through collusion between lender and partner it is again possible to come up with the type of product they need.
Whether the idea comes from the lender or the distributing partner is not necessarily important. The real key in the whole process is that both parties are able to have an open and frank dialogue as to what is required.
In many ways this is one of the most valuable aspects of offering genuine exclusives and the discussions that take place between lender and distributor can play an incredibly important role in helping both parties gain a fuller understanding of each other and allow them to cement and develop their existing relationship.
If both parties know their customers as well as they should do, then this level of co-operation and collaboration will end up delivering the kind of products that borrowers need, rather than simply the kind of products that lenders feel they should offer.
There is no doubt that the design, coordination, communication and administration that is required to create a successful exclusive product does create extra work for those involved.
However if exclusives are used as they should be to serve targeted client bases or explore new areas of lending, then this is all part of the ongoing research and development that any lender in the market should be doing.
If on the other hand, lenders are using exclusives as gimmicks, then this extra effort will fail to create any long-term value. Neither will it broaden their proposition or open up new markets.
Exclusives offered on this basis are simply eating into the margin of the ongoing business, without actually delivering anything that will help it grow into the future.
Level of diversity
While there has been some talk that exclusive products may raise a few regulatory eyebrows in regards to ‘Treating Customers Fairly’ (TCF), this seems unlikely.
As the market stands there are so many distribution channels that any borrower walking into virtually any broker is likely to get a different choice of products.
Some will offer whole of market, others will work off a panel, while some may be tied. Each and every panel used by distributors is different and whether borrowers choose to buy online, over the phone or face-to-face will also have an influence on the products that are available.
Given this level of diversity, it seems unfeasible that exclusives could be ruled out on the grounds of TCF.
As long as the product in question is tailored to the best interests of the borrower, there may be an argument to say that exclusive mortgages are working harder for borrowers as they could potentially meet their needs even better than those in lenders’ core ranges.
This is why exclusives have such an important role to play. By using them to push the boundaries of what is already on offer, lenders and distributors can work together to develop the market and better serve the borrowers using it.
In turn, this will lead to better choices for the borrower and should allow those who have worked hardest in development to differentiate themselves from their rivals.
Exclusives may add to the huge choice that is already available, but by paving the way to the future, when used effectively they are an invaluable part of the market for all concerned parties.
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