Is there a magic formula to achieving success in the specialist lending arena? If it could be bottled and sold, many doubtless would buy it.
There are constant references in the trade press about the crowded – or it could be said – over-crowded market and yet still more are planning to enter it. So, here are my thoughts on which fundamentals are absolutely essential if you want to remain in the leading pack.
The fundamentals
Specialist products are what sets this market apart and so you need development people who are in tune with client demand. Innovation simply for the sake of it is not a prerequisite. Yes, we need new ideas every so often, but brokers will see through gimmicks. Value and transparency matter most.
You also need the right distribution strategy. If a lender is looking for volume in the non-conforming sector then it is crucial, in my view, to work with packagers and distributors. Some lenders have said they do not want to use this channel or are ambiguous in their messages on this. You cannot be half-hearted, however.
I believe that investing in developing relationships with packagers will reap rewards because it is far more effective for them to leverage the best deals from a relatively select panel of lenders. It is the old 80:20 rule and while direct business is extremely important, packagers are integral to the specialist market.
Next comes technology – both ensuring you have developed it and making sure that your target audience is aware of it.
It is vital, I feel, for a lender to allow online decisions and applications. This should be pretty basic stuff, but are all the new entrants providing this? They may well be, but intermediaries need to know what technology is on offer and of course, it has to be fast and easy.
Likewise, same-day offers and increasing use of automated valuation models (AVMs) are set to take off this year – are all lenders geared up for these where appropriate?
First-rate service is a given. There is certainly no room for complacency and no matter how good you feel the proposition is, most lenders will mess up at some time or other, particularly if they underestimate demand for a newly launched product.
Facing up to the flak
It does not take long for news of problems to leak out into the market and it is essential to put matters right as quickly as possible.
You have to face up to the flak and get the message out that you are addressing problems – and do it. If service is consistently not up to scratch, then brokers will quickly find another lender to do business with.
Good service is linked to technology, but even more important are the people. The fact that there is a shortage of experienced employees – exacerbated by the fact that there are so many lenders and poaching is rife – makes it difficult.
But, in more complex cases, such as heavy adverse, manual underwriting is unavoidable. This means lenders must invest in quality training and career development so that brokers’ expectations are met. You cannot promise a same-day offer if there are detailed investigations necessary and the underwriter wants to properly assess the risk – but you can make sure that the broker is kept in the loop and there are prompt responses to queries.
A rewarding environment
It makes the news when business development managers (BDMs) leave for pastures new. They are on the frontline when it comes to promoting your company and obtaining feedback from brokers. Obviously, you need to offer the right package and create a rewarding environment to attract quality replacements. At the same time, no lender can secure total loyalty and indeed, this would not be healthy. Certainly, there are cases where simply leaving for more money has not worked out – so again, it is a case of being attractive on all fronts.
Communication counts. We have a healthy and well-read trade press serving the mortgage industry. Journalists want to know what is going on and the lenders that make themselves available to comment and are switched on in providing material you will be uppermost in brokers’ minds. If you stick your head above the parapet, you also expose yourself potentially to more negative press than those lenders which consistently have no comment to make or simply produce puff. But, as Oscar Wilde said, the only thing worse than being talked about is not being talked about.
It could be argued that brand is less vital in the specialist marketplace because our customers are brokers. This was the case when there were a handful of specialist lenders, but it is no longer true. Looks now matter and you need advertising which tells the market what sort of firm you are. I think it is a question of balance. Being too clever can lead to mixed messages and means your name is not remembered. On the other hand, lenders must appear professional and not look as if their advertising has been produced cheaply by someone with a day’s training in desktop publishing.
Brand is also built through activities, such as presence at exhibitions, broker training, e-mail marketing and the service provided by BDMs.
Getting all this right across the board is no easy feat. But, if we want to stay ahead or build on a position, then these are the core elements which must be attained. One fact is certain in this market – you don’t get there by doing nothing.
