Mortgage Professional Australia issue 19.08

MPAMAGAZINE.COM.AU ISSUE 19.08

GROWING OPPORTUNITIES Commercial lenders gather to discuss the industry, diversification and technology WHITE LABEL LENDING How these loans are great for a broker’s business

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NEW BROKERS The aggregators supporting those entering the industry

ROBYNNE FROST The importance of small business at Suncorp

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AUGUST 2019

CONNECT WITH US

CONTENTS

Got a story or suggestion, or just want to find out some more information? twitter.com/MPA_Australia facebook.com/Mortgage ProfessionalAU

UPFRONT 02 Editorial

Positive steps forward in a busy period

04 Statistics

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34

Small businesses are looking optimistic

BUSINESS INSURANCE

Are new serviceability rates the answer for borrowers?

FEATURES

An insurance provider discusses SME growth and the importance of being insured

COMMERCIAL LENDERS ROUNDTABLE

BIG INTERVIEW

ROBYNNE FROST

Suncorp’s national manager, SME and commercial, intermediaries, talks about her passion for small businesses in Australia

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Three brokers discuss how they have adapted for growth

08 News analysis

10 Opinion

Brokers need non-bank lenders more than ever

FEATURES

SPECIAL REPORT

Representatives from the commercial space discuss the industry, how it is moving forward and how they are working with brokers

06 Head to head

46 Loanworks

How these brokers overcame their outsourcing concerns

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FEATURES

WHITE LABEL LENDING

A look at the product making up nearly 7% of broker-originated loans

48 From small changes to huge gains

How to overcome distractions and be productive

52 Why you don’t need motivation to succeed

Three foolproof ways to get things done

PEOPLE 56 Other life

The mortgage broker who's fighting fires

40 FEATURES

BACKING NEW BROKERS

How these aggregators are helping new-to-industry brokers

MPAMAGAZINE.COM.AU NOW ONLINE: Our daily newsletter. Keep on top of property market trends, business strategy, and what industry leaders have to say.

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UPFRONT

EDITOR’S LETTER www.mpamagazine.com.au AUGUST 2019

Looking to a brighter future

T

here’s been a lot going on in the industry since the last issue of MPA, with the RBA cash rate moving yet again, changes from APRA, the launch of open banking, and the new Banking Code of Practice. There seems to be much positivity in the market at the moment, but this is coming alongside warnings to be cautious about the changes.

A sign of things potentially being ‘on the up’, the AFG Index released in July for the three months to June 2019 showed the first increase in mortgage lodgements in over a year. AFG CEO David Bailey said he was “cautiously optimistic” about the increased activity.

There’s also been a lot happening in the world of MPA. Turn to page 16 to read about the Commercial Lenders Roundtable we hosted last month. Held on a beautiful Sydney day, there was a great mix of people, which made for some really good discussions.

EDITORIAL

SALES & MARKETING

Editor Rebecca Pike

National Sales Manager Claire Tan

Journalist Abel Riototar

Global Head of Communications Lisa Narroway

Contributors John Dickinson, Ayetkin Tank Production Editor Roslyn Meredith

ART & PRODUCTION Designer Cess Rodriguez Traffic Coordinator Freya Demegilio

CORPORATE Chief Executive Officer Mike Shipley Chief Operating Officer George Walmsley Managing Director Justin Kennedy Chief Information Officer Colin Chan Human Resources Manager Julia Bookallil

EDITORIAL ENQUIRIES

tel: +612 8437 4784 rebecca.pike@keymedia.com

SUBSCRIPTION ENQUIRIES

tel: +61 2 8311 5831 • fax: +61 2 8437 4753 subscriptions@keymedia.com.au

ADVERTISING ENQUIRIES

There seems to be much positivity in the market at the moment, but this is coming alongside warnings to be cautious It was interesting to hear the different experiences and attitudes of such a wide industry mix. There were banks, non-banks, an aggregator and two brokers. There were those who had been around for decades and those whose businesses were established within the last 10 years; those who specialised in SME finance and those who focused more on property.

As always, it was great to see the conversation flow between people who might be in competition with each other but were happy to come together to talk about the industry and share what they are doing to make things better for brokers and borrowers.

I’ve also been in Melbourne to celebrate the achievements of a number of industry players at the national MFAA awards. It was an honour to help judge a category and be invited along to see the worthy winner collect their trophy!

Congratulations to everyone who was a finalist – we’re gearing up for our own Australian Mortgage Awards in October, so we hope to see you there too!

claire.tan@keymedia.com

Key Media Regional head office Level 10, 1–9 Chandos St, St Leonards, NSW 2065, Australia tel: +61 2 8437 4700 • fax: +61 2 9439 4599 www.keymedia.com Offices in Sydney, Auckland, Denver, London, Toronto, Manila, Singapore, Seoul

Mortgage Professional Australia is part of an international family of B2B publications and websites for the mortgage industry CANADIAN MORTGAGE PROFESSIONAL neil.sharma@kmimedia.ca T +1 416 644 8740

Rebecca Pike, editor, MPA Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as the magazine can accept no responsibility for loss.

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UPFRONT

STATISTICS

The test of courage Despite external and internal challenges, small business owners have a generally positive outlook IN ITS Small Business Bravery Index June 2019, insurance service provider BizCover surveyed its small business customers to find out how they felt about their business performance for the rest of the year following the May federal election, and what they considered to be the biggest obstacles and constraints to their growth.

Of the 639 BizCover small business customers who took part in the survey, 29% were professionals, 23% worked in the service sector, 18% in trades and 11% each in allied health and retail industries. When it comes to

34%

Business owners who think they will perform better

8%

Business owners who think they will perform worse

gender representation, slightly more male small business owners (54%) answered the survey than female (46%). There was a higher representation of males in the professional and trade industries and females in the service and allied health sectors.

According to the report, Australia’s small business owners are “hardworking individuals who often do not clock off at 5pm, who are often working public holidays, who wear many different hats and who have had the courage and bravery to take the leap and turn their passion into their living�.

63%

A SUNNY OUTLOOK Across all states, small business owners seem generally positive about investing in growing their businesses in 2019. Forty-three per cent of survey respondents said now was good time to invest and only 28% felt differently.

However, almost 33% were unsure of whether to invest in 2019.

53%

Females who predict a better/much Males who predict a better/much better business performance better business performance Source: BizCover Small Business Bravery Index 2019

LIMITED BY LOW DEMAND

Among the many perceived obstacles to small business growth, demand from customers (or lack thereof) ranked as the biggest constraint for respondents, particularly those working in the professional and service industries.

WANTED: CUSTOMERS

Unsurprisingly, as businesses need customers to survive, over a third of respondents pointed to finding more customers and growing their business as their major concern.

Cash flow is also a major concern because of unpaid invoices.

Underinsured (0.64%)

Availability of skilled workers (8%) Demand from customers (30%) Licensing and regulations (10%)

Major constraints to small business growth

Price pressure from competitors (18%) Rising overheads and utility costs (15%) Taxes and government charges (14%) Wages (5%)

Robbery/fraud (0.32%) Retaining good staff (4.93%) Long hours (8.43%)

Biggest concerns of small businesses

Government legislation (8.74%) Cybercrime (1.1%) Cash flow (30.21%) Building the business/new customers (39.75%) Bad debts (1.59%) Other (4.29%)

Source: BizCover Small Business Bravery Index 2019

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Source: BizCover Small Business Bravery Index 2019

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INVESTMENT PERSPECTIVE BY STATE 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

WA

VIC

TAS

SA

Bad time to invest

QLD

NT

NSW

ACT

Good time to invest

Not sure Source: BizCover Small Business Bravery Index 2019

BELIEF IN THE PRODUCT/SERVICE

Over half of small business respondents felt most confident about the product or service they provided. But among all industry categories, organisations in the ‘Other’ category were most likely to feel this way.

Product/service (51.99%) Staff (4.93%)

What makes small businesses feel most confident?

VIEWS VARY BY GENDER When it comes to investing in their businesses, male respondents were more swayed by external factors such as the federal election and economic performance, while females were more swayed by internal factors such as changes in resources and costs.

Australia’s economic performance 42% Federal election 20% Changes to internal resources 14%

35.67%

Other (2.38%)

Australia’s economic performance 35% Cost changes 22% Changes to internal resources 18%

19.30%

17.13% 40.91%

Balance sheet (0.79%) Brand (12.56%)

45.03%

41.96%

Customer loyalty (27.34%) Changes to internal resources 24% Australia’s economic performance 21% Changes to competition 18% Source: BizCover Small Business Bravery Index 2019

Changes to internal resources 38% Cost changes 21% Changes to competition 15% Source: BizCover Small Business Bravery Index 2019

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UPFRONT

HEAD TO HEAD

How have you adapted for growth in the last year?

It’s more about building relationships than acquiring the latest technology, say brokers

Robert Trewin

Managing director Robert Trewin Mortgage Broking We were well placed when the catastrophic news in relation to the royal commission recommendations hit. Being regionally located and established for 15 years, with a loyal client base, we concentrated on what we could control. This included local media and our clients with their concerns about being forced back to dealing with the banks after having a relationship with our office for many years based on genuine customer service and care.

My staff and I talked about how we would evolve and survive as our industry discussed additional income streams. We already did this well, so we experienced growth in the last year as consumers lost faith in their banks and sought relationships with local experts based on service and integrity.

Debbie Worthington

Raymond Teh

Owner manager Mortgage Choice Newcastle & Lake Macquarie

Managing partner Mortgage Choice Pyrmont & Randwick

Having a 15-year-old business and heading into my early 50s, I wanted to make sure I had a growing business and an exit strategy. I certainly didn’t want to work any harder or do longer hours.

I spent some time looking for someone who could join the business as a partner, someone who could take over so I could exit by my mid to late 50s. To enable the change, I wanted someone with the skills to write loans, and with a vision to grow the business and the dedication to do so. We restructured the team, organised some outsourcing and took on our partner, Kristie Gould.

We now have a better focus on converting leads that come in and a better system within the business to move files through from enquiry to settlement.

Emulating Mercedes Benz – a faltering company in the 90s that has come back from the nadir to outsell BMW worldwide.

The lesson learned from that is to target the younger and aspirational demographic.

I am changing my target group to first home buyers from older high-income earners or investors. Their loan sizes may be smaller, but there is minimal ambiguity regarding lending policies, and higher potential for future business.

With the overlords making adverse changes to living expenses, retirement policy and the calculation of financial commitment, and a property market that’s not growing, higher income earners are less likely to purchase investment properties powered by Raymond Teh.

IS IT TIME TO AUTOMATE? With the mountain of numbers, forms and document processing it confronts daily, the mortgage industry is ripe for automation, according to Gihan Perera, business futurist, speaker and author of Disruption by Design: Leading the Change in a Fast-changing World’. He says automation is happening already, and anyone who is not integrating it into their business now is falling behind. Automation trends currently shaping the industry include chatbots, machine learning and robotic process automation. Perera warns that one should “make no mistake” because every area of the financial services industry, including mortgage broking, is facing massive changes due to automation and AI. “Take the time now to investigate and integrate some of these ideas into your own business so you can stay ahead of the game and future-proof your role,” he says.

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UPFRONT

NEWS ANALYSIS

A boost for borrowers APRA’s change to the serviceability assessment rate has been met with positivity, as many dubbed the rate introduced in 2014 outdated, but there are still questions as to whether it will make borrowing easier WHILE MANY expect the changes to lenders’ serviceability assessment rates to make borrowing easier, others believe the expansion of comprehensive credit reporting and other regulations may impose higher standards on the banks.

APRA confirmed at the start of July that it would no longer expect authorised deposittaking institutions to assess home loan applications using a minimum interest rate of at least 7%. Common industry practice has been to use a rate of 7.25%.

Banks will instead be able to set their own serviceability rates, with a revised interest buffer of at least 2.5% above their loans’ interest rates.

Making the announcement, APRA chair Wayne Byres said “a serviceability floor of more than 7% is higher than necessary for ADIs to maintain sound lending standards”.

The move could mean that many borrowers who have been denied finance because of the guidance issued in 2014 are now eligible for loans. But it seemed at first that the banks were taking a cautious approach to APRA’s decision, and some commentators, like the FBAA’s managing director, Peter White, encouraged them to respond more quickly.

“Brokers are trying to help buyers purchase a home, but banks have been holding them ransom,” he said.

ANZ was the first major bank to announce a change to its floor rate, amending it to 5.50%. Westpac followed suit with 5.75% and CBA later announced the same.

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NAB was the last of the big four to drop the rate, saying it welcomed APRA’s change and moving to 5.50%. All banks also revised their interest buffers to 2.5%.

White praised APRA’s decision, in the hope that it would give the Australian economy a much-needed boost.

“With most lending institutions offering interest rates between 3% and 4%, an assessment rate of 7.25% was unfair.

“As brokers it makes it more difficult to get approval and creates immense disappointment and confusion for clients if banks use outdated data to assess the suitability of average

household income of $109,688 should be able to borrow up to around $60,000 more, even if their loan is assessed at a rate of 6.25%, according to RateCity.com.au.

Research director Sally Tindall said that if more people could suddenly get their home

“The reduction in the assessment rate will make it easier for existing borrowers to refinance so they can escape their existing mortgage prisons” Peter White, FBAA Australians to pay off their home,” White said.

“The reduction in the assessment rate will make it easier for existing borrowers to refinance so they can escape their existing mortgage prisons because of unreasonable rates and conditions.”

How homeowners will be affected Analysis of what APRA’s announcement really means shows that many Australians may be able to boost their borrowing power by tens of thousands of dollars. A family on an average

loans approved, house prices could start to increase again.

“Australia is in a very different home lending landscape than when the 7% buffer was made in 2014. It was time to reassess what has become an out-of-date interest rate floor, especially on the back of two RBA rate cuts,” Tindall said.

“APRA has eased off the brakes slightly, but that doesn’t mean it will be a complete field day for borrowers. There are still a number of checks and balances in place to

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BORROWING POWER Scenario 1: Single income ($83,455) Potential increase in borrowing power

Serviceability rate

Estimated borrowing amount

7.25% – current

$478,000

6.50%

$516,000

$38,000

6.25%

$529,000

$51,000

6.00%

$544,000

$66,000

Scenario 2: Family of four (household income $109,688)

make sure people aren’t jumping into home loans they can’t afford to repay.

“APRA is also allowing banks to set more than one interest rate floor, acknowledging that lenders often charge lower rates for some loan types, such as owner-occupiers.”

“Given this, lenders will have a lot more information about borrowers’ credit histories and will seemingly have fewer excuses for providing loans to those that aren’t creditworthy,” Kusher said.

Secondly, the industry has seen the adop-

“Borrowing is going to become somewhat easier as APRA makes the changes it is proposing and mortgage rates have reduced” Cameron Kusher, CoreLogic A level of caution While the outlook is mostly positive for accessibility of finance, CoreLogic analyst Cameron Kusher has looked at other changes in the wider landscape that will have an impact.

Firstly, from 1 July, comprehensive credit reporting has been expanded, so lenders will now have more information on credit history, including types of accounts, dates the accounts were opened, current credit limits and account closed dates, as well as two years of repayment history.

tion of the new Banking Code of Conduct, which sets stringent standards for anyone applying for a loan, whether for a home or a small business.

“On one hand you can see borrowing is going to become somewhat easier as APRA makes the changes it is proposing and mortgage rates have reduced on the back of the two interest rate cuts we’ve had.

“On the other hand, the expansion of comprehensive credit reporting gives lenders much more insight into the creditworthiness

Potential increase in borrowing power

Serviceability rate

Estimated borrowing amount

7.25% – current

$559,000

6.50%

$603,000

$44,000

6.25%

$619,000

$60,000

6.00%

$636,000

$77,000

Assumptions: Average household income data according to ABS Census 2015/16. Assumes one parent earning 30% of $109,688 and the other 70%. Assumes monthly household expenses of $3,500.

Single-income figure from ABS average weekly earnings November 2018; full-time adult average weekly ordinary time earnings. Assumes monthly expenses of $2,000.

Source: RateCity.com.au

of borrowers, and the new Banking Code of Conduct appears to be requiring much higher standards from the banks,” he said.

“Furthermore, banks continue to have a very close focus on living expenses assessment when deciding whether a borrower is creditworthy.

“Given all of this, we believe that mortgage credit is going to become a little more accessible; however, there will remain a level of conservatism and caution from lenders – especially given the royal commission that has recently occurred and the fact that they have much more data available to them in order to make decisions about the creditworthiness of borrowers.”

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UPFRONT

OPINION

GOT AN OPINION THAT COUNTS? Email rebecca.pike@keymedia.com

The growing importance of non-bank lenders In a changing environment, brokers need non-bank lenders more than ever, writes the director of ComDirect, John Dickinson

WHILE I’M sure the banks would love to control everything and write – or lately not write – every loan, the fact is that now more than ever brokers need non-bank lenders.

People are not square, most people anyway, and many find it impossible to fit into those tight little banking boxes.

Over the last 12 months these boxes have been getting smaller, and fewer and fewer people are able to squeeze themselves into them, no matter how hard they breathe in.

This has left many borrowers and brokers at a loose end and looking for options. The hard fact is that the good old days are over, and non-bank lenders have never been more relevant than they are now.

The reason for this is that while our banking friends are often stuck with inflexible rules-based credit guidelines, non-bank lenders can assess each application on its merits and make sensible and, importantly, relevant decisions that can often lead to an approval rather than a decline – often after the broker has already spent weeks or sometimes even months jumping through the bank’s fiery hoops.

Due to the retraction of mainstream credit and, dare I say, the often-arrogant attitude of the banks, it has never been more important for brokers to align themselves with reputable non-bank and private mortgage providers, as by doing so they will not only be in a position to help more clients but also to generate additional income.

Despite what some would say, our economy is not in great shape. The recent drop in interest rates is proof of this.

While property values have seemed to

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stabilise, at least for now, the fact is that the biggest driver of housing prices is mortgage availability, and while mainstream credit remains tight, it’s unlikely that real estate values will improve greatly for some time.

In fact, this could be a best-case scenario, as all bets are off if there is a significant international event or the regulatory bodies

we’d better keep money revolving, as just like the earth, if we stop spinning it will rock us to our core.

Investor-based private mortgages can also be an option worth considering in the current market. This is due to the fact that property investors are able to rely heavily on the asset being offered as security and can

The hard fact is that the good old days are over, and non-bank lenders have never been more relevant than they are now continue to turn the credit screws.

I think we would all agree that it’s good that the election is behind us, but don’t make the mistake of thinking all is good in the world once again.

The truth is that Australia’s property is still some of the most unaffordable in the world. We pay some of the highest utility prices globally; we have historically high household debt levels; and despite the political spin, wage growth is slow or non-existent.

The banks are aware of this fact, and while there has been some relaxing of interest rate stress testing, this is seemingly negated by increased household expenditure measures, so mainstream credit remains as restrictive as ever and most likely will remain this way for some time.

Due to this fact, I believe that the more options people have with regard to finance the better.

If money makes the world go round, then

apply their own credit due diligence. For the borrower this often means only having to satisfy relevant requirements and not having to navigate through the ofteninsurmountable and nonsensical demands of a bank.

I encourage brokers to reach out and connect with a wide variety of credit providers, such as non-bank and private mortgage lenders.

Your clients are looking to you to find a solution, and the more options you have in the current market the better.

John Dickinson is the director of ComDirect, a lending mortgage company specialising in arranging private commercial mortgages.

He was previously the director of a debt mediation company focused on helping people regain financial control through the reduction and elimination of their debts.

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PEOPLE

BIG INTERVIEW

ROBYNNE FROST: CREATIVE STRATEGY After 34 years in the industry, Suncorp’s national manager, SME and commercial, intermediaries, has learnt that change and growth encourage people, and businesses, to be the best they can be. Robynne Frost talks to MPA about how the bank is continuing its investment in the growth of its small business channel

WITH SMALL and medium-sized enterprises expected to continue growing at a strong rate, the opportunities for brokers to help them with finance are expanding alongside. This area is one of the passions of Suncorp’s national manager, SME and commercial, intermediaries, Robynne Frost, who is working to build the bank’s offering for these businesses, as well as its support of brokers.

The mum-of-one rejoined Suncorp six years

Being in a senior role, Frost says it is essential that she finds the balance between working hard and getting the best out of life, but she has also learnt to use her talents outside of the office to influence the decisions she makes on the inside.

A vibrant, sociable person, Frost says she is strong on connecting with people and being creative; she not only uses that creativity as an artist to paint big colourful canvasses but

“We’re really committed to helping Australians, supporting their families, their homes and small businesses. That piece really links into my allegiance with the brand” ago, having spent 14 years at the lender earlier in her career, before working at a number of other companies over the next 10 years. She says she came back to an organisation that had “grown up significantly”.

“It was like leaving a small organisation and coming back to a large one,” she adds.

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it has also served her very well in the many strategy-based roles she has had.

“A lot of that time was spent looking at large customer bases and how we could cross-sell financial services to unique organisations. I love being creative and strategic,” Frost says.

Allegiance to the brand As a result of the royal commission, trust in financial institutions has diminished, and business lending has been particularly hauled over the coals. Suncorp is working to rebuild trust and trying not to be “just a financial services organisation” but instead to look at more ways it can help its customers, which Frost says the bank is really passionate about.

“We’re really committed to helping Australians, supporting their families, their homes and their small businesses. That piece really links into my allegiance with the brand.

It’s a great place to work,” she says.

In response to the new Banking Code of Practice, Suncorp is also assessing how it looks after vulnerable customers and deals with situations in which a customer is made to feel vulnerable.

“Some of the things we have implemented as an organisation are phenomenal, and it shows we’re genuinely committed to helping customers in vulnerable situations. We really looked at empowering, educating and increasing awareness of our customers,” Frost says.

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PROFILE Name: Robynne Frost Company: Suncorp Title: National manager, SME and commercial, intermediaries Years in the industry: 34 Career highlight: “In my time at Suncorp I’ve been proud to grow a national team that started off with three staff. We built customer demand and grew that team to 65 staff in just 18 months.”

Career lowlight: “When you see obvious opportunities but organisations aren’t courageous enough to invest and commit to an opportunity.”

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PEOPLE

BIG INTERVIEW

“It might be simple things, so instead of filling out a form we have a large team of people who can have a conversation with a customer to understand their situation.

We’re looking at complex processes that involve customers where they could have different interpretations.”

Even earlier than the royal commission, Suncorp realised changes needed to be made in the small business lending space. Four years ago, Frost was appointed to set up the small business channel.

Before that, small business lending had always been integrated into Suncorp’s home

diversification into small business.

Having a dedicated team of small business BDMs also means brokers can now be supported by people with the right skills base to educate them.

“I’m really proud of the team we have.

I think they’re best in the market,” Frost says.

As part of Suncorp’s ‘Power of Partnership’ distribution model, those BDMs are also aligned with aggregators in order to gain a stronger understanding of their approach and get to know the brokers better.

Another opportunity the lender has

“With brokers looking to be seen as adding more value to the customer base, it’s integral that they own their customers and be empowered” lending sector, and residential BDMs would support its brokers. Recognising the opportunities for small business growth, the bank created the specialised channel to cater to the unique needs of small businesses and the brokers who service them.

“The future is business. The industry has seen a decline in home lending because of many things, predominantly legislation changes and the royal commission. Business is predicted as the growth engine for brokers and the Australian economy,” Frost says.

“Our commitment to the broker community is underlined by the fact that we now have a dedicated team of BDMs working across small business.”

Educating the industry Continued investment in the channel has given Suncorp the chance to identify needs across the whole industry, and it has ramped up its investment in education. The lender has launched an SME Education program to support brokers at any stage of their

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embraced is a “high-touch model” that allows brokers to write the transactions themselves instead of having their customers taken away.

“My team provide a model that involves being there, holding their hands through the process, and helping them build the confidence to write the transaction themselves,” Frost says.

“I think it’s the right model and the right model for the future. With what’s happening across our industry with brokers looking to be seen as adding more value to the customer base, it’s integral that they own their customers and be empowered and have the appropriate skills across multiple products.”

Frost talks about her own learnings on a personal level after 34 years in the financial services industry.

“Probably for me the biggest thing I have learned is that change is constant. We need to anticipate it and embrace it,” she says.

This industry in particular is especially competitive, and in all of her roles Frost has

HOW SUNCORP IS

,HELPING SMES

Earlier this year the Council of Financial Regulators (CFR) reinforced its support for keeping the borrowing threshold of small to medium-sized enterprises at $3m for the purpose of defining small business within the Banking Code of Practice.

Suncorp welcomed the CFR’s approach and in response pledged $3bn of new credit to the SME sector.

The non-major also said it would increase its appetite for lending with less security and a focus on cash flow, providing greater access to bank credit for SMEs. Discussing this pledge, Robynne Frost, national manager, SME and commercial, says, “We went out and said we are absolutely committed to small business, and that we want to lend more to help Australian businesses.”

learnt that you cannot afford to become complacent, particularly in the intermediary market, which has been no stranger to turbulent change.

“With the broker market now being the most major distribution channel for lending products, the pace is so fast and dynamic, and it dictates that we need to be the best that we can be. That’s what I have learnt, but it’s also what I have loved,” she says.

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SPECIAL REPORT

COMMERCIAL LENDERS AGGREGATORS ROUNDTABLE ROUNDTABLE 2017

COMMERCIAL LENDERS ROUNDTABLE Representatives from across the commercial lending space joined MPA to talk about the market, how they’re working with brokers, and the opportunities moving forward

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ARGUABLY, the commercial lending space has not faced as many headwinds over the past year and a half as residential lending, but changes to regulations and banks’ credit appetite have certainly had an effect.

However, the opportunities for brokers in spite of those headwinds are huge; the appetite of the banks may have changed, but by all accounts business borrower appetite is stronger than ever.

As many of the mainstream banks pull back from lending to businesses, these borrowers will still be looking for ways to access finance, and brokers can help them find the right solutions.

To look at the issues and opportunities surrounding commercial lending, MPA held its Commercial Lenders Roundtable with a bumper group of participants. Gathering at CafĂŠ Sydney on a beautiful July day, 11 industry professionals sat together to compare their experiences of the past 12 months and discuss the commercial space as a whole.

Participants came from a cross-section of the industry, including two banks, an aggregator, non-banks, fintechs and brokers.

This provided for a great discussion, which even included questions being asked within the group, as they were keen to hear from each other.

It was not about competition or promoting one brand over the other; all participants were happy to share their experiences, provide feedback and talk about the ways in which they were helping the industry. And some had already been working together through the Combined Industry Forum or at education events.

Commercial lending means more than just one thing, especially in a group as diverse as this. They talked about their experiences of SME cash flow lending, asset finance, commercial property and construction.

One of our participating brokers who focused on commercial property, particularly large developments and construction finance,

said the space had been tough this year.

This prompted an interesting discussion among the non-banks as to how they were coming in to support those deals that were being turned away from the banks – as well as, more generally, about the difficulties faced in the commercial property space when compared to business lending.

Read on to hear more about what these groups are doing across the commercial lending space and what they think about the growing opportunities for mortgage brokers.

Many thanks to our panellists: John Mohnacheff from Liberty, Steve Lawrence from La Trobe Financial, Aris Allegos from Moula, Yotta Agamemnonos from Loanworks, Brendan Wright from FAST, Chris Thomas from NAB, Malcolm Withers from Pepper, Greg Moshal from Prospa, John Kolyvas from ING, and the two brokers who made time on the day as well: Kevin Wheatley from Bayside Residential and Commercial Mortgages and Renee Tocco from Loanezi.

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AROUND THE TABLE

Yotta Agamemnonos Loanworks

Aris Allegos Moula

John Kolyvas ING

Steve Lawrence La Trobe Financial

John Mohnacheff Liberty

Chris Thomas NAB

Renee Tocco Loanezi

Kevin Wheatley Bayside Residential and Commercial Mortgages

Malcolm Withers Pepper Money

Brendan Wright FAST

How has the commercial lending space been different to the residential in terms of challenges over the past 18 months?

With so many different areas of commercial lending, the conversation was opened up to participants to compare and contrast the various challenges they had experienced.

“It’s no secret in the commercial space: it’s been a real tough time this year,” said commercial broker and director of Bayside Residential and Commercial Mortgages, Kevin Wheatley.

Wheatley specialises in large developments such as hotels, shipping ports and shopping centres, so most of his experience as a broker has been in dealing with lenders in that space. He said he had seen developers paying high prices for land while the property

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market was contracting, and that an inability to raise funding for construction had led to the stalling of this industry.

“The cranes we’re seeing in the sky at the moment are projects that have started in the last 12 months, probably earlier, but we’re not seeing too much more come out of the ground at the moment,” Wheatley added.

While that has been the case for larger developments, smaller development lending has been “an absolute dream” for La Trobe Financial. Vice president and head of major clients Steve Lawrence said the lender was seeing more and more “bank-quality customers” coming through as the big banks pulled back.

“What we’ve been seeing is customers coming our way in larger numbers in that development space,” he said.

Greg Moshal Prospa

While the major banks were looking for higher presale levels for the multi-unit developments, Lawrence said that wasn’t the approach of La Trobe Financial.

“We don’t always look for those 100% plus presales the banks are currently looking for; we can do nil-presale deals up to $15m, of course at lower LVRs, and deals with presales at levels lower than the banks. We’ve never been beaten by a bank on presales, and also we can turn around those deals much quicker,” he said.

From a major bank perspective and in contrast to commercial property, National Australia Bank’s general manager, commercial broker, Chris Thomas, said the bank had seen strong demand in industries such as agricultural financing.

“Equally, there are a lot of flow-on effects

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LA TROBE FINANCIAL How have you seen the commercial lending space over the last year?

Aside from noting the increase in “bank-quality customers” over the last year in the area of smaller development lending, La Trobe Financial’s Steve Lawrence said he had seen another shift: small business customers were also moving away from the banks to the non-bank sector.

“The main change is that the banks are becoming more stringent when undertaking their annual reviews, and a lot of SME customers are having a lot of trouble with the changes being made, such as they may have changed their view with respect to a certain industry type, or they may require a reduction in the LVR, making the borrower make a principal reduction, or they may require the borrower to move to P&I repayments instead of interest-only, which of course puts more pressure on the borrower’s cash flow,” Lawrence said.

The non-banks in this space are more like ‘set and forget’ lenders and do not carry out those same reviews.

Steve Lawrence

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from the significant infrastructure spending that’s going on through the eastern seaboard, and we’re seeing a number of customers who are partnered with their brokers, looking for finance to support that level of growth and to handle those contracts,” he said.

As the only aggregator in the room and thus perfectly placed to evaluate the residential and commercial markets, FAST CEO Brendan Wright said property was certainly tougher, but lending to business was seeing strong growth.

“There’s plenty of demand, particularly with small and medium-sized enterprises

when Greg and I started our respective businesses the cash flow lending category was a niche and less mainstream,” Allegos said.

“What we’ve seen over the course of the last four years as more brokers have adopted our product is that we’ve become significantly more mainstream than we ever have been.”

Loanezi’s managing director and commercial broker, Renee Tocco, added that now was a “prime time” for fintechs like Prospa and Moula.

“Customers need cash flow help, and the fact that people continue to tighten up on providing credit or changing matrixes means

“Brokers who understand that it’s not all just technology and data, it’s actually about understanding customer needs and fulfilling a solution quickly, do really well” Aris Allegos, Moula looking for finance. They are sourcing funding from a number of lenders around the table here by the way. We’re seeing significant opportunities, which is bucking the trend to be honest,” Wright said.

Nodding at the other end of the table as Wright spoke, Prospa CEO and co-founder Greg Moshal added that he had seen a continued need from small businesses for working capital, which provided a great opportunity for Prospa to work with brokers. “[Business owners] are looking for trusted advisers, so it’s also been fantastic for us to look at the broker market as key partners,” Moshal said.

“We can add an additional revenue stream, so especially when times are potentially tougher in certain other areas, we’re happy to be supportive in helping them diversify from a revenue standpoint.”

Fellow business lender Aris Allegos, owner and CEO of Moula, said businesses like his had grown from a niche to more mainstream because they were fulfilling a need.

“What I think is important to note there is

it’s even difficult for brokers to keep navigating through that,” she said.

Tocco specialises in asset finance and said she had noticed that once the election was over people were back in a “buying mood”.

“I think the election had a really big impact; the royal commission wasn’t great, but the commercial space is successful and profitable, and we just all need to focus on making it sustainable through putting the right structures in,” she said.

Wheatley agreed that “the timing couldn’t be better” for institutions like Prospa and Moula. “Most SMEs have run out of equity in the properties that they’ve had because they’ve leveraged off those in the past, so short-term money markets, cash flow finance is very much in demand,” he said.

Having recently transitioned from a bank, Pepper Money’s head of commercial, Malcolm Withers, said it had been an interesting time.

The lender only this year launched into the commercial lending space, and Withers said this was in reaction to the deterioration of banks’ lending appetite as well as the

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COMMERCIAL LENDERS ROUNDTABLE banks’ changing standards in regard to how they assessed customers.

“Business customers have seen a massive shift into the non-bank space. This has provided a huge opportunity for brokers who in the last four years now have more access to capital than they ever had in the past,” Withers said.

One thing that John Kolyvas, national sales manager, commercial, at ING has observed in the last 12 months is the emergence of niche markets.

“There are a lot of other players coming in that have got little niches in the value chain of SME lending, and some of them are tiny,” he said.

“I met a group providing cash flow finance to entities that were supplying two major supermarkets exclusively. That’s very much a sharp niche with a very particular appetite, and we’re seeing more of it. I think that’s one of the biggest fundamental shifts.”

What are the opportunities for brokers looking to diversify into the commercial space?

As the demand for lending to businesses has increased, and there are so many different products and lenders, more and more potential customers are looking for help to identify finance options.

While this does not mean all mortgage brokers should ditch the residential space, there are certainly opportunities to help their existing customers more widely.

Liberty’s group sales manager John Mohnacheff said traditionally the commercial market had been held by the banks and major lenders, but these institutions did not have the same capacity as non-banks to deal with smaller loan amounts.

“With the evolution of lenders like Moula, cash flow lending has become short, sharp and nimble, and the banks have found it very difficult to do that,” he said.

“If you go to a large bank and say you want a business facility for $200,000, they’ll direct you to a telephone. They simply can’t; there’s no scale for them to do it, and that’s

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“In diversifying your business, start by having great customer conversations, and understand that your self-employed client is actually a business owner, not only a self-employed customer” Malcolm Withers, Pepper the opportunity for the broker to jump in there and become the conduit to the small, nimble lenders.”

But brokers have become “wary”, Withers said. Entering the space can be confusing, so he focuses instead on having the right conversations to get them started.

“When we talk about diversity, people say, ‘But I’ve got to learn all these products, and now I’ve got to sell them everything’.

It’s not necessarily about that. It’s about having a conversation and getting to know

your customer’s business,” Withers said.

“We don’t have that conversation with our customers because we think they’re selfemployed customers who need a home.

“In diversifying your business, start by having great customer conversations, and understand that your self-employed client is actually a business owner, not only a selfemployed customer.”

Withers added that it didn’t always mean that a broker needed to do it all themselves; sometimes it was about bringing in partners.

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He said partnering with others who could provide that additional offering also meant brokers were not risking losing customers in the future.

Wright pointed out that many of the brokers FAST worked with were capable of lending to any size business, whether small,

about moving into commercial, Loanworks director of lending Yotta Agamemnonos said her team had been working on making it easier for brokers to work across the different spaces.

“We’ve really focused on making our processes as simple and certain as possible,”

“We as organisations have to evolve and be acutely aware of what the consumer really wants, and be able to provide a solution quickly” John Mohnacheff, Liberty medium, large or corporate, and they were also doing home loans. He said brokers needed to think about how they built their own businesses.

“They’re business owners, and this is the edge that they have in the marketplace; they can talk to another business owner and meet their needs,” he said.

“Brokers need to be aware that their competition could well be from other brokers, so you need to have a clear strategy around your business and your client base.

“One of the real upsides is to build on capability, not just in the small business and medium enterprise market but there is also a need to look after the needs of the directors and employees as well. That’s playing out really quickly.”

Allegos said this was a good point, and that a lot of people pigeon-holed cash flow lenders in terms of what they could do.

“The reality is, it’s very solution-based lending, so if you’ve got a broker who understands the customer’s needs and what they’re trying to solve for them, they can plug it into a platform like ours and quickly extract a solution that caters to that need.

“That’s the crux of our pitch and why brokers who understand that it’s not all just technology and data, it’s actually about understanding customer needs and fulfilling a solution quickly, do really well.”

Going back to brokers being nervous

she said. “Whether a broker is putting forward a residential or a commercial loan, our processes are the same. They speak to the same people. If they’ve done a residential loan with us, then they’ll know what to expect.”

“Brokers may be thinking, ‘I’ve never dealt in the commercial space, I don’t know what to do, I don’t know how to go about it’; however, with us it’s no different to doing a residential loan. We just want to make it as easy for the broker as possible.”

Kolyvas said ING was also trying to make it easier and had been running commercial workshops. He found that residential brokers were more often than not simply lacking the confidence to move across, rather than the knowledge.

“It’s interesting because the residential brokers come along and we go into in-depth financial analysis, identifying risks and how to mitigate them, of which they’re generally already aware,” he said.

“When you’re talking to them and asking them to contribute to a group exercise, they all know the theory and they all contribute actively; they just don’t necessarily have the confidence to be able to put their knowledge into practice for the first particular deal.”

Mortgage brokers are not expected to try their first commercial deal on their own, and Thomas said partnerships with solution providers were critical.

NAB How are you working with brokers and their SME customers?

As Chris Thomas mentioned a couple of times during the discussion, he places a high value on partnerships in the industry. This is particularly the case when it comes to brokers helping their small business clients.

“SMEs are underserviced in this country, and I think brokers are playing that trusted adviser role, which is spectacular, but partnership with solution providers is just as critical,” Thomas said.

“We have an obligation to support SMEs in Australia, because that’s where the prosperity is and that’s where the jobs get created.”

He said while sentiment regarding small business lending had taken a dip, he expected it would increase again.

“After the election we did see a nice level of renewed optimism starting to flow through. We were running at post-GFC highs eight months ago and since then have started to see a gradual decline to levels that are pretty ordinary.

Hopefully we’re now starting to see a bit of a bounce,” he said.

Chris Thomas

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COMMERCIAL LENDERS ROUNDTABLE NAB has 400 broker-aligned bankers across the country who work with brokers to help provide a service to borrowers, and he said it was “pretty special”.

“I think learning along the way is also critical because no two customers are the same and nothing fits the box, but it is how you work together to service the customer that is so important,” Thomas added.

Responding to this, Wheatley praised NAB for being the first to put its hand up at the start of the year to help SMEs with a cash flow product.

“Everybody had walked out on them.

NAB was the only one of the mainstream banks outside of the non-banks, the Prospas and the cash flow funders that said, if you tick our boxes we’re here to help,” he said.

Having been a small business owner himself a number of times, Moshal said

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owners of these businesses were often confused by the complexity of the various loan products, which meant brokers were perfectly placed to help them.

“They don’t understand the jargon, and the thing we’ve definitely found is – and I think this is true of all people but it’s 100%

years, and that’s fantastic, but as new entrants come in trust is a major point that’s got to be created.

“I think brokers represent that trust and earn that trust, and their selection of lenders and offering, that is a great advantage as well.”

“We find that giving a fast no can often be better than giving a fast yes for a business. It’s that extreme” Greg Moshal, Prospa true of SMEs – that they do value service and they do want to speak to someone,” Moshal said.

“We love working with partners because partners really serve that customer adviser role. Banks have created trust for over 100

What impact has the emergence of fintechs had on the commercial lending space?

Although the lenders that are frequently dubbed ‘fintechs’ are keen to move away from the term, there is no denying they are a group that’s revolutionising the way lending is done.

Wright said the beauty of fintechs was that they were “keeping the bigger organisations on their toes”, causing them to think differently and adapt. He added that it went beyond lenders, with solutions and platforms such as NAB’s QuickBiz, Simpology’s Loanapp and NextGen.Net’s ApplyOnline on the market.

“Lenders are looking at fintechs and thinking about how they can leverage the technology to be more efficient and effective.

It might mean more products and services, but certainly the fintech lenders have got the major banks on their toes, and it’s a really good thing; competition is a good thing,” he said.

The need for faster, more efficient processes as a result of increasing competition from fintechs resonated across the table.

When Pepper entered the commercial space this year, the non-bank recognised the important role technology needed to play.

Withers said residential mortgage brokers looking to introduce commercial would find its efficient online application process similar to its home loan online applications. Pepper also provides a strong solution for all brokers by delivering in a timely manner.

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FAST How has the industry worked together over the last 12 months?

The group began by discussing the efforts of the industry bodies to educate and lobby, particularly after the royal commission’s final report was released earlier this year. While the challenge was made that they had not been proactive because it was a reaction to the report, Wright said it was important to remember what had happened before that.

“The industry did get on the front foot after the ASIC broker remuneration review: the Combined Industry Forum was established. Because the nature of what brokers do is more than home loans, all the industry bodies got involved, and then something was done to take a proactive step,” Wright said.

“It’s a significant achievement, not just the establishment of the Combined Industry Forum but more broadly, whether you’re offering home loans, business lending or asset finance, it’s the piece about working together, with the right outcome for the customer in mind, whether for the consumer or the business owner.”

Brendan Wright

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To improve the process, Withers said, creating direct links between the broker and the credit team had allowed for faster turnaround times.

“That’s why we decided to utilise technology with online lodgements and then give the broker who knows the story the ability to talk directly to credit. No one knows the customer’s story better than the broker,” he said.

Loanworks has done a similar thing by making it easier for brokers to speak directly to the decision-makers.

Agamemnonos said the brokers who worked with Loanworks appreciated its

what it’s all about,” Lawrence said.

La Trobe Financial, he said, was focusing on “speed to market” and using technology like the Simpology Loanapp to do that.

He said it was all about servicing brokers and borrowers, and that La Trobe Financial had a “three-ring policy” that allowed a customer phoning in to talk to a staff member within three rings.

While many lenders are looking at their own technology in reaction to the rise of fintechs, Mohnacheff said Liberty realised there was a better solution.

“By partnering with fintechs and alternative providers like Moula, MoneyPlace,

“I was a broker for 10 years ... and the challenge for the broker at the moment is there are so many options available to them” John Kolyvas, ING input with regard to how best to package deals, and also that they weren’t dealing with a BDM but rather with the person directly responsible for the decision.

On the technology side, she said this had been a focus of Loanworks since its early days.

“Twenty years ago, we developed our digital automated loan origination solution.

Our lending business uses it to streamline our own lending processes, and our solution is now so sophisticated that our decisioning engine is used by banking industry challengers such as 86 400,” she said.

Lawrence said she took the words right out of his mouth, when emphasising how important it was for brokers to talk to the decision-makers.

“You’re absolutely right about brokers being able to talk to the decision-makers at any financial institution, which is not always the case. Speaking to the decision-makers, passing on what we required back to the broker/borrower to make sure we can speed up the time get the deal approved, that’s

and ALI, we can provide greater customer satisfaction by saying we’ve got that solution,” Mohnacheff said.

“We as organisations have to evolve and be acutely aware of what the consumer really wants and be able to provide a solution quickly. We’re all facing the same challenges, because the moment you rest on your laurels and say we’re almost there, you can be guaranteed that you’re not.”

As one of Liberty’s fintech partners, Moula’s Allegos said the lender was not focused on competing with the big banks but instead on investing in its own infrastructure and helping brokers with their transactions.

“A core part of what we’ve built, apart from our decision-making capability, is our partner relationship management tool, and it’s as simple as that,” Allegos said.

“The fact that our presence might result in NAB’s QuickBiz is fine. In fact it’s great; it validates the segment and gives us more capability to invest more in our broker tools, etc., so it’s really quite self-fulfilling.”

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PROSPA What impact has the emergence of fintechs had?

During the discussion comparing more established lenders with the fintechs, Greg Moshal said it made him nervous to use the term ‘fintech’: many groups are trying to move away from it as they become more and more mainstream, particularly as the expectations of consumers shift.

“The first thing to call up is general expectations are shifting – what consumers expect, what consumers are getting from technology providers, and the experiences you have. Not so long ago you used to have to order a taxi.

That seems strange to me now; I order an Uber,” Moshal said.

At Prospa, this meant the team spent a lot of time on automating their processes to make the solutions simpler and faster, but it also involved looking at creating an “elegant design”.

“That’s very important to us in creating the best experience,” he said.

Greg Moshal

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With expectations shifting and what consumers are getting from technology providers evolving, some parts of the commercial lending space have lagged, Moshal pointed out.

At Prospa, he said they never measured how long someone was spending on the phone to the client, because it was important to understand their story and come to the right decision.

“We find that giving a fast no can often be better than giving a fast yes for a business.

It’s that extreme, and we should all just be aware that the expectations from all our customers is dramatically increasing and we all have to keep up,” Moshal said.

How are you training and educating brokers to keep up in the commercial space?

As the group had already discussed the inconsistency of commercial lending, the various banks’ appetites and developing technologies, it was important to gauge how each of the participants was working with brokers to ensure they kept up to date and were having the right conversations.

Moshal said it was important for Prospa to educate brokers as they entered a whole new area, and they did this through webinars and PD days, but he found the best results came from providing real-life scenarios.

“The reality is, you can have as much

“Certainly, the fintech lenders have got the major banks on their toes, and it’s a really good thing; competition is a good thing” Brendan Wright, FAST The need for fast answers was agreed around the table, which is one thing fintechs have spurred the banks to work on. Borrowers can now expect loan approvals to come through within minutes after filling out an application form online; no longer do they want lengthy processes and to wait for a decision, let alone wait on the phone or wait for an indicative answer.

These online applications and other platforms, however, might be making things more confusing. Thomas said that when he visited brokers he often asked them what they were looking for in terms of technology.

While every broker put their own spin on it, consistency was the answer that kept coming up, because there was no current standard emerging.

“They look at the residential market and they see a very consistent lodgement protocol, but in the commercial and equipment finance market they’re worried about everyone going their own way and being very different,” Thomas said.

training as you want, but when you say I actually helped the business in this way, it’s amazing and it just resonates. I think real examples, real scenarios, have absolutely been key,” Moshal said.

Many of those at the roundtable had also been involved in the Combined Industry Forum, which has worked to educate and grow the broker industry.

As well as being part of the forum, Wright said FAST had also worked with the MFAA to develop a commercial accreditation program, and also with the Commercial and Asset Finance Brokers Association of Australia (CAFBA).

“We look at what we can do, we work with the lenders on bringing their capability programs to brokers who aggregate through FAST, and we also work with industry bodies. So, we have a three-tiered approach – involving FAST, lenders, industry bodies – to build the capability of broker businesses to meet more than the home loan opportunity,” Wright said.

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MOULA How have you seen the commercial lending space over the last year?

Aris Allegos said that, from starting in a niche space a few years ago, Moula has grown to become a more mainstream offering. He puts this down to fulfilling a need.

Looking forward, he said, “From our perspective, growth is significant. It’s a function of the fact that we’re going from being niche operators into mainstream operators. Insofar as industries we’re catering to, we’re broadening beyond what was our traditional mainstay of small businesses to very much the whole remit of SME, and to that end we’ll continue to see a lot of growth.”

That growth will continue without “retaliation” towards the banks but due to Moula’s product offering, speed of loan execution and continued investment in the data-driven platform the lender has built since it first started.

“A core part of our infrastructure which we’ve been building since we started is around how do we fulfil a broker-related transaction with speed and transparency for the customer top of mind? How do we make it easy for a broker to refer to us and have confidence in our solution and the outcomes?”

“I think learning along the way is also critical, because no two customers are the same, and nothing fits the box” Chris Thomas, NAB Aris Allegos

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PEPPER How will you continue the education and training of brokers?

The industry has shifted to a strong focus on education, particularly as a result of the royal commission, but Malcolm Withers said that even over the last four or five years there had been a major uplift in the accessibility of education for brokers on their journeys through learning commercial; and it was just getting better.

Moving forward with Pepper, Withers said he wanted to continue the commercial training for brokers.

“It’s designed around teaching the broker how to have a conversation with a customer. It starts with a conversation and what types of things to ask the client and how to create a story for that customer. They could take that narrative and talk to any bank, any BDM, across the entire industry and tell that customer’s story about what they need,” he said.

“Then it moves from there into the more technical aspects of writing an application form and then doing the financial analysis off the back of that application.”

Malcolm Withers

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For the last two years, before he joined Pepper, Withers was involved in an industry commercial masterclass, joining forces with other lenders to offer training, and he will continue to focus on broker commercial education at Pepper.

“When I look at the broker education efforts, it’s getting better. Over the last four to five years there’s been a major uplift in the accessibility to education and opportunities for brokers to learn how to adopt commercial,” he said.

Joining Withers at the commercial masterclass was ING’s Kolyvas, who said he still jumped “on the tools” every couple of months to see the quality of transactions.

He found this served to educate him on how to help brokers produce better submissions.

As well as increasing education for brokers, the industry has had to work harder on educating politicians and the public over the last year.

As a commercial broker, Tocco works closely with CAFBA, and she said she doesn’t think the hard work the associations do is spoken to enough.

“It blows my mind what every single board member does at CAFBA towards lobbying for this industry and keeping it viable and pouring into the longevity of the industry,” Tocco said.

“These aren’t people who are active on social media, so that’s what I’m trying to do a little bit, because there is no clap, there’s no pat on the back, for the extensive amount of work that they’re doing. It’s not just CAFBA but every single industry body, and the aggregators.”

Bringing it back to the point of education and training, Mohnacheff said Liberty believed it was important to concentrate on what happened after the education. It was not just about teaching brokers but empowering them to use their new skills.

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ING What impact has the emergence of fintechs had?

With fintechs entering the market, on top of the established bigger banks, non-banks and alternative lenders, John Kolyvas said there was a growing challenge for brokers.

“I was a broker for 10 years – I’ll put my hand up – and the challenge for the broker at the moment is there are so many options available to them,” he said.

He added that the education piece around this was particularly important.

“The brokers are rightly focused on processing particular transactions and dealing with each customer, but we find that when they balance this with continuous education – because there are so many options and so many niches and products available – this is what leads to them offering the best possible service to the customer.”

“We’ll make sure they know what we do and help them through that process so they can look after the borrower, because that’s what it’s all about” Steve Lawrence, La Trobe Financial John Kolyvas

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SPECIAL REPORT

COMMERCIAL LENDERS ROUNDTABLE

LIBERTY How has technology had an impact on the industry?

One of the discussion topics was around the various technology platforms in the commercial space. Liberty’s John Mohnacheff said things were changing very quickly, but more consistent commercial platforms were beginning to emerge.

“I think technology will help drive change – it has to. If you’d told us 10 years ago that we’d be sitting here talking about unsecured cash flow lending for SMEs – assessed by a technology platform – we would have laughed. But it has happened,” he said.

“I think technology is critical to better understanding our business clients. I’m very much for partnering with people who understand how technology can create improved customer outcomes.”

John Mohnacheff

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“We’ve come back to the one simple realisation that we have to put people on the ground. We’ve got over 60 BDMs talking to our brokers, helping them through it, holding their hands for their first, second and third deals,” he said.

Allegos added that this requirement was “inherent” in platforms like Moula’s, which have the technological capability but brokers also need the conversations on the phone to explore the appropriate solutions.

“BDM relationships are the key. The reality is you need vastly capable BDMs as the go-to people for support in fulfilling complex commercial scenarios, whether they’re cash flows or building towers. You’ve got to have a huge spectrum of knowledge to explore all the various outcomes, and that’s where the relationships with brokers

become so key to it,” Allegos said.

The importance of the role of BDMs was echoed by Thomas, who said NAB had 160 business banking centres across Australia that brokers could access to speak to bankers and credit managers directly about transactions. It had also introduced seminars enabling brokers to speak to specialists about different forms of financing.

“The connection point is the people and how we connect and how we hold hands together. We’re really committed to lifting standards for the customer at the end of the day, and we’ll continue to invest in our platform because we continue to believe in this channel and see the growth ahead is going to be quite exciting,” Thomas said.

Educating brokers by enabling them to have conversations with BDMs or credit

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LOANWORKS How is Loanworks using technology?

Loanworks already offers a cloud-based loan origination solution that automates the origination process end to end.

It is now refining this further to include an online application interface, due to launch later in the year, which will allow customers to apply for a loan on any device and even switch between devices mid-application.

Yotta Agamemnonos said the Loanworks decisioning engine made credit decisioning easy. It would help lenders increase their loan volumes, not to mention reduce costs.

“We’ll return a decision in three to four minutes, fast-tracking assessment and approval of those vanilla clients, allowing lenders to work on the more complex deals. It’ll improve transparency around the application process and will allow lenders the time to better service their customers.”

managers was a trend among the lenders.

Agamemnonos said that because Loanworks controlled the entire process brokers got to speak directly to the person approving their loan to discuss a deal if they were not sure how to package it.

“Brokers can speak directly with the decision-makers. We listen to what they need and work with them to develop a solution.

We’re in regular communication, constantly educating them, advising how they can make their scenario work,” she said.

“Each broker is different; however, we really try to customise the experience for each one. We’re all about relationships.

I really think that our relationships are the core of our business.”

With a table of non-banks and fintechs, the importance of brokers was clear.

Lawrence said that at La Trobe Financial about 90% of its business was made up of broker transactions.

“We have one-on-ones with brokers; we bring brokers into our office for training sessions; we undertake presentations on commercial, presentations on construction; we undertake webinars on these topics as well. We enter presentations with the aggregators, and we were recently the major sponsor of the FBAA Commercial masterclass,” Lawrence said.

“What everyone else has been talking about, we’re doing with the brokers, because at the end of the day they’re an absolute priority to us. We’ll make sure they know what we do and help them through that process so they can look after the borrower, because that’s what it’s all about.”

Yotta Agamemnonos

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FEATURES

INSURANCE

Insured for business growth New research shows that small businesses have a positive outlook for the year ahead, but BizCover’s Michael Gottlieb says it is important to do a health check on the business to avoid being underinsured

SMALL BUSINESSES are looking at the year ahead with a much more positive outlook than in the last 12 months, but as they make plans to expand it is important that they ensure they are prepared for any risks.

According to the recent BizCover Small Business Bravery Index, about 60% of small businesses interviewed predicted a better outlook for 2019 than in the previous 12 months.

While findings from the index point to a variety of reasons for this optimism, changes to internal resources were a key contributor.

These could be attributed to expansion within businesses, which are hiring new staff and using online tools to save money and time.

At a macro level, the federal election in May discouraged small business positivity during the first half of the year. Now the election period is over, BizCover CEO Michael Gottlieb says businesses can look forward.

“The main concern was the lack of stability, clarity and continuity of policy.

After the election, I’m extremely hopeful we will see the beginning of a government providing an environment of certainty, which hasn’t been the case for years,” he says.

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Sponsored by

The report also showed that 30% of small businesses that were looking to grow saw demand from customers – or the lack of it – as a major constraint. Eighteen per cent said price pressure from competitors was a constraint, 15% mentioned rising overheads, and 14% cited government charges and taxes.

When asked what the biggest concerns were, the two answers that came out on top were building the business/new customers (39.75%) and cash flow (30.21%).

Cash flow is a resounding area of concern across the small business sector, and many of the respondents to the survey called out problems with unpaid invoices. A recent study by the Australian Small Business and Family Enterprise Ombudsman found that it takes, on average, 36.7 days for a small business to have an invoice paid.

One small business owner surveyed in the index said tighter lending policies after the royal commission were a concern, as this affected client cash flow and

SMALL BUSINESS PERFORMANCE 2019

8% 2%

24%

Much better Better About the same

33%

Worse Much worse

34%

in the report, as to what might affect their performance over the next year, may also be shared by mortgage brokers hoping to grow their own businesses.

Gottlieb says risk management is inherent in running a business, and professional

“To connect with your customer you need to understand their value proposition and the unique selling point of their business to build rapport” borrowing potential. Gottlieb says this is where mortgage brokers can step in to help their small business clients.

“Among different industry sectors, over half of all business owners felt confidence in their product or service first and foremost. The lesson here for brokers is that to connect with your customer you need to understand their value proposition and the unique selling point of their business to build rapport,” he says.

Many of the concerns raised by businesses

indemnity (PI) insurance can provide finance and mortgage professionals with some financial protection.

This insurance protects small businesses in the case of claims against the business for losses due to actual or alleged negligent acts or omissions in the provision of their professional service or advice. PI insurance will also assist with the legal costs associated with responding to or managing claims that are covered by the policy.

“You don’t need to buy all forms of insurance, apart from compulsory coverages, but you must purchase insurance to cover you when the financial risks of being uninsured are too large for you to manage,” Gottlieb says.

According to the index, just less than 1% were worried about being underinsured.

While Gottlieb says it is concerning that small businesses don’t see insurance as a major worry, he says it is not surprising when looking at the statistics on a national level.

Underinsurance is a bad habit of most Australian businesses. The Insurance Council of Australia has found that almost 20% of small businesses aren’t insured for the amount their assets are worth, and 13% don’t have any insurance at all.

Gottlieb says, “We believe the best way for a small business to avoid being underinsured is to do a health check on your business.

Have you recently added more employees?

Expanded your product or service offering?

Or increased your revenue? What is the true value of your asset holdings? As your business grows, so does your risk profile, so it’s important to review your cover, just like you would review your finances.”

Insurance is particularly important for businesses, even mortgage brokers, as they look to expand, because there is a huge risk in playing catch-up with policies.

It is important to insure a business against the kind of events that have the singular power to financially ruin it, says Gottlieb.

“As your business grows and your investment becomes more and more significant, the amount of risk you take on can increase exponentially. Insuring against expensive legal claims should be a major priority and your starting point. From there, it’s in your best interest to do a full risk audit and decide what other special insurances your business needs.”

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FEATURES

WHITE LABEL LENDING

Brokers’ point of difference There are many ways brokers offer value in their service to customers, and white label loans are one of them. Those offering and funding these products expect the space to continue to grow

IN THE recent Brokers on Aggregators survey, MPA asked brokers to rank a number of aspects of the industry in terms of their importance. While white label loans were not considered as important as training and education, commission payments or BDM support, they were given higher importance than last year.

According to the MFAA’s Industry Intelligence Service for the period 1 April 2018 to 30 September 2018, just over 7% of brokeroriginated loans go to white label lenders.

Lenders and aggregators know the importance of white label loans is growing too, as brokers continue to expand their service value to clients. One of the benefits for mortgage brokers is the exclusive deals they can get in the form of these loans.

Head of Connective Home Loans Michael Goerner says this is a real point of difference.

“The thing with any broker is they have

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access to a lot of different lenders, and some of these lenders are available in the retail space and are recognised retail brands,” he says. “But a broker might say, I can take

and highlights the unique role a broker can play, but it also helps the broker from a business point of view. Goerner says when that home loan borrower is talking to

“The product and pricing matches consumer expectations, so it’s not something sold as premium just because it’s good for the broker; it’s very worthy of being a competitor to the major banks” Michael Goerner, Connective Home Loans you through some products today and some of them you’ll know, but I’m going to introduce you to some products and solutions that you don’t necessarily know.”

This is not only good for the customer

friends about their loan, they won’t name a retail brand but instead will direct them to their broker.

“It positions the broker as a point of difference; it delivers a great solution, and

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if it’s a great service the consumer is more likely to refer people back to the broker,” Goerner says.

“The other thing that happens is that because we are really just delivering the home loan through the broker channel, we’re not telling the consumer to come back into a retail environment through a customer call centre or retail branch. The chances of me as a broker losing that customer back to the retail option is significantly less.”

The growing importance of white label has also encouraged better-quality loans.

Goerner says the perception of these loans has changed; the cheaper price used to be seen as a sign of the quality of the product, but now there is confidence that it is the same product, if not better.

Connective relaunched its white label offering back in 2015, and its business has grown 35% year-on-year. In the last four years it has settled in excess of $6.5bn, representing around 14,000 loans for 30,000 Australians.

“I think it’s a combination of a lot of things. One is consumer confidence. The fact is that the product and pricing matches consumer expectations, so it’s not something sold as premium just because it’s good for the broker; it’s something very worthy of being a competitor to the major banks in the rates, the services, the products, all of the features,” Goerner says.

Over the last four years since it relaunched into the white label space, Connective Home Loans has continued to add new products from various lenders to its offering, to ensure it can service the wide range of customer needs coming through.

One of its partners is Adelaide Bank, which also has white label partnerships with AFG Alpha and Tic:Toc. Darren Kasehagen, head of third party banking, says there are a couple of reasons why the bank chooses to offer these products through aggregators.

“We’re responding to the changing wants and the needs of our partners and the preferences of their customers, in terms of how they choose to access finance.

Aggregators also help find and service market segments or customers that Adelaide Bank may not always necessarily be able to reach,” Kasehagen says.

care from the everyday all-round support of these products.”

Choosing to fund a white label takes a lot of consideration for Adelaide Bank, which wants to make sure it is offering the right products in the right places.

“We will only add white label partnerships if we think it makes sense,” Kasehagen says.

“When you put yourself in the mindset of a broker … they’re looking to sell and distribute those products for the right reasons for the customers” Darren Kasehagen, Adelaide Bank He agrees that the level of scepticism around white label loans has dropped over time, and brokers are starting to understand that aggregators do not want to put a product to market under their own brand that “doesn’t stack up”.

From the lender perspective it is important to know what those brokers are looking for in a white label product.

Kasehagen says there are a few things brokers are interested in.

“If there’s a new-to-market white label product, brokers want to make sure the product will be well supported, that it’s a competitive product range and complemented with competitive pricing. I don’t think they’re necessarily asking for anything more or less than that,” he says.

“When you put yourself in the mindset of a broker who is out there every day representing themselves in front of customers, they’re looking to sell and distribute those products that are the right fit for their customers. The last thing they want to do is put something in front of the customer that isn’t the right fit or well supported in terms of back-office servicing and genuine

“We’ll add another white label product at the right time, when it’s the right fit, but there’s no benefit to anyone, whether it’s the broker or the borrower, of adding a white label for the sake of it.”

Another lender that has seen the popularity of white label loans continue to rise is dedicated white label funder Advantedge. It offers a huge variety of products across multiple aggregators, and more than eight in 10 Australian brokers currently have access to its white label loans.

The increase in white label’s popularity is not just about cheaper rates and simplicity but also down to the “faster turnaround times, increased ease of transacting, improved accessibility and superior customer service”, says Advantedge general manager Brett Halliwell.

Brokers are also turning more to white label loans for their competitiveness and flexibility, he says. “The common misconception that white label loans are simple products limited to simple-use cases is slowly eroding, and brokers are now realising they can be used far more broadly and for more complex financing requirements.”

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FEATURES

WHITE LABEL LENDING

PROPORTION OF LOANS TO WHITE LABEL LENDERS 1.3% 2.1% 5.5% 4.3% 6.6%

1.5% 2.8% 5.7% 5.3% 5.7%

6.0%

5.8%

15.8%

13.9%

2.4%

1.8%

4.9% 4.7%

7.5%

6.6% 5.0% 5.7%

5.1% 7.3% 5.9% 7.7%

14.8% 14.1%

3.6% 9.6%

Credit unions, building societies and mutuals

6.4%

Non-bank lenders

7.3%

Any other type of lender

7.4% 6.9% 13.1%

White label lenders International banks (eg ING Direct, Citi etc) Independent regional banks (Suncorp, Bendigo)

58.5%

59.3%

55.9%

50.7%

45.6%

Regional banks owned or aligned with major lenders (ie Bankwest, St. George, etc)

JULY AUGUST SEPT 2013

JULY AUGUST SEPT 2014

JULY AUGUST SEPT 2016

JULY AUGUST SEPT 2017

JULY AUGUST SEPT 2018

Major banks (ANZ, CBA, NAB, Westpac)

Source: MFAA Industry Intelligence Service 7th edition

“The common misconception that white label loans are simple products limited to simple-use cases is slowly eroding” Brett Halliwell, Advantedge Halliwell says he expects the growth and interest in white label loans to continue as the broker market share grows, and Advantedge aims to play a part in that.

“Advantedge remains committed to supporting and championing mortgage brokers as a channel of choice for consumers, which is why we continue to strengthen and refine our product and service offerings,” he says.

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“We support and work in partnership with brokers to provide a great experience and positive outcomes for customers. We do this by continually investing in improvements to simplify our service offering, and by enhancing our digital capabilities to make life easier for brokers and their customers.”

While their popularity is growing, and brokers are gaining a better understanding

of white label products, there are still some misconceptions and confusion. To combat this, Advantedge has a number of initiatives, as well as specialist teams and BDMs to provide support for brokers.

Advantedge’s quality submission checklist guides brokers through the steps of lodgement, and it is also about to introduce Simpology’s Loanapp to provide real-time assistance throughout the application process. “[These initiatives] have resulted in significant time savings for brokers and customers, with approximately 60% of digitally signed documents being signed by customers and verified within three business days – less time than it takes to send hard copy documents in the mail,” Halliwell says.

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FEATURES

NEW BROKERS

Supporting new industry entrants New entrants and business growth might have taken a dip in the months before the federal election, but with more stability since then, new brokers are coming back into the industry. MPA looks at how two different-sized aggregators are working with those coming in

ENTERING A new profession in any industry is tough. It involves learning new skills, meeting new people and, as often happens with a career change, possibly taking a pay cut.

For mortgage brokers, this is all too true.

With no trail book behind them, new-toindustry brokers find they need to spend a couple of years building up their client base before they have any kind of steady income.

A large proportion of new brokers struggle to make it past the first 12 months.

Specialist Finance Group’s managing director William Lockett says he sees about 30% of new entrants remaining in the industry, after having worked through and overcome all the changes that come with being in a new profession.

Add to that the anxiety caused by the royal commission, which meant not only was the remuneration structure under threat but the reputation of the industry as a whole.

The result was that those considering entering the industry backed away, and even those already settled as brokers put their plans for growth on hold.

Lockett says he saw a decrease in

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FEATURES

NEW BROKERS

NUMBER OF BROKERS RECRUITED ACROSS AUSTRALIA Apr 15–Sept 15

Oct 15–Mar 16

Apr 16–Sept 16

Oct 16–Mar 17

Apr 17–Sept 17

Oct 17–Mar 18

Apr 18–Sept 18

Number of men recruited during period

931

972

947

938

1,168

892

854

Number of women recruited during period

475

454

439

360

523

406

371

Source: MFAA Industry Intelligence Service 7th Edition

enquiries from new brokers over the last year, but since the federal election in May he has seen those rise again.

“If we’ve got stability in our industry, it allows us to make plans, it allows us to make decisions, it allows us to forwardthink with regard to our strategy – and by knowing what stability we have, it allows people to manage their businesses accordingly,” he says.

Over the last year, Specialist Finance Group has welcomed about 15 new-toindustry brokers. While it’s had a much

committed is one of the biggest challenges for a new broker. “It’s a full-time input to the industry,” he says, adding that it can be an emotional and financial rollercoaster.

Specialist Finance Group is one of a few truly independently owned aggregators.

Lockett works closely with his new members to advise on their business models. As well as providing new brokers with a high level of support, the group ensures brokers are paired with the right mentors and equipped with the best tools and technology. The process is “very much a direct business

“Mortgage broking can be rewarding and offers the opportunity to be independent, but it takes a lot of self-determination and proactivity” Stephen Moore, Choice Aggregation Services higher number of enquiries than that, it vets each one to ensure they not only have the right qualifications but also a strong business strategy and are committed to the industry.

Lockett says that, as well as the commission structure, being and remaining

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owner to business owner” model, he says.

“One of our great strengths is having that direct contact, because they feel that they as business owners having access to me as a business owner provides them a level of comfort, but they also know they can

deal with decision-making people and they don’t have to deal with a board structure or companies taking a month to make a decision,” Lockett adds.

As a larger aggregator, Choice Aggregation Services typically sees around 100 new brokers each year. While some of these are completely new to the industry, for Choice the largest segment coming in is made up of bankers or those with other financial services backgrounds.

The biggest pitfall for brokers is “underestimating” what it takes to become a successful broker, says Choice CEO Stephen Moore. This includes everything from knowing what it takes to get a new business up and running, to understanding the time it takes before they will see positive cash flow or grow a strong peer network.

“We find that new-to-industry brokers who possess strong customer service skills and a positive mindset do well. Mortgage broking can be rewarding and offers the opportunity to be independent, but it takes a lot of self-determination and proactivity,” Moore says.

Like Specialist Finance Group, Choice also saw a decline in interest from new brokers within the period of uncertainty, but

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FEATURES

NEW BROKERS

following the federal election this has picked up again.

“We also continue to see an increase in the experience and quality of new recruits.

This is fantastic news for our industry as we continue to develop as a profession,” Moore adds.

Choice understands that it’s important for its new brokers to feel supported and connected with others in the industry.

Along with the fact that many of the aggregator’s new brokers have a background in the financial services sector, Moore says many of Choice’s founding members and staff also started their careers in banking.

“So we know a thing or two about helping bankers and other financial service professionals transition to mortgage broking,” he says.

Choice does this by offering both formal and informal peer-to-peer learning opportunities, on top of its professional development days and lender expos.

Support for new broker businesses New brokers at Specialist Finance Group take part in a detailed, structured training and development program, in addition to its ongoing professional development days, and there is a strong focus on their continual support to help new brokers with their business strategies.

Specialist Finance Group also provides its members with the opportunity of financial support for their brokers to help them grow their businesses. “You wouldn’t provide that additional assistance if you didn’t have belief or if you didn’t have trust,” Lockett says. “Why would you bring any business relationship on board if your starting position was not to help them grow wherever you possibly could?”

Specialist Finance Group’s online realtime advisory panel, ‘Loan Assist’, allows members nationwide to access a panel of experienced loan writers and a rotating group from the lender panel.

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“[The broker] might just get stuck on a particular deal. They’ll put it into our loan scenario team and they will all provide help on the enquiry. As the feedback comes in, all the others see the response, and they can agree with it or put up other suggestions,” Lockett says.

Also acknowledging that brokers don’t just need to work in their business but on their business, Choice ensures that its team of partnership managers work directly with all new brokers, including transitioning financial services professionals, to help them get up and running.

This includes assistance in the develop­ ment of business and marketing plans, cash flow strategies, referral opportunities,

number of years ago, in terms of digital advancements. Specialist Finance Group provides online platforms enabling brokers to work more efficiently and providing a boost for the broker-client relationship.

Its software platform SFGconnect was launched just over two years ago and has been a “game changer” in the industry. It has recently added the convenience of an iPhone app.

Business tools such as Equifax, RP Data from CoreLogic and bankstatements.com are fully integrated. Via the client portal, clients can upload their documents in their own time and brokers are updated automatically.

Choice has also been investing heavily in

“Having access to me as a business owner provides [brokers] a level of comfort, but they also know they can deal with decision-making people” William Lockett, Specialist Finance Group customer management and more – all to create the best environment in which new brokers can thrive.

“We find that the best brokers are those who can maintain a proactive and positive mindset when it comes to doing business.

Using good customer service skills effectively to build relationships and deliver better outcomes is essential,” Moore says.

“Positive people are not only happier but are typically more successful, and therefore the best thing brokers can do is to surround themselves with like-minded people and leverage the support teams of their aggregator.”

Leveraging technology New brokers now have a big advantage compared to those joining the industry a

its digital offering, and following extensive feedback from broker members it is rolling out an enhanced version of its broker business operating platform Podium.

The new features provide brokers with the capability to interact digitally with customers upfront and on an ongoing basis, and aim to provide improvements to many aspects of a broker’s business, including workflow, compliance and management reporting.

“It’s clear that change in the broking industry shows no signs of slowing, and that the physical and the digital worlds will continue to integrate. Choice is focused on investing in our technological solutions to help brokers, both new and experienced, run their businesses more effectively,” Moore says.

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FEATURES

OUTSOURCING

Making time for great moments As brokers grow their businesses, mundane administrative tasks can take away from what first motivated them to enter the field: people.

While nervous about outsourcing at first, two self-proclaimed advocates say they have been able to get back their face time with clients DECIDING TO outsource can be a big move for business owners who are so used to doing it all themselves that they are not sure how to relinquish control. This was certainly the case for 1st Street Financial director Jeremy Fisher, who says he was a “control freak” used to being hands-on and overseeing everything.

But Fisher’s business was growing yearon-year, and he had already moved offices three times to keep up with recruiting new staff over the past eight years, so he gave outsourcing a go.

A couple of years down the line, he says he would not look back.

“I was the last person I’d have ever thought would look to outsource. But outsourcing has enabled us to continue to work efficiently and grow our settlement volumes without the additional compliance and paperwork getting in the way,” Fisher says.

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Wanting to maintain control of his business, Fisher says he rolled out tasks slowly so his team members in Manila could fully understand each process before moving on to the next.

something brokers bring up a lot, but control is not compromised any more than if the broker hired someone in the same office.

With the broker controlling what tasks to send over and what pace they are sent over at, the dynamic varies from business to business.

“We have clients where the outsource person is just in the background and everything goes through the broker. So the broker is there for that hero moment, first of all when they’re meeting the client, presenting different options, and then when their loan is approved,” he says.

“The broker is there for those great moments, but there are lots of moments in between which are not client facing.

Some brokers do have the outsource person interacting with the clients, others do not, but either way the broker controls that process.”

Part of the team While outsourcing can be done on a per-deal basis, hiring a permanent member of staff means they can be trained to fully understand your business and you won’t have different people working on different deals.

Melanie Cunliffe, owner and founder of Indigo Finance, also uses Loanworks

“Where the outsource person is just in the background and everything goes through the broker ... the broker is there for that hero moment” Jason Goodacre, Loanworks He works closely with outsourcing provider Loanworks, which helps with the day-to-day management of the offshore teams, as well as providing the IT structures, human resources and training.

Loanworks customer relationship manager Jason Goodacre says the control aspect is

for outsourcing. She decided to outsource because she wanted to open up more time with her clients and have someone take on the back-end administration.

She says she has taken on some “amazing” and passionate staff, and ensures they feel just as much a part of the team as those based in

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WHEN AND WHY YOU SHOULD OUTSOURCE As a broker’s business grows, so does their workload. But Loanworks’ Jason Goodacre says this doesn’t have to be the case.

“There’s a lot of data entry, quite a lot of time chasing documents or calling lenders; you might spend a lot of time calling banks and being on hold.

“But that’s not the broker’s main job, and it’s not where they add value.

Their expertise is not to spend the afternoon on hold to banks. It might be that you’re new to the business and you’re happy to do all that, but there comes a point when you shouldn’t be doing this any more if you want to grow your business and you need some help.”

Australia. Not only are they involved in all the staff messages sharing memes, but she has been to visit them in Manila.

“One of the best things we’ve done is go

“For each individual area we built training modules. We had one person initially, and now we use that one person as we’re growing the team to train others within the team. There are

“We had one person initially, and now we use that one person as we’re growing the team to train others within the team” Melanie Cunliffe, Indigo Finance over there and spend time with the staff on training, and also getting to know them more on a personal basis and seeing the environment they’re working in,” Cunliffe says.

She also ensures that her dedicated staff are fully trained so they can go on to train other staff members that join the team.

also some instances where team members in Manila train our members in Sydney.”

Not left in the dark While it may seem daunting to hire someone so far away and trust them with your day-today tasks, Loanworks is on hand from the

beginning, right the way through. The group is a specialised outsource provider, so most of its clients are in lending, and it fully understands the various tasks associated with this. It does the initial recruitment of staff, vetting résumés, conducting face-to-face interviews and doing police checks and skills assessments.

Goodacre says Loanworks spends some time training recruits, then the broker meets the potential candidates to interview them like they would anyone else. Once staff have been hired, Loanworks works with both sides to ensure targets are being met and they are staying on track and getting the work done.

“We give our input, but the broker has full control. They have comfort that we’re looking after the day-to-day stuff, that everyone shows up on time, that they’re productive throughout the day. But the broker can tailor them to their business,” he says.

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FEATURES

DIGITAL

From small changes to huge gains In a technological world in which employees are expected to be online all the time, it can be easy for productivity to drop as interruptions become the norm.

Amantha Imber explains three small adjustments that can boost your team’s performance

EVERY MINUTE of every workday, there are several (or in fact many) managers who are inadvertently killing their teams’ productivity. They are doing this by expecting their teams to be at their beck and call, responding to instant messages or emails within a few minutes. They do this by constantly interrupting their teams – because it’s OK for managers to interrupt people, isn’t it? And they spread out numerous meetings across the course of the week, many of which are not helping anyone make progress on their most important projects.

Indeed, Adobe’s Consumer Email Survey, conducted across 1,000 white-collar workers, showed that we spend 2.5 hours in our inbox per day. Furthermore, research published in the MIT Sloan Management Review revealed that executives spend 23 hours per week in meetings – and their subordinates are probably not that far behind.

Often, when we talk about improving

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productivity, common sense suggests that to achieve big gains we need to make big changes.

Yet what we know from fields such as cognitive psychology and behavioural economics is that small changes can actually lead to big leaps forward in performance. I call this microproductivity – tiny changes can lead to huge improvements in the way we work.

morning versus evening people? Which ones are firing on all cylinders in the morning? And which ones come to life at night? If you don’t know this information, then you need to get to know it, because this has huge implications for performance.

Around 14% of the population fit the category of ‘larks’, the types of people who

Come the end of the day, we wonder why it’s so common to think to ourselves, ‘What on earth did I achieve today?’

If you manage a team, here are three simple microproductivity tactics you can try that will have a dramatic impact on their performance.

• Ask your team members to work to their chronotype Do you know which members of your team are

are bright-eyed and bushy-tailed at 6am.

Another 21% are ‘owls’, who peak in the evening. And the rest of us are ‘middle birds’, who fall somewhere in between.

Once you know where individuals sit on this scale, encourage them to structure their day based on their chronotype. Let your larks

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DIGITAL

start work as early as they like, but this means letting them leave early too. And encourage your owls to do the opposite.

Larks and middle birds are best suited to doing focused and analytical work in the mornings, and then less cognitively intense work in the afternoons. For owls, their days should be structured in the opposite manner.

On my team at Inventium, I have a couple of larks who regularly start work between 4am and 5am, when their brains are firing, and finish a bit after lunchtime.

By encouraging your team to work to their individual chronotypes, you’ll boost performance significantly by aligning people’s natural inbuilt clocks with work tasks.

• Allocate one distraction-free hour a day The average team starts the day in reactive mode. Emails and Slack are checked at the start of the day, which puts everyone on the back foot, playing whack-a-mole with their inbox to try to achieve the elusive inbox zero and attempting to respond to everyone’s

requests for their time. And come the end of the day, we wonder why it’s so common to think to ourselves, “What on earth did I achieve today?”

If this sounds like your team, you need to help them protect at least one hour of their day when they can work proactively on their most important projects without interruption.

Ideally, this should be the first hour of the day before incoming messages start competing for their attention.

To kick things off, send out a calendar invite to your team titled “Distraction-free hour”. Block this out in everyone’s diary for the first hour of their workday (note that for owls, their hour of power should be at the end of the day). Giving people permission to stay out of their inboxes and protecting this time from meetings will allow your team to get a big chunk of deep and focused work done.

You’ll see that people will use this time to make big steps forward on their projects, and as an added bonus this creates a much more energising start to the day compared to getting buried in emails.

After your team has mastered its hour of power, you might start to build up to 90 minutes or even two hours. The more time you set aside for focused and uninterrupted work, the greater the productivity gains you’ll see.

• Batch meetings As a manager, you are probably responsible for setting many of your team’s meetings.

Many managers don’t give much thought to the timing of meetings. All that often matters is that attendees are free at the allocated time.

But by not considering the timing of meetings, you are unwittingly killing productivity.

A series of experiments by researchers at Ohio State University showed that when people have a meeting coming up within an hour or two, the time in between is used much less productively. One of their studies found that when people had a meeting coming up, they got 22% less work done in the time before the meeting started compared to if they didn’t have a meeting approaching.

To boost productivity, batch your team’s meetings. You might decide to allocate two or three afternoons per week that are specifically for meetings, or you might want to keep meetings to only occurring during certain hours of the day, such as from 2pm to 4pm.

By batching meetings, you will eliminate the ‘dead’ time that happens when meetings are scattered randomly throughout every workday.

All three of these changes should be quick and easy to implement, but the results that will spring from any one of them will be enormous.

Dr Amantha Imber is the founder of Inventium, Australia’s leading innovation consultancy, and the host of How I Work, a podcast about the habits and rituals of the world’s most successful innovators.

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FEATURES

MOTIVATION

Why you don’t need motivation to succeed Ayetkin Tank offers three foolproof ways to get things done without relying on motivation

I’M NOT highly motivated. I don’t have amazing willpower or self-control. I don’t get up at 6am to read, meditate, drink a green smoothie and run a 10K. That’s because I don’t believe in motivation. Instead, I’ve built systems and habits that remove my internal drive from the equation. So whether or not I feel ‘motivated’, I can still be productive.

I realise that systems and habits are not a glamorous topic, but honestly, they work.

They’ve fuelled every step of my entrepreneurial journey over the last 12 years. If you create reliable systems and continue to improve these systems (instead of your willpower), you don’t even have to think about motivation.

Let’s break it down a little. First, what the heck is motivation, anyway? In the simplest terms, motivation is your desire to do something. It’s a sense of willingness that exists on a spectrum, from zero interest to a burning

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desire to take action. When your desire is strong, motivation feels effortless. But when you’re struggling, just about anything sounds better than starting the assignment, making a tough phone call or hitting the gym.

Procrastination takes over – until the agony becomes overwhelming.

As Steven Pressfield writes in The War of Art, “At some point, the pain of not doing it becomes greater than the pain of doing it”.

I love this quote because I suspect we’ve all felt this painful moment – when it’s harder to stay on the couch than to get up, put on your sneakers and go outside.

In his 2011 book Drive: The Surprising Truth About What Motivates Us, author Daniel Pink splits motivation into two different types: extrinsic and intrinsic.

Extrinsic motivation is external. It’s money or praise or trying not to look clumsy on the tennis court. Intrinsic motivation comes from within. It’s the desire to act, even

when the only reward is the activity itself (or completing a task). Intrinsic motivation implies that you’re acting for authentic, honourable reasons. For example, you start a business to help people or solve a problem, not because you’re dazzled by visions of fame and fortune.

Motivation gets in the way, though, when we rely too heavily on it. No matter how much you love your business, there are probably moments when you don’t want to take action.

Maybe it feels scary or impossible, or the task at hand is downright boring.

That’s when systems can do the heavy lifting. Here are a few strategies that have helped me to build sustainable systems so I don’t have to rely on motivation.

Choose your focus areas – and ignore the rest Focus and motivation might seem like two different topics, but they are closely

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Your feelings don’t have to match your actions – especially when you truly want to move forward intertwined. For example, last year I had three work priorities: hiring really great people, creating quality content and equipping our users to work more productively.

These themes informed everything I did.

If a project or an opportunity didn’t fit into one of these three buckets, I said no.

Distractions slipped away, and I could make real progress.

For example, I spend the first two hours of every workday writing out my thoughts.

It might be a problem I’m trying to solve or a new idea. I don’t book meetings during this period, and I definitely don’t answer

emails. But if I arrive at work feeling less than inspired, I give myself permission to do something else – as long as it fits within my three focus areas. Instead of writing and problem-solving, I can read articles or books on these topics, meet with a product team or watch a lecture.

All that thinking and exploring soon makes me feel more engaged. Once I’m engaged, I come up with better ideas. And good ideas inspire me to take action.

This process isn’t accidental. It’s a simple feedback loop I use to get moving on days when my brain feels stuck in neutral.

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FEATURES

MOTIVATION

Remember that motivation is optional In a 2016 article for The Cut, author Melissa Dahl wrote that “the only motivational advice anyone has ever needed [is] you don’t have to feel like getting something done in order to actually get it done”.

It’s surprisingly brilliant. Your feelings don’t have to match your actions – especially when you truly want to move forward. You could feel tired but still put on your goggles and go for a swim. You could feel like you’d rather staple yourself to the chair than build another PowerPoint deck – and you still get the presentation done.

Dahl also quotes Oliver Burkeman, author of The Antidote: Happiness for People Who Can’t Stand Positive Thinking, who writes: “Who says you need to wait until you ‘feel like’ doing something in order to start doing it? The problem, from this perspective, isn’t that you don’t feel motivated; it’s that you imagine you need to feel motivated.”

Once again, this is where routines can outsmart feelings. Sure, you might feel like watching cat videos, but every morning you sit down at your computer and open a blank document. You write for two hours (or whatever your routine entails) and you don’t bother taking your emotional temperature. Progress ensues. Then you repeat, repeat, repeat.

Delegate whenever possible The other day, I had a great idea during my morning workout. It was one of those eyebrow-raising light-bulb moments. Unfortunately, it had nothing to do with my three focus areas I mentioned above.

So I made a note in my phone and asked our COO to follow my mental thread. I was tempted to chase it myself, but I knew I had to stay focused.

I realise that delegation isn’t always possible, especially when you’re just starting

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out or money is tight. But when it’s possible, delegation can pay off big time. Offload an activity if: • You can regain precious time, energy or focus and apply it to something that will truly move the needle for you. That kind of work is priceless. Stretch yourself a little and measure the results. You can always test delegation in baby steps.

each activity. In the end, her day looked the same as it did when she was ‘disciplined’ – but the experience was nearly effortless. “Yes, discipline is critical, just like all the teachers say,” Piver says. “And there is definitely stuff that needs doing that is just never going to be fun, like paying bills and cleaning the cat box.

But I suggest that instead of being disciplined about hating on yourself to get things done,

If you’re struggling to do something you care deeply about, go easy on yourself. Tap into why you started your business or why you’re flexing your creative muscles in the first place. It’s a much happier way to move through your days • Someone else can do it better. In my case, there’s almost always someone on our team who has more knowledge or niche expertise than I do. They’ll create a stronger result in less time – and again, I don’t get distracted from my goals.

The importance of enjoying the ride I’ve talked a lot about everyday motivation, but how do you sustain your drive for the long run?

It’s an important question. The answer will look a little different for everyone, but ultimately we’re all motivated by joy and meaning.

The Antidote author Oliver Burkeman first led me to Buddhist teacher Susan Piver. Tired of forcing herself to be ‘good’ and master the daily to-do list, Piver decided instead to focus on the pleasure of her work. “Once I remembered that my motivation is rooted in genuine curiosity and my tasks are in complete alignment with who I am and want to be,” she says, “my office suddenly seemed like a playground rather than a labour camp.”

She asked herself what would be fun to do and then focused on what she loved about

try being disciplined about remaining close to what brings you joy.”

Talk about a perspective shift. We all go through tough times, work at jobs we don’t love and endure genuine unfairness. But if you’re struggling to do something you care deeply about, go easy on yourself. Tap into why you started your business or why you’re flexing your creative muscles in the first place. It’s a much happier way to move through your days.

To recap: Establish your systems and habits. Stay focused on what matters.

Delegate and tune out the noise. Your motivation will grow. And if it doesn’t? You don’t need it anyway.

Aytekin Tank is the founder and CEO of JotForm, an online form creation software with four million users worldwide and more than 100 employees. A developer by trade but writer by heart, Tank shares stories about how he exponentially grew his company without any outside funding. For more information, visit jotform.com.

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PEOPLE

OTHER LIFE

TELL US WHAT YOU GET UP TO Email rebecca.pike@keymedia.com

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Approx. age Unwin got involved with the fire service

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Years Unwin has lived in or around the area his brigade supports

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Firefighters in the Melbourne Firefighter Stair Climb

BATTLING THE BLAZE Fire volunteer and Extra Financial owner Mark Unwin is also involved in fighting issues that ignite depression

“I’ve always been involved in volunteering my time to various services, because without volunteers a lot of critical infrastructure within the community wouldn’t exist. Nothing can outshine the feeling of achieving something together for the benefit of others, particularly as a volunteer”

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LIKE MANY KIDS, when he was a boy Extra Financial owner Mark Unwin loved seeing firemen in action and fire trucks with their lights flashing and sirens blaring.

He would go to the local station on Sundays to help wash the eight-wheelers. When he was old enough, Unwin joined the junior ranks, learned the skills, got exposed to live fire exercises and eventually progressed from junior brigade member to full-fledged firefighter.

Unwin is currently an operational member at Hoppers Crossing in Melbourne West. Apart from being on call for emergencies and assistance requests, he engages in community activities such as teaching kindergartens about fire safety and raising funds for various charities.

“Being involved in the fire brigade provides me with an opportunity to work with some amazing people from so many different walks of life,” Unwin says. “Our combined goal is to give back to the community that has provided for us.”

On 7 September 2019, Unwin will join other firefighters to step up for mental health in the 6th Annual Melbourne Firefighter Stair Climb. The event aims to raise $700,000 to improve support services and fund research on issues such as depression, post-traumatic stress injury and suicide, especially within the emergency services and defence community.

“The fire brigade is a massive extended family which also provides excellent support services; however, some people are still reluctant to take advantage of them when required,” Unwin says. “With awareness being raised a lot more, hopefully we can further the assistance to those in need.”

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