Mortgage Professional Australia

MPAMAGAZINE.COM.AU ISSUE 20.08

FACING INTO UNCERTAINTY Industry players join MPA for a virtual panel discussion of the state of commercial finance VEHICLE FINANCE A route brokers can take to complement their mortgage offering

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NEW BROKERS How the industry is coming together to support new entrants

STEPHEN MOORE The Choice CEO is prioritising brokers’ mental wellbeing

28/07/2020 10:44:29 AM

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27/07/2020 3:20:13 PM

AUGUST 2020

CONNECT WITH US

CONTENTS

16

Continuing focus on industry support

04 Statistics

Brokers feel the pain of the pandemic

28 Brokers can add another tool to their toolkit with this solution

Keeping relationships strong

08 News analysis

Open banking is here, but what does it mean?

10 Opinion

Thoughts and learnings from COVID-19

FEATURES How unproductive urgency could be harming your team

COMMERCIAL LENDERS ROUNDTABLE

42 Leading innovation

Three commercial lenders and an aggregator gather virtually to discuss the current environment

12

06 Head to head

40 The negative impact of urgency

SPECIAL REPORT

The CEO of Choice Aggregation Services on prioritising the mental wellbeing of brokers

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02 Editorial

VEHICLE FINANCE

STEPHEN MOORE

twitter.com/MPA_Australia

UPFRONT

FEATURES

BIG INTERVIEW

Got a story or suggestion, or just want to find out some more information?

32

FEATURES

NEW BROKERS

Four qualities leaders need to drive innovation in business

PEOPLE 44 Brokerage insight

Why building relationships is crucial for More Than Mortgages

How the industry is supporting and educating new brokers

46 Career path

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48 Other life

The new GM distribution at Mortgage Choice Down the slopes with Alycia Inglis

MPAMAGAZINE.COM.AU FEATURES

NEXT GEN LEADERS Key steps to becoming the intuitive leaders of tomorrow

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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27/07/2020 2:48:11 PM

UPFRONT

EDITOR’S LETTER www.mpamagazine.com.au

Staying hopeful together

M

y last Editor’s Letter may have been a little premature in suggesting that things were going back to normal. Even before the July issue hit desks, restrictions had been reintroduced in Melbourne.

Having already experienced the lockdown and how the restrictions could feel, I found it hard to hear that parts of the country were going back into it. Back in March it was unclear how long we’d be stuck at home, so it didn’t feel quite so overwhelming; this feels different.

Everyone is experiencing and feeling the effects of this pandemic differently: some people live with their families, some live with partners or friends, and some live on their own. Naturally, each person’s situation is different, so their reaction will be too.

Maybe you don’t feel concerned or overwhelmed or isolated – and maybe by the time this magazine is released, it will all be over (one can hope)! – but if you do feel any of these emotions, know you’re not alone.

I’ve spoken to many aggregators, lenders, BDMs and other industry players who are doing what they can to keep up communication – not just regarding all the policy

I’ve spoken to many aggregators, lenders, BDMs and other industry players who are doing what they can to keep up communication changes, interest rate cuts and educational pieces but with a focus on broker mental health and wellbeing.

In fact, this month’s Big Interview (p.12) is with Choice CEO Stephen Moore, and we talk about what the aggregator is doing to support brokers. He is paying close attention to the mental health of his brokers, teaming up with organisations like R U OK? and offering employee assistance programs for both brokers and their families.

Talking of the lockdown in Melbourne, the seriousness of it really hit me during the Commercial Lenders Roundtable, when one of the panellists who took part was logging in from an affected suburb. Just the week before, I’d started meeting people in person again and talking to some who were heading back to the office; now others are retreating to their homes.

Although virtual and a much smaller crowd than last year, the 2020 roundtable produced some really insightful content. Enjoy the report of the discussion (p.16) and other features in this month’s magazine, and continue to stay safe.

Rebecca Pike, editor, MPA

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AUGUST 2020 EDITORIAL

SALES & MARKETING

Editor Rebecca Pike

National Sales Manager Claire Tan

Contributors Daniel Carde, Dermot Crowley, Evette Cordy, Richard Maloney Production Editor Roslyn Meredith

Global Head of Communications Adrijana Monevska

CORPORATE

ART & PRODUCTION

Chief Executive Officer Mike Shipley

Designer Cess Rodriguez

Chief Operating Officer George Walmsley

Traffic Coordinator Kristine Jamir

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 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

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.

www.mpamagazine.com.au

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27/07/2020 11:55:37 AM

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27/07/2020 11:55:45 AM

UPFRONT

STATISTICS LEVEL OF CONCERN DUE TO COVID-19

Brokers feel the pain

22%

Broker survey shows the impact of COVID-19 on their businesses, their wellbeing and the lending space AS COMMERCIAL and business finance brokers have been helping Australian businesses navigate the difficulties of the coronavirus pandemic, they have been dealing with concerns about their own businesses.

When FAST Group surveyed its broker network in April and May, it found that most brokers were concerned about the virus and acknowledged it had had a negative impact on their businesses (76). Sixty-nine per cent said they were also expecting it to continue affecting their businesses in the future. However, according to the report, FAST brokers expect

9%

28%

of brokers say COVID-19 will have a believe COVID-19 will have a large, large, positive impact on their business negative impact on their business

45%

41%

Extremely concerned

34%

SME working capital flows to increase 20% over the next six months as they help them secure critical funding lines. One in two brokers said they had facilitated some form of COVID-19-specific lending in recent months.

FAST CEO Brendan Wright believes brokers have been providing an essential service to the small business community. “Accessing finance will be critical for SMEs over the coming months, and our brokers are now preparing to help their commercial clients secure working capital so that they can continue operating through this challenging period,” he says.

have seen a reduction in lending flows in the past six months

22%

Extremely concerned

37%

Moderately concerned

Moderately concerned

38%

37%

A little concerned

A little concerned

6% Unconcerned Brokers

6% Unconcerned Consumers*

of commercial/business lending is for commercial property

*Consumers interviewed April–May 2020 (n=1,000)

Source: FAST Business Lending Index

MAJORS STILL DOMINATE

Lending continues to be dominated in 2020 by the major banks in the commercial/business loans and equipment/asset finance segments, but non-banks and local banks have seen some gains.

Major banks

Local banks (owned/ aligned with majors)

Independent local banks

International banks

3% 4% 7%

Other private lenders

16%

rrace

Market share of commercial and business lending

Credit unions

Brokers say the current situation is leading to fewer queries, more deals falling over/stalling, customers wanting to restructure deals, and slower processing of applications by lenders.

COVID-19-specific lending handled by brokers

1%

7% 17%

Non-banks

BROKING IN THE COVID-19 CRISIS

62%

9% 2% 1% 2%

Market share of asset and equipment lending

67%

9%

26%

a lot

a small amount

17%

a reasonable amount

48%

none specifically

Source: FAST Business Lending Index

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Source: FAST Business Lending Index

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22.73%

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BROKERS FEELING EXHAUSTED Much like the average consumer, brokers are feeling a range of emotions in the present climate. While many of them reported feeling optimistic, calm and safe, almost half felt exhausted. Forty-seven per cent may feel content, but a concerning proportion of brokers (40%) are feeling overwhelmed and anxious.

CURRENT EMOTIONAL TEMPERATURE

63%

Optimistic

5% Neutral

32%

Pessimistic

50%

57%

46% Excited

Energised

Content

10% Neutral

11% Neutral

11% Neutral

13% Neutral

13% Neutral

40%

33%

42%

Calm

Safe

Anxious

Afraid

40%

47%

47%

Bored

40%

Exhausted

Overwhelmed

Source: FAST Business Lending Index

BUSINESS BROKERS SEE DROP IN LOANS

Business brokers report that, overall, in 2020 they are writing fewer loans and lower loan values than they did last year. While some have seen an uptick in lending flows, most expect a reduction across all lending. % of business brokers writing loans in each segment 2019 2020

90%

GAINS FOR HIGH-VOLUME BROKERS

On average, deal size of equipment/asset finance loans has been consistent over the last six months – brokers with smaller flows have remained steady or seen contraction; those with higher settlements have seen gains.

Average total written per broker in last 6 months

85% 64%

-5% YOY growth

Residential and home finance

$110k

21% 53% -11% YOY growth

Commercial and business finance

61% 53% -8% YOY growth

$25k

Brokers seeing a reduction on average

45%

Brokers seeing gains on average

Brokers writing equipment/asset finance loans

33%

$25k

Brokers remaining steady

Equipment and asset finance Source: FAST Business Lending Index

Source: FAST Business Lending Index

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27/07/2020 2:35:09 PM

UPFRONT

HEAD TO HEAD

How have you maintained relationships this year?

Brokers know that relationships with their clients remain a top priority – now more so than ever

Cameron Price

Amy Small

Karen Bashford

Owner–partner Mortgage Choice

Regional director – finance broker Professional Lending Solutions

General manager/broker South Coast Business & Financial Solutions

“Apart from our staff, our clients remain the absolute number one priority for our business; client relationships are the key to our continued success. Good and healthy client relationships allows us to operate as efficiently as possible, knowing we’re all working for the same positive outcome.

They also mean our clients are more likely to become a referral source and continue to use our services. We then have a key component of what all businesses need: a loyal client base and a reliable marketing source for new clients. In the current climate, being available to take a call or meet in good times and bad has allowed us to continue to build relationships with new clients and strengthen existing relationships with clients and lender and referral partners.”

“I believe building lifelong relationships with clients is very important, and this is what is going to grow your business most. Word-of-mouth recommendations are a huge way to increase and maintain leads. In my office we make sure each client is made to feel special instead of feeling like a transaction. We call it giving it a little bit of love, and we often send out cards to our clients for various reasons as an example. I’m involved in my local community via a Newcastle mum’s group that tags me whenever anyone has questions about finance. Word-of-mouth recommendations are so important, and you can only do that by fostering strong relationships and helping clients reach those goals.”

“Client relationships are number one on the list! Making your clients aware that you care and want them to be financially successful into the future builds a relationship that lasts many years.

2020 has been doubly difficult for our community, firstly with the fires as well as the pandemic’s effects on a tourism town, so it has been imperative to be available to assist – pro bono of course! Keeping in constant contact with clients, offering support and assistance with deferring repayments – as well as negotiating with insurance companies or banks for fire rebuilds – has been mammoth.

The relationships you build determine your level of referral/repeat business – the lifeblood of any broking business.”

THE VALUE OF RELATIONSHIPS IS ‘NEVER-ENDING’ Industry stalwart Kathy Cummings joined Bank of Queensland in December 2019 in the new role of general manager, broker. Cummings believes that while some aspects of the mortgage industry will continue to evolve as the world goes through the coronavirus pandemic, it’s a question of ensuring it can keep satisifying clients with the quality of its customer service. Perhaps particularly important in the current environment are some of her key learnings from her experience: she says it’s vital to embrace change, make a decision and go with it, and that “the importance of relationships is never-ending”.

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www.mpamagazine.com.au

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27/07/2020 10:14:43 AM

Donkey or cash cow?

This isn’t just any donkey. This is a Serbian donkey that produces the most expensive cheese in the world – pule – which sells for $1200 a kilogram.

The cost comes from the considerable time and resources needed to make it. A female Serbian donkey produces about two litres of milk a day, and it takes about 25 litres of milk to produce one kilogram of pule. The cost also comes from its rarity – there’s only one pule-producing farm on the planet.

How would you know this donkey is a moneymaker without the appropriate insights?

It’s not unlike making decisions in the mortgage broking market. At Choice Aggregation, we help brokers face the future with confidence. Our software’s data insights helps our members proactively respond to opportunities that can enhance their business’ value.

Choice. Make the right one. choiceaggregationservices.com.au

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27/07/2020 10:16:35 AM

UPFRONT

NEWS ANALYSIS

Enter the new era of open banking From 1 July, customers were able to start sharing their data as the next phase of open banking kicked in – but is it enough, and what will the new environment look like for mortgage brokers?

THE CONSUMER DATA RIGHT (CDR) was officially launched on 1 July, heralding a new era of open banking in which consumers can choose to share their data in order to access more personalised financial products and services.

All four major banks are now able to share their customers’ data upon request, but this is set to ramp up over the following months, and by the end of the year it is expected that dozens more companies will be accredited. While the CDR only currently relates to deposit and transaction accounts and credit and debit cards, from 1 November this will be extended to include data on home loans, investment loans, personal loans and joint accounts.

Australian Banking Association CEO Anna Bligh said the system would give consumers greater access to personal information, as well as the ability to allow banks to provide third parties with safe and secure access to their data.

“From today, customers will be able to give permission to accredited third parties to access their banking data while they search for a better deal on banking products,” she said.

“This sharing of data is a watershed moment for competition in the banking industry and, in time, will enable every Australian to use their data for their own benefit.”

While the finance industry has been preparing for open banking for a long time,

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Lumi founder and CEO Yanir Yakutiel said it could not have come soon enough.

The change to open banking means that fintechs like Lumi will now be able to access the same data on customers’ current accounts and credit history, etc., so they can make better decisions on who to lend to.

As an SME lender, Lumi has been providing crucial finance to businesses throughout the COVID-19 pandemic as banks have acted slowly in distributing funds.

September last year. While this has been paused and the group uses its own “openbanking-like” system, CEO Robert Bell says he supports open banking and will look to use it when there is more data available.

“We have just taken a very accurate snapshot of their income, and we have done it in a matter of minutes rather than a week” Robert Bell, 86 400 “Fewer bad loans are a benefit to everybody and cannot come fast enough,” Yakutiel said. “It would have been hugely beneficial to have this data made available at the start of the pandemic.”

For some lenders, however, the data capture allowed by open banking is something they already have. As a fintech, 86 400 prides itself on being able to capture data and analyse it within minutes.

Recently celebrating its first full year since receiving its banking licence, 86 400 was one of 10 lenders testing open banking back in

“It becomes more useful when more data is available; the four big banks have made a very limited data set available. If we’re talking in a year’s time or two years’ time, the use of data is really going to make a difference,” Bell said.

For a mortgage broker, he says not much will change with open banking; it is up to the lender to satisfy itself with respect to the borrower’s income and expenses. A mortgage broker will ask all the initial questions, and when they submit an application it will include the customer’s bank credentials.

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27/07/2020 11:58:36 AM

OPEN BANKING TIMELINE

The lender will take a one-time accurate snapshot of their accounts, using smart algorithms to sort the data out. What this means for the mortgage broker is much faster turnaround times.

FBAA managing director Peter White said it was still too early to tell what impact open banking would have for mortgage brokers, but the future looked bright and he encouraged brokers to embrace it.

“This sharing of data is a watershed moment for competition … and, in time, will enable every Australian to use their data for their own benefit” Anna Bligh, ABA “The lender will have just taken a very accurate snapshot of their income, and will have done it in a matter of minutes rather than a week, but we do that at the moment,” Bell said. “We have been providing openbanking-like benefits to our customers for the last 12 months. We didn’t want to wait for open banking, so we’re well positioned to transition when we can.

“In the future, with more participants and better data, we’d be using open banking to do the same thing.”

“I think the whole opportunity around open banking here will be really good for our industry,” White said. “It will help drive the broking industry further, in combination with the best interests duty.”

White believes the BID guidance, alongside open banking, will provide a strong positioning statement that brokers can use to bolster their proposition. It will show customers that not only are brokers required to act in their clients’ best interests but they can also turn loans around more quickly,

JUL 2019

Australia’s major banks made their product reference data for their standard products available, eg interest rates, fees and charges

FEB 2020

Major banks made their product reference data available for mortgages and personal loans

JUL 2020

Consumer Data Right launched. Customers can now share their banking data from personal accounts

NOV 2020

Customers will be able to share data from their home loans and personal loans.

Data from joint accounts and closed accounts, on direct debits, scheduled payments and payees will also be shareable

thanks to the fluidity of data sharing created by open gateways.

“When you’re trying to gather data on a client or to be able to restructure a mortgage, open banking should deliver something that is a much quicker means of sharing that data from a mortgage point of view,” he said.

Looking at how open banking has worked overseas, White expects that Australia will be able to progress significantly faster than elsewhere and provide great outcomes.

“I was overseas on a study tour last year speaking to guys in the UK about their open banking experience,” he said. “They’re expecting Australia to really step forward in big strides on this and overtake the UK and other markets around the world in regard to the use and the fluidity and functionalities of open data.”

To prepare for this new way forward, White said brokers should take the time to understand how the technology will work.

“The most important thing brokers need to be doing is making sure they are techsavvy, that they understand what this technology will and won’t do, and how it will work in their systems,” he said.

“This is where we’re going. It may be new in Australia, but it’s happening around the world, and the technology driver is where we’re all destined to be.”

www.mpamagazine.com.au

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27/07/2020 11:58:45 AM

UPFRONT

OPINION

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

Looking for silver linings While the COVID-19 pandemic has largely proved to be a devastating experience for many, Resimac’s Daniel Carde reminds brokers to look for the silver linings COVID-19 is proving to be one of the most devastating things I think I’ll ever live through. On every metric – whether physical, financial or emotional – this global health emergency has wreaked havoc on the good people that make up our sector.

From a wider perspective, lives have been lost and livelihoods destroyed as many businesses struggle in an economy now predicated on social distancing.

These impacts are real; however, I believe that as an industry we should also look at and embrace the positives that have emerged from this situation.

The very first thing that hits me is how the experience of isolation has brought many families closer together. In my case – married with two children – I’ve been conscious of the fact that I have been lucky enough to avoid the usual once-perfortnight sleep away from home when hitting the road for work.

As a result, I feel more connected to my family. I’ve been able to catch every moment that’s been thrown up by life during this confusing period. I have also been reminded of how much my wife does each and every day to keep our family on track. The juggling of two kids and all that comes with it is a humongous collection of tasks, many of which I’ve missed while I have been stuck in the office hitting the phones or meeting with stakeholders.

Another silver lining has been the way that our small business community – which brokers are inextricably linked with – has

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adapted and found new ways of working and generating revenue, despite the significant obstacles we are facing in our new way of life. The number of businesses that were quickly able to adapt to a home-delivery model, or pivot entirely to help those in need, is inspiring.

Throughout the experience of the last

the digital document delivery system we had been working on since the start of the year.

The change meant our customers could discuss their borrowing needs with a broker via phone or video call, and the loan document pack could then be emailed directly to the borrower, ready for digital execution without them ever needing to meet with someone face-to-face.

Since the pandemic began, businesses across our industry have made decisions like this to make it easier for brokers to carry on ‘business as usual’ and keep the customer front of mind despite the restrictions COVID-19 imposes on their operations.

I hope the changes we’ve seen will continue to be for the better, benefiting brokers and customers long after the effects of the virus have been felt. Sometimes it takes a significant event in order to speed up inevitable progress.

And personally, I’ve noticed that people have become far more understanding of others, with many of us no longer ‘sweating

Another silver lining has been the way that our small business community – which brokers are inextricably linked with – has adapted and found new ways of working few months businesses have been able to flex their creative muscles, which in turn has helped prepare them for the next challenge – COVID-19-related or otherwise – that will inevitably hit their operations.

The industry has, for the most part, been fast to adapt. Take Resimac as an example.

We have adopted and fast-tracked additional digital processes, streamlined those processes that no longer delivered an optimised experience in light of the pandemic, and rolled out a business continuity plan that saw 100% of our staff working from home.

An important change we were able to make quickly allowed customers to verify their identity remotely, and we began accepting digital and electronic signatures on our documents. We then implemented

the small stuff ’ and focusing much more on the big picture.

COVID-19 has no doubt been a horrible experience, and it is important to acknowledge that for many this pandemic has been life-changing in the worst of ways, and for many it is not yet over.

But for those of us who are lucky enough to still be leading a relatively normal life, it’s also important to find and focus on the positives as we look to heal and commence the journey towards recovery.

Daniel Carde is the general manager of distribution at Resimac and has more than 25 years’ experience in the finance industry.

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27/07/2020 10:33:31 AM

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27/07/2020 10:33:38 AM

PEOPLE

BIG INTERVIEW

STEPHEN MOORE: STAYING CONNECTED The mental health and wellbeing of brokers is particularly important to Choice Aggregation at the moment, says its CEO

THE POTENTIAL strain on the mental health and wellbeing of brokers over the last few months has been significant, as they have worked remotely, faced an economic recession, worried about their own businesses and helped borrowers navigate hurdles.

At the onset of the coronavirus pandemic, mortgage brokers were still recovering from the turmoil of the royal commission recommendations and subsequent preparation for the best interests duty.

This is why Choice Aggregation is focusing its efforts on the mental wellbeing of its brokers.

“2020 really has become a year unlike any other,” says CEO Stephen Moore.

While COVID-19 has impacted many areas

It’s not all bad news: Choice has seen a 12.5% increase in settlement volumes year-onyear, and Moore says growth is continuing.

Loan applications in May totalled $2.96bn, the highest result for the financial year and 27% ahead of plan.

Refinancing has been one of the biggest focuses for brokers, and while Moore says it is the right thing to do for existing customers, he warns that brokers should watch out for a false sense of security.

“We haven’t yet experienced the full economic impact of COVID-19. So it’s important that brokers continue to focus on marketing their businesses for future growth to attract new customers too.”

“Change is challenging, and I know the past few months have been difficult, but in this environment brokers really do need to embrace change” of everyday life and business, Moore says the exact responses and challenges will vary from person to person.

“We all adapt differently, and brokers are working through exactly what COVID-19 means for them on a personal level,” he says.

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Adapting to change One of the ways Choice is supporting broker mental health is by helping them be proactive in making business decisions so they can feel more in control.

“Change is challenging, and I know the

past few months have been difficult, but in this environment brokers really do need to embrace change and be willing to adapt,” he says.

“We have focused on supporting brokers to control what they can. For example, adopting practical measures that will support them to operate efficiently in this period and ensure they can continue to deliver outstanding customer experiences.”

Moore encourages brokers to find some quiet time and headspace to plan strategically and consider how they want their businesses to emerge in the post-pandemic environment, for example, by thinking of positive, long-term changes that could help brokers get on the front foot.

These could be things brokers were already considering doing, or opportunities that have been identified thanks to the pandemic.

Marketing to existing customers and the broader community is also particularly key right now.

“It’s the work brokers do now to market their businesses that will lead to future growth,” Moore says.

One thing that’s had a significant impact on broker businesses – and businesses across the globe – in the last few months is technology. During a time of restricted face-to-face interaction, technology has stepped in to ensure that brokers can remain in contact

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27/07/2020 10:50:13 AM

PROFILE Name: Stephen Moore Company: Choice Aggregation Services Title: CEO Years in the industry: 10 Career highlight: “In my 25-plus years in the financial services industry, one standout was being a co-founder of Ubank, which is now recognised as a leading direct bank. However, leading Choice and being part of the broker industry has been the most satisfying. I love working with such a great team and such fantastic brokers and am proud of how our industry has advanced, tackling significant challenges to become the leading channel for home loans in Australia.”

www.mpamagazine.com.au

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27/07/2020 10:50:30 AM

PEOPLE

BIG INTERVIEW

with new and existing clients. And while it is difficult to imagine that broking will ever be wholly digital, Moore says brokers should be adopting digital tools and investing time in getting up to speed on new technology.

Choice recently released a new feature as part of the new Podium platform called My Finance Communities, which enables brokers to complete a seamless online application, from uploading and storing customer documents through to an inbuilt chat functionality.

“The future for broker businesses is, after all, combining great digital tools with highquality face-to-face customer interactions,” Moore says.

A message to brokers While there is still uncertainty around the virus itself, as well as its economic impacts, Moore says there is a lot for the broking industry to be positive about. He is confident the industry will come out of the pandemic more resilient than ever, and expects broker market share to continue climbing towards 70% over the next three years.

“In times of uncertainty there is a natural flight to those we trust, and the critical role that brokers play in supporting customers has been and will continue to be apparent

SUPPORTING BROKER WELLBEING Choice was raising awareness of broker mental health long before the coronavirus pandemic hit. In 2019, the aggregator teamed up with R U OK?, a not-for-profit suicide prevention organisation, and in recent months it has responded with new initiatives to support brokers’ mental health in the workplace.

For example, Choice launched its ‘Staying Connected’ Zoom series, which offers fortnightly sessions on a range of topics suggested by the aggregator’s members, such as regulation, lender updates, digital tools and business marketing. At a state level, Choice runs multiple Zoom sessions each week to help its members stay connected.

Moore says the aggregator has also worked hard to maintain strong communication with its members through phone calls and video calls, and has supported brokers in doing the same to keep connected with their clients, peers, friends and family.

Choice brokers and their families have access to an Employee Assistance Program, MyCoach, which is a counselling helpline they can call if they feel pressured or overwhelmed.

“Communication is arguably more important than ever,” Moore says. “When you have limited face-to-face engagement, you almost need to ‘overcommunicate’ to ensure connections remain strong and relationships are maintained.”

that’s ever happened to our industry”.

Despite the opportunities and the positives, Moore says feelings of loneliness or anxiety can impact us all.

However, “you aren’t alone”, he says.

While social distancing and self-isolation are currently the right things to do, these terms can have negative connotations,

“Talking to others is the best thing you can do – your internalised perspective can often be far worse than true reality” during the coming months,” Moore says.

The industry has already proved that it can not just survive adversity but prosper beyond the challenges it faces. It now also has support from the government, and new regulatory requirements are ensuring that there is confidence in the system.

Moore believes the implementation of the best interests duty will be the “best thing

14

particularly for people who are usually sociable. Moore says brokers should remember that there is support out there, and they should feel comfortable about reaching out to their aggregators, which have a particularly important role to play in this regard.

“Don’t forget to speak to your friends, your family, your colleagues and industry peers,” he says. “Staying connected can really help us

all overcome feelings of uncertainty.

“Talking to others is the best thing you can do – your internalised perspective can often be far worse than true reality.”

He adds that we need to look out for each other now more than ever.

“I would encourage all brokers to look out for those around them, and don’t be afraid to ask the simple question, ‘R U OK?’ “Trust your instincts. If you feel like someone is not acting themselves, then talk to them. Simple conversations can be lifechanging,” he says.

“Maintaining a positive mindset can be a challenge for all of us during such uncertainty and negative news reports.

“Remember to look after yourself and do what you can to remain positive – whether by doing regular exercise, meditating or just blocking out time away from your desk.

Lean on your aggregator for support.

Surround yourself with positive, motivated individuals and, most importantly, take care of yourself.”

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SPECIAL REPORT

COMMERCIAL LENDERS ROUNDTABLE

2020

COMMERCIAL LENDERS ROUNDTABLE In a difficult period for commercial lending, three industry players come together to discuss their experiences over the last few months and how they are supporting brokers in their efforts to help customers

16

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IT SEEMS like everything this year has taken a back seat while we wait for the coronavirus pandemic to settle down – and commercial lending is no different. The commercial property space is facing a number of particular challenges, from extra scrutiny as lenders become more cautious to tenants reconsidering the spaces they occupy.

Brokers are experiencing challenges as well. New customers are coming to them for help, while they are also having to assist existing customers who may be in hardship and want to refinance or downsize their space.

Lenders and aggregators alike have been ramping up their education to help brokers keep on top of all the changes and point them in the right direction when they need finance.

For mortgage brokers who don’t have a lot of – or any – experience in the commercial property space, there is also the challenge of understanding the market in such volatile conditions as they work to assist their customers as much as they can.

Data from the MFAA has shown growing numbers of mortgage brokers diversifying into commercial lending: 3,670 mortgage brokers wrote commercial loans between April and September 2019, the highest number recorded by the Industry Intelligence Service reports so far. The value of commercial loans written by mortgage brokers was also high, but it will be

interesting to see how the current period affects those numbers.

While diversification is usually a hot topic for any commercial lending panel, this year there was a bit more caution.

This challenge, and more, was discussed at the 2020 Commercial Lenders Roundtable, and the importance of brokers educating themselves and partnering up with other brokers was emphasised as a way of providing customers with the help they need.

This year’s roundtable saw fewer participants as we shifted to a virtual discussion of a particularly complex topic. Nonetheless, it was a really interesting conversation, particularly with the range of areas represented by the three participants.

With a bank, a non-bank and an aggregator on the panel, we were able to hear the different perspectives each had of the current situation. While the two lenders could talk about their policies, how they are assessing new deals and what they are doing for existing borrowers, the aggregator could share insights from a broker perspective as to the challenges they are facing.

Participants in the 2020 roundtable were John Kolyvas from ING, John Mohnacheff from Liberty and Brendan Wright from FAST. I’d like to thank them for their time and for being so willing to have a discussion about the commercial property market.

Read on to find out what else we talked about.

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27/07/2020 2:38:25 PM

SPECIAL REPORT

COMMERCIAL LENDERS ROUNDTABLE

THE PANELLISTS

John Kolyvas National sales manager – commercial, ING

John Mohnacheff Group sales manager, Liberty

What changes have you seen in the commercial property sector over the last few months?

The last few months have brought a wave of uncertainty and changes to the way almost every industry works, and commercial property has been significantly affected. Offices have been left empty as the majority of the Australian workforce has moved to working from home, the hospitality and retail sectors have lost businesses due to the COVID-19 restrictions, and cautious banks have slowed or stopped lending.

This time last year, no one could have predicted any of this, so naturally there was much more confidence among buyers and lenders in commercial property. Over the past few months that confidence has faltered, particularly when it comes to office buildings.

ING has spent this time checking in with its existing customers and ensuring they are OK. John Kolyvas, national sales manager, commercial, said the bank was waiting to see how the next few months would play out.

There is continued uncertainty as to what the commercial property space will look like now that many businesses are considering winding back office spaces as they realise staff can work from home.

18

Brendan Wright CEO, FAST

“While the office market was fairly tight, that’s loosened up a bit, and there are a lot of sublease properties coming on to the market that are looking for new tenants. So we’ll just keep an eye on that moving forward,” Kolyvas said. “We’re also watching suburban retail strips carefully too.”

FAST CEO Brendan Wright said it was understandable that looking after existing customers had been a priority for lenders, and the amount of resources needed to support that was having a significant impact on them.

Last year there was much more certainty in commercial lending, mixed in with recordlow interest rates, but “nothing is the same anymore”, he said.

While interest rates continue to drop, the uncertainty has changed things. With more scrutiny now, deals are taking longer.

“If you came back to something more local, like local shopping strips – depending on what they do, what their services or goods are – it is impacting on how they’re operating their business,” he added.

“Of course, that has impacts on their landlord. So these are just seriously different and intriguing times, and it’s having really different impacts right across the market.

There is still business going on, but it’s taking longer and understandably so.”

Offering a different viewpoint, Liberty’s group sales manager, John Mohnacheff, said that while preserving existing customers was important, the pandemic had presented opportunities as well.

“There’s always a cohort of investors who are looking for good opportunities to buy commercial properties as one-off deals. We have seen an uptick from this type of investor,” he said.

“Banks are a little more cautious, and quite rightly so. But the brokers are helping here because they’re saying, ‘This lender may not give you the 80% that you want, but we can do it at a 70% LVR’.

“While we’re being more mindful of higher-LVR lends, we’re still open to reviewing scenarios. We’re happy to have a look, whether they have strong long-term tenants or it’s brand new without any proof of rental history. We’re being more cautious, but we’re also seeing a lot of opportunities.”

Wright added that lenders were spending more time with brokers as they help customers get through this difficult period and work out what the future will look like.

“It’s when there’s that element of uncertainty that brokers can play a really critical role in providing support to their customers.

Not just in commercial property but more broadly as well,” he said.

Kolyvas agreed, saying that brokers had a good opportunity to reinforce relationships with their customers at the moment.

“Even if there’s no new transaction associated with that customer or there’s nothing new happening with them, it’s still a good time to just check in to see how they’re dealing with the current crisis,” he said.

As lenders, what challenges are you facing, and how will things progress?

While the panel discussion centred around commercial property, Mohnacheff said there were wider challenges for the sector, like business cash flow. He said Liberty had received a number of applications for the government’s Coronavirus SME Guarantee Scheme, but

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SPECIAL REPORT

COMMERCIAL LENDERS ROUNDTABLE COMMERCIAL PROPERTY SALES, YEAR TO MAY 2020 The purchase of property for businesses fell in May 2020 to its lowest level in six months, a drop of 35% compared to the same period last year

$8bn $7.4bn

$7bn $6bn

$6.6bn

$5bn

$5.2bn

$5.2bn

$4.9bn

$5.1bn $4.6bn

$4.5bn

$4bn

$4.1bn

$4.0bn

$4.2bn

Oct 2019

Nov 2019

$4.3bn

$4.2bn

Apr 2020

May 2020

$3bn $2bn $1bn

0

May 2019

Jun 2019

Jul 2019

Aug 2019

Sept 2019

Dec 2019

Jan 2020

Feb 2020

Mar 2020

Source: ABS, Lending Indicators, May 2020

there were businesses that fell outside the scheme that needed help.

He said Liberty was working its way through those applications, which were a keen reminder that businesses need help with a variety of opportunities.

“There are a lot of businesses out there without commercial property that still need cash flow lending,” he said.

“For example, there are many small businesses in the trades and logistics that want to buy plant and equipment. So, in times of uncertainty these businesses are seeing opportunities, and they’re using this time of low interest rates and government support to build their business.”

Agreeing, Kolyvas said another challenge for ING was the assessment of potential new business opportunities.

“We’re trying to get a deeper understanding of our customers’ existing and possible future

20

“If you’re engaging with your customers and they have a problem, it’s incumbent on you to find a solution” John Mohnacheff, Liberty challenges, and this can prove difficult as the COVID situation is ever-evolving and unpredictable,” he said.

“The way to progress through this is to treat each application on a case-by-case basis and to work with the customer to really understand their needs.”

Reflecting on Mohnacheff ’s earlier comment, Wright said the conversation would always turn to the cash flow of the business because, no matter who was occupying a commercial property, there would be businesses needing to generate revenue to pay rent or loans. “The priority needs to be about

understanding these businesses that are occupying these properties or buying these properties and what they need to do to continue operating in a sustainable way,” Wright explained.

“This is where brokers can play a role and have got an opportunity to do that more than anyone, because they’re business owners as well, and there’s so much support going on from government, from lenders, and initiatives like the small business guarantee that can create confusion around where do I go next as a business owner and what do I need to do to get through this.”

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21/07/2020 12:00 27/07/2020 2:45:07 PMpm

SPECIAL REPORT

COMMERCIAL LENDERS ROUNDTABLE Brendan, are there any insights that you can share on how commercial brokers are feeling right now?

As an aggregator, FAST is working closely with its brokers to ensure they remain informed and supported throughout the pandemic. Wright said the brokers he had spoken to were being “inundated” by existing clients looking for support in deciding what they could do next.

Going back to the discussion of cash flow, Wright said many brokers were helping their clients with working capital funding, but he added that brokers faced their own challenges. Brokers are operating in a much more complex lending environment, in which lenders have varying views on different industries; they are therefore spending more time and effort on deals.

Not only that but Wright noted that brokers were running their own businesses themselves while working to help customers with theirs.

“So they often feel overwhelmed, and from time to time they’re on their own, so we’re being mindful of that and spending a lot of time connecting with them,” he said.

jumping in there to be the intermediary, because the last thing you want when all this is over is to be in a position where the customer is a lot closer to the bank and somehow you’ve been bypassed,” he said.

How are each of you supporting brokers at the moment?

Jumping in again after explaining the challenges FAST had seen brokers facing, Wright pointed out that everyone in the industry would have been ramping up communication with their customers – and for FAST, those were brokers.

He said the aggregator had worked hard to keep brokers up to date with what lenders are doing for clients, what government support is available and what support there is for brokers as well. He added that the best interests duty was another change brokers were preparing for.

“There’s a real focus on keeping it as crisp and clear as possible for brokers to prioritise what they need to know and what they need to be doing in their business to get ready for all that’s coming their way,” Wright said.

FAST is doing this through digital tools

“Stick to what you know and what you do well, because we really all need to come together to look after customers at the moment” John Kolyvas, ING Wright added that brokers were also having to think about how they could reach their customers and how to help their staff have those conversations.

“For all business owners it’s a lot to digest at the moment, so that’s what they’re going through right now. It’s challenging times, but there’s certainly plenty for them to do and lots of opportunity.”

Kolyvas added that another challenge brokers were facing right now was how to stay relevant, as customers in hardship often contacted their lender directly.

“You need to make sure that you’re

22

and events, as well as connecting one-onone with broker businesses. But this brought up the other challenge of diversification.

And while it has always been something the industry has pushed, Wright said “brokers have enough on their plate”.

“Yes, they should be looking for opportunities and looking to diversify, but make sure you’ve got your main game sorted,” he advised.

“Particularly for what’s coming down the pipe for mortgage brokers. Absolutely look for opportunities, but have your main game sorted. That gives you confidence,

gives your people confidence, and then gives your clients confidence when you’re talking to them as well.”

Agreeing, Kolyvas said it was probably not the best time for residential brokers to move into the commercial space.

“It’s unusual for me to say that, because normally my message is by all means any residential broker should be considering getting into commercial – and we make it pretty easy for brokers to do that as well,” he said.

“But at the moment, stick to what you know and what you do well, because we really all need to come together to look after customers at the moment. If you can’t adequately address a new application because you don’t know the ins and outs of what’s happening or what the bank may want at the moment, then you’re not doing your customer justice.”

Wright suggested that if brokers did want to diversify or had commercial deals falling on their desks but did not have the capability to handle them right now, they should look for ways to partner with other brokers who could assist.

“Talk to an aggregator with commercial and business lending know-how. They’ll partner you up with a broker that has the expertise, and you can make an arrangement for how the client is looked after while you deal with building capability,” he said.

Mohnacheff said that while he could not think of a better time for brokers to educate themselves and diversify, he agreed with the idea of partnering up with other brokers to help clients.

“If you’re engaging with your customers and they have a problem, it’s incumbent on you to find a solution,” he said.

“That doesn’t necessarily mean that you need to be the one to write the business loan. You can always rely on your network within your aggregator cohort by making an introduction and begin your education process at the same time. Your customer will still appreciate you, because trying is better than saying ‘I can’t help you’.”

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“Whilst these are uncertain and challenging times, we are making progress, and we will get through them” Brendan Wright, FAST

How are you working with your commercial brokers?

Those brokers who are already offering commercial finance products, whether alongside mortgage products or simply as commercial brokers, are facing constant changes and uncertainty in the sector.

While some industries are performing really well, others are not, and whether they’re dealing with cash flow lending, commercial property or asset finance, there is a lot to keep track of.

Kolyvas said ING was being as responsive as possible. The bank aims to check new applications within 24 hours and get back to the broker to let them know if there’s any missing information, if there’s a change in appetite, or any other issues.

“What we’re trying to do is get back to them as quickly as possible so we’re not

holding up the deal in the queue, or the customer’s and broker’s expectations as well,” he said.

As a lender that prides itself on providing bespoke services and assessing each deal on its own merits, Liberty has not had to greatly shift its approach to applications, Mohnacheff said. What it did do was adapt to being non-face-to-face.

Liberty created virtual backgrounds, chatrooms, digital training sessions and virtual breakfast meetings so its BDMs could stay in touch with brokers to keep them up to date and workshop deals.

“Service is now very bespoke, which can mean a very quick yes, a slightly less quick yes, or an even quicker ‘sorry can’t help you’,” Mohnacheff said.

“This is creating that bit of certainty that, in the broker’s mind, we’re there for you.

We will take your call, we will respond, we won’t be hiding for weeks on end and then taking weeks to come back with a no. There’s nothing more frustrating than that, especially in this most uncertain environment. So we’re trying to create speed and certainty as best we can and staying in touch with all of our brokers constantly.”

NUMBER OF MORTGAGE BROKERS ALSO WRITING COMMERCIAL LOANS 4,000 3,668

3,500

3,670

3,617 3,481

3,000

2,932 2,647

2,500 2,374

2,000 1,500

1,673

1,641

1,000 500 0

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

Oct 18– Mar 19

Apr 19– Sept 19

Source: MFAA Industry Intelligence Service 9th Edition

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SPECIAL REPORT

COMMERCIAL LENDERS ROUNDTABLE What differences are there in the commercial lending space that mortgage brokers need to know about?

Whether it’s an office building, a shop or a home, it’s all property. But while it may seem that if you can do one you can do the other, commercial lending can require a little more caution and consideration.

Kolyvas says brokers should gain as much knowledge as they can and reach out to their BDMs. Particularly at the moment he said, the industry was seeing things it had never seen before, but this was providing an opportunity to learn.

“When times are good, it’s very easy to get an application together and get it in, but when times are bad, that’s really where you learn about the things that can go bad,” he said.

“This really is the time when you can learn a lot to put you in a better position when the market improves again and you’re looking to get back into the market.

“Tap into your BDMs, whether it be your aggregator BDM or your bank BDM; talk to more than one BDM when you’ve got one particular transaction, because that’s how you’re going to learn.”

ROLE OF COMMERCIAL BROKERS IN SME MARKET Commercial brokers’ role in SME market by segment % of SMEs using brokers in each segment – Total market (N: 1,256)

New finance

Refinancing

Shopping around only (price discovery)

Advice on major acquisitions

Advice on selling the business

Buying/selling assets/plant and equipment

Do not use a business broker but have done so in the past

Do not use a business broker and have never done so 0%

10%

20%

24

40%

50%

60%

Source: Scottish Pacific SME Growth Index, April 2020

“We’re trying to create speed and certainty as best we can and staying in touch with brokers constantly” John Mohnacheff, Liberty Saying that Kolyvas was “spot on”, Wright added that the guardrails of a commercial deal could shift depending on factors like the nature of the tenancy, the businesses in it, and whether it was owneroccupied – plus you have to deal with valuers and changing lender policy.

He said speaking to BDMs across different lenders would help brokers understand the varying appetites and the best way to present their deals.

“The reality is it’s just more complex;

30%

there’s more to it, let alone in an environment like right now,” he said.

“We’ve all said it a number of times: there’s still an opportunity there, but you need to engage with others very quickly.

And the other thing is to say to a client: because this is the reality, this will take some time.”

Speaking to BDMs, too, is not only helpful because they know their own lenders so well, but, as Mohnacheff explained, most of them know other lender BDMs as well and will

point brokers in the right direction if they are unable to help.

“At the end of the day, all any of us want is a happy broker and a happy customer. So, if we’ve got a scenario and we know that we can’t do it, I guarantee that our BDMs will tell you where to go,” he said.

“We’re all in this horrible situation together, and we’ll get through it together.

We need to be more supportive – and we are; we’re working more closely together to find a good solution for the consumer.”

What do we see in the future?

A tough question to ask in any environment, Wright took it on. He said that while it was hard to predict where we would be in a year’s time, everyone was learning

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SPECIAL REPORT

COMMERCIAL LENDERS ROUNDTABLE “It’s when there’s that element of uncertainty that brokers can play a really critical role in providing support to their customers.

Not just in commercial property but more broadly as well” Brendan Wright, FAST

and adapting. The property market and economy might be harder to assess, but as consumers and business owners, he said the way we do things was changing.

“There is an opportunity for innovation, to adapt, to be as nimble as you can and learn,” he said.

“Whether it be government, larger businesses, smaller businesses, lenders, all the players in the game are being extremely mindful about the fact that it is uncertain, and we need to change the way we’re doing things. Some things may go back to the way they were, but some things will be different.”

Kolyvas commented that what made it a hard question to answer right now was that

the environment was so volatile and was changing so quickly.

“It will be interesting to see what positives from COVID will stick as we move beyond the pandemic,” he said.

“Technology has been accelerated and

changed the way lenders and brokers go about their everyday business and in many ways has made life easier. It’s possible there will be a push for digitalised processes that didn’t exist before COVID to stay in place.

“One thing’s for sure, there will always be

VALUE OF COMMERCIAL LOANS SETTLED BY MORTGAGE BROKERS Mortgage brokers were writing strong values in the commercial loans sector prior to the coronavirus pandemic

$10bn $9bn $8bn $7bn $6bn $5bn $4bn $3bn

$8.05bn

$7.90bn

$8.85bn

$8.94bn

$9.05bn

$8.79bn

$8.99bn

$0bn

$4.82bn

$1bn

$5.74bn

$2bn

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

Oct 18– Mar 19

Apr 19– Sep 19

Source: MFAA Industry Intelligence Service 9th Edition

26

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a need for real human interaction in the commercial broking world.”

In contrast, Mohnacheff said the answer was simple. Pointing to other big moments in history such as the Great Depression, the World Wars and natural disasters, he said humanity continued to survive and adapt.

“We’ve all had to sit down and reassess, because the change was thrust on the entire world. I know we will come out of this a better society with greater learnings and better clarity,” he said.

“It’ll be a different way that we live and work, and that’s very exciting. The uncertainty is part of that excitement. We’re going to be part of rebuilding the way that we go forward.

So, on an optimistic note, I think it’s going to be very interesting observing how we evolve and grow and find a new normal.”

Is there any message or advice you’d like to give brokers?

As the industry continues to face into the threat of COVID-19 in terms of health, the economy and business pressures, Wright said his message to brokers was to “stay connected”.

With the increasing and complex workloads brokers are handling at the moment, he said it was important that they didn’t feel like they were on their own, and that they should reach out to others.

“You’re experiencing and dealing with significant challenges on behalf of your clients and yourselves as business owners and your families and your people,” he said.

“Whilst these are uncertain and challenging times, we are making progress, and we will get through them over the coming months, and things will look a lot clearer for what it means for us as Australians.”

For those whose workloads were a little quiet right now, Kolyvas said his advice was to use the time for education. With lenders and aggregators running virtual training sessions, and other paid-for training and diplomas available, brokers could use this time if things were quiet to educate themselves on commercial lending.

“This really is the time when you can learn a lot to put you in a better position when the market improves again” John Kolyvas, ING “Use this as an opportunity to learn,” he said, adding that it was also important that brokers cement their relationships with clients. “Once things start getting better, the customer will remember you for what you did during this time. You don’t want to be the fair-weather friend all the time,” he said.

Agreeing with Wright’s point about staying connected, Mohnacheff said it was important for brokers to remember that they “are not alone”. He also reiterated that it

was the perfect time for brokers to diversify their knowledge.

“There is so much material out there to help you get through these challenges,” he said. “LinkedIn Learning has these enormous levels of courses to help you through it, no matter what you’re trying to do.

“It’s not all doom and gloom. It’s a wonderful opportunity to connect and reconnect with people you maybe haven’t spoken to in a while.”

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27/07/2020 2:47:12 PM

FEATURES

SECTOR FOCUS: VEHICLE FINANCE

Driving better customer outcomes The opportunities for mortgage brokers to help their customers with vehicle finance continue to grow, but it is better to be cautious before jumping in at the deep end

28

FOR MANY, the idea of a home with a car in the driveway is a pretty simple one. However, not only are mortgages and vehicle loans the two largest expenses a customer will commit to, but often borrowers end up seeking out different finance professionals for help.

It is generally thought that most vehicle loans are obtained within the first six months of a new mortgage. So it makes sense that the borrower would benefit from using the same broker for both solutions.

The opportunities extend beyond this.

According to the ABS, there were 19.8 million registered motor vehicles as at 31 January 2020, and the number is increasing all the time, while more than 9.2 million households were recorded in the 2016 census. Almost 35% of those households held a mortgage.

One home loan for a broker could mean they could also help with two or three vehicle finance loans for the family.

Liberty’s group sales manager, John Mohnacheff, reminds brokers that people generally purchase cars much more often than they buy houses. He says brokers should always enquire about a mortgage borrower’s additional needs, because “you never know what you might uncover”.

“Investing a bit of time and effort in adding new products and services to your business can be incredibly rewarding,” he says.

It can be daunting to start with, however, and Mohnacheff says many brokers avoid trying other areas of lending because they are considered too difficult or complex. But he says that in fact very little changes.

“Succeeding in vehicle financing requires the same skills as it does in any other area of lending – and there is so much more opportunity for brokers who expand their customer offering,” he says.

While there are differences between loan size and asset type, a significant and not unwelcome difference is the speed of a vehicle finance deal. Where mortgage brokers can spend days or even weeks pulling

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a mortgage deal together, motor lending can happen within a few hours.

“In many ways, motor finance and mortgage broking complement each other.

Vehicle finance can provide brokers with a steady stream of settled business while they support home loan customers over much longer time frames,” he says.

Liberty offers finance options for a range of vehicle types, as borrowers need finance for more than just new and personal cars. It offers fixed-rate car loans that can be used for new vehicles as well as those up to 20 years old

“Offering vehicle finance gives brokers the opportunity to drill down into … their connections on what needs and wants need to be filled” Mhairi MacLeod, Astute Ability Group and allows flexibility around loan terms and balloon repayments. The lender’s products also include business car loans, low-doc loans and custom out-of-the-box solutions.

“As private deals still constitute 60% of all

used-car sales, it’s the perfect opportunity for mortgage brokers to get a message to their clients that they can assist them with finance for a private sale,” Mohnacheff adds.

Healthy demand spurs on brokers

VEHICLE FINANCE TOPS EQUIPMENT/ASSET SECTOR While 68% of equipment and asset finance loans this year have been for cars/light commercial vehicles, the six-month flow shows some slowing for both light and heavy vehicles Equipment/asset finance lending by segment (and 6-month flow for key segments)

2019 2020 6-month flow

-22%

65% 68%

17%

-8%

13%

5% 2% 5% 6% Cars/light commercial vehicles

Heavy commercial vehicles

Yellow goods (inc. cranes)

Fit-outs

2% 1%

1%

1%

Agricultural equipment

Medical equipment*

ICT*

10%

5%

Other assets

*Not asked in 2019 Source: FAST Business Lending Index

Finance broker and principal and founder of Astute Ability Group Mhairi MacLeod has been offering vehicle and asset finance for more than 22 years. She started out as a business manager in a motor dealer before deciding to specialise as an asset finance broker running her own business. She services SME clients who usually need to finance several commercial vehicles.

MacLeod says offering vehicle finance as her core business proposition allows her to “deep-dive” into her self-employed SME customers’ needs and then in turn help their clients.

“One opportunity to finance an SME customer’s motor vehicle can potentially lead to a consumer personal loan for debt consolidation and home loan lending,” she says. “As a business, we’ve benefited by being able to cross-sell from one asset such as a car loan to various other assets in other industries, from excavators to six-wheeler trucks to a horse float or a shop fit-out.

“Offering vehicle finance gives brokers the opportunity to drill down into your client database and their connections on what needs and wants need to be filled.”

MacLeod’s time in the industry means she has seen it shift and grow, and one of the things she has noticed in particular is that the number of brokers diversifying or specialising in vehicle finance is growing.

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FEATURES

SECTOR FOCUS: VEHICLE FINANCE

“There has been an overall healthy market demand for vehicle finance, so it makes sense to see more brokers taking this opportunity to provide diversified solutions for their clients,” she says.

It’s not just brokers who are taking up the opportunities. MacLeod says it has been great to see more lenders entering the space and showing flexibility about each client’s needs, and there are also more support services for vehicle finance training.

Nevertheless, MacLeod warns that “diversification is not for everybody”. Her business understands the nuances and niches of vehicle finance, and her clients appreciate her specialty knowledge.

For example, her team know that clients need to repair or upgrade their vehicles, and this means they can help those clients with strategies to structure their finance in order to manage those costs.

“If you’re a mortgage broker and you’re

already good at what you do, diversification into vehicle and asset funding will still require work and research,” she says.

“A vehicle finance deal is not simply a

John Mohnacheff, Liberty quick turnaround; it requires you to be agile and knowledgeable. You will need to be committed to learning and understanding the processes of vehicle finance, the different types of assets, different types of lending and different lenders’ policies. Start by considering which aggregators you choose to work with to access these lenders.”

According to the January 2020 ABS Motor Vehicle Census in Australia:

the number of registered vehicles

19.8 million increased 1.5% registered motor vehicles

from 2019 to 2020

light rigid trucks saw the highest growth rate of

the largest increase in registrations was

25.6% 2.6% of cars were – seen in Tasmania diesel vehicles

Every industry has been affected in some way by the pandemic and the resulting restrictions, and motor vehicle finance is no different.

“We have seen a growing number of brokers coming back to us for vehicle finance after experiencing how quick and seamless the process can be”

A COUNTRY OF CAR LOVERS

there were

Vehicle lending during COVID-19

5.8%

campervans had the second-highest growth rate of

3.5%

Mohnacheff says it is facing challenges due the pandemic, but also because of changes to technology and customer expectations.

“The goal for us is to remain agile and innovative by adapting to these shifts so we can provide relevant products that support brokers and help more people to get financial,” he says.

In fact, the pandemic offers opportunities for brokers to look for alternative solutions.

Mohnacheff says he has seen for himself and heard via word of mouth that there is a growing awareness of the options Liberty provides.

“During recent months, we have seen a growing number of brokers coming back to us for vehicle finance after experiencing how quick and seamless the process can be,” he says.

“Our dedicated motor BDMs are proactive in supporting and promoting to brokers the benefits of diversifying into vehicle finance.”

As a broker who has had to face these challenges, MacLeod says this year has changed the way the industry works and how individuals connect with each other.

“As for our clients, it’s business as usual, but we’re smarter about how we communicate with them: we’ve used a simple strategy of doing check-in calls with all our clients and asking them if there are any changes to their finances that they need assistance with,” she says.

“Also in this space, we’re acutely aware that SME business owners are more in need of tailored equipment finance funding, which we can provide.”

Source: ABS Motor Vehicle Census, January 2020

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FEATURES

SECTOR FOCUS: NEW BROKERS

Giving high priority to new brokers Despite the challenges that joining the broking industry this year might bring, new entrants will find there are plenty of opportunities if they are willing to work hard and put their minds to it

JOINING THE broking industry is always challenging, but at a time when even the most experienced broker is facing an unpredictable situation, this year presents additional difficulties.

It can be hard work starting out as a broker, particularly for those joining without having banking and finance relationships. With no salary, brokers need to grow relationships from scratch and slowly build up their business as upfront trail commission comes in.

According to figures from the MFAA’s 9th Industry Intelligence Service (IIS) report, the current national average annual upfront

commission for a broker is $67,650. It can be assumed that this figure will be much less for those new to the industry, who don’t have the client base that experienced brokers will have built up.

Specialist Finance Group’s head of aggregation, Blake Buchanan, explains that one of the big challenges for new brokers is the time lag between starting out and getting paid. He says when he speaks to people intending to join the industry, they may have done their research, spoken to people and completed coursework, but that is not all there is to it.

“Sometimes what is missing is the hard truths about starting up alone and what is involved, which is learning the trade, all of the acronyms, the varying lender pricing and policies,” Buchanan says. “But also, really being thrown in the deep end and having to do all tasks of a business, including marketing, sales, ongoing learning, bookkeeping and accreditations, to name but a few.”

However, he says over the last decade he has seen increasingly fewer brokers “going it alone”. Instead they are choosing to join established businesses or broking houses.

NEW BROKERS RECRUITED 2015–19 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

Oct 18– Mar 19

Apr 19– Sept 19

Number of men recruited during period

931

972

947

938

1,168

892

854

625

630

Number of women recruited during period

475

454

439

360

523

406

371

313

281

Source: MFAA Industry Intelligence Service, 9th Edition

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“By joining a business from the outset, new-to-industry brokers have more support readily available and often might have their income subsidised, which eases entry and will most often teach and support them with the fundamentals they need for lasting business success,” Buchanan says.

Lenders themselves are also aware of the challenges brokers face when they join the industry. As a new home loan lender, smartbank 86 400 is focusing on supporting them as well as more experienced brokers.

The head of broker at 86 400, George Srbinovski, says brokers are worried about maintaining their relationships particularly during the pandemic, and are trying to provide clients with as much help as they can,

but there are still the same challenges that new brokers have always faced.

“Brokers who are new to the industry face many challenges, generally learning the

processes easier for new and experienced brokers alike. Srbinovski says the bank is removing the need to provide “pages and pages” of supporting documents with their

“The numbers can be learnt, but it is the DNA of a person that makes them a successful broker” Blake Buchanan, Specialist Finance Group vast range of different lending policies and procedures that are rapidly changing, getting the most out of their CRM and working on generating new leads and growing their businesses,” he says.

Built on smart technology, 86 400 is making

clients’ home loan applications.

“This will reduce the amount of time they spend when submitting the deal to us, and our ability to turn deals around very quickly means they will be impressing their customers with amazing service,” he says.

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FEATURES

SECTOR FOCUS: NEW BROKERS

Overcoming the challenges There are also opportunities to be had for brokers, despite the challenging year that 2020 has been.

Thinktank’s general manager, partnerships and distribution, Peter Vala, points out that it is difficult to forge new referral partners in a non-face-to-face environment, when they are already “digitally dazed” from webinars and Zoom meetings. “[But] the best place to start is with clear and useful communication, responsive service, and simple hard work and determination,” he says.

He adds that new brokers just need the

that’s real support,” Vala adds.

The challenges of 2020 are not the first the broking industry has had to go through, however. Mortgage Choice CEO Susan Mitchell says the industry has transformed over the years, and despite facing hurdles like regulatory scrutiny and the royal commission, brokers continue to demonstrate the value they bring to customers.

There has been significant change though, and as change continues with, for example, the introduction of the best interests duty, Mitchell says new brokers will need to learn to adapt quickly.

“Mentoring is key to developing new brokers’ skills, giving them the confidence they need to establish their business” Susan Mitchell, Mortgage Choice right mindset and approach to overcome any hurdles.

“As most new brokers are going to be selfemployed, an appropriate business plan and cash flow forecast are a must,” he explains.

“As part of this, you must be realistic and ask the following questions: How will I fund my day-to-day operations until a level of continuous business and revenue is established? How will my value proposition differ from others already in the industry?

How can that value proposition attract client referrals and referral partners?”

The commercial lender has placed a “high priority” on education for new-to-industry brokers, including Commercial 101 and 201, and training in SMSF funding. It also ensures its relationship managers are on hand to workshop transactions and educate brokers on financial institutions.

“And if a transaction is not for Thinktank, we will often assist brokers with various contact points at other institutions. We think

34

Looking at the COVID-19 pandemic, she also sees opportunities.

“Brokers are in a unique position to help consumers make decisions in an incredibly uncertain time,” Mitchell says.

“Australians are looking for guidance from a trusted voice that can help them make sense of all of the uncertainty in this economy, and I believe that brokers play an integral role delivering that.”

Mortgage Choice is offering brokers support in a few different ways, such as marketing support; peer support through its Lending Advice Forum; and technology to manage deals and tasks, communicate with clients and automate customer data.

It also offers a two-year training and mentorship program consisting of online and face-to-face learning. New brokers have their loans reviewed by their dedicated compliance coach and receive ongoing support from their sales and credit coach.

“Mentoring is key to developing new

brokers’ skills, giving them the confidence they need to establish their business,” says Mitchell. “It also plays a huge part in the professional development of brokers, equipping them with the knowledge and information to stay up to date on changing industry standards.”

Crossing over from banking It is not unusual for many new-to-industry brokers to come from banking, and SFG’s Buchanan says this trend has really ramped up over the past few years. He believes that, as brokers continue to eat into the first-party market share, this will happen more. But he warns that working for a bank and becoming a broker are “wildly different things”.

“Whilst there is great appeal to offering more products than just one, and there is also a financial upside if you become great at your craft, it takes hard work, determination, long hours, excellent negotiation skills, as well as being at the top of the class when it comes to problem-solving,” he says.

“Some of the best brokers in the country have come from hospitality, property or sales roles,” he says.

“The numbers can be learnt, but it is the DNA of a person that makes them a successful broker. I am grateful to have over the years met and become friends with many of the best brokers in Australia, and it is not their résumé that makes them great but their attitude and desire to help people.”

While it is not necessary or even recommended that brokers should come from the banking industry, Srbinovski says there are advantages.

“Brokers with a banking background have extensive training on deal structuring and great customer outcomes. Once they learn what other banks are offering, they can draw on that experience for their customers,” he says.

Regardless of whether they have come from banking or are new to the finance

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NUMBER OF AUSTRALIANS PER BROKER Based on ABS’s Estimated Resident Population, June 2019

4,500 4,240

4,000 3,844

3,500 3,000 2,500 2,000

2,027 1,724

1,500 1,000

1,409

1,341

NSW and ACT

Vic

1,528

1,375

500 0 Qld

WA

SA

Tas

NT

National average

Source: MFAA Industry Intelligence Service, 9th Edition

“The best place to start is with clear and useful communication, responsive service, and simple hard work and determination” Peter Vala, Thinktank industry, Srbinovski says there is still a lot to learn as the lending landscape changes and as fintechs like 86 400 develop.

“It’s a rapidly changing space, and there is lots to learn, not just for new brokers but existing brokers also,” he says.

“COVID-19 has shown that new fintechs

can provide additional capabilities to brokers so they can serve their customers.”

Agreeing that there are advantages to having experience in banking, Vala says it can be helpful knowing how to structure deals, and to have contacts in the industry, but brokers from this background may be held

back by having a structured school of thought around looking at deals in a certain way.

“Brokers from a non-banking background have no preconceived ideas on how to look at transactions and prospect for business,” he says. “This in itself could be the actual value proposition that distinguishes a new broker to the market.”

Vala adds that experience in different industries could also add to that value proposition.

“A broker from outside banking may well have other industry experience that could make them a specialist in a certain field of finance,” he says.

“For example, past experience in the transport industry could make them perfect for assisting businesses in logistics, transport and wholesale requiring financing of heavy vehicles and industrial property, and cash flow solutions such as debtor finance.

“Everyone has different skills and experience to bring to bear, and success in broking and finance is built around attitude, collaboration, relationships and being solutions driven.”

Being a franchise operator, Mortgage Choice is well placed to help those new brokers who are coming in without prior experience in financial services. Mitchell says its training program has been created to mentor and support new entrants.

She adds that the franchise model is great for new brokers as it allows them to leverage a recognised brand in a local setting rather than spending time and money on establishing that themselves.

“Being part of a franchise network also gives you access to a national community of like-minded business owners that have bought into the same journey, who are passionate about seeing you succeed as part of the one branded family,” she says.

“This means access to a wealth of experience from people who have already walked the path you are undertaking.”

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FEATURES

SECTOR FOCUS: NEW BROKERS

Growing opportunities The MFAA IIS report, based on June 2019 figures, shows that on average there is one broker for every 1,528 people in Australia – a 4.3% increase from the previous year. With so many people to one broker, the opportunities for new entrants are clear.

Buchanan says brokers often don’t see what is “glaringly obvious” – the importance of their loan book.

“Sometimes brokers are so focused on acquiring the next customer that they don’t stop and realise the importance of planning the size of your existing and future book,” he says.

With the average broker-introduced loan lasting between four and five years, Buchanan believes that if a broker has 250 active clients they should be writing 50 deals just from

their existing client base in year five.

“There is opportunity galore for brokers to get stuck into this gap,” he adds, “and they are even obliged to tap into this, as every Australian should see a broker who has the highest lending standards, with the

“It’s a rapidly changing space, and there is lots to learn, not just for new brokers but existing brokers also” George Srbinovski, 86 400 customer’s best interests at the forefront of what we do.”

Those new brokers coming in to take advantage of the opportunities the figures suggest are available should “think outside

UPFRONT COMMISSION PER BROKER Average annual upfront commission per broker, prior to costs

90,000 80,000 70,000

$71,814

$71,751

50,000

$67,650

$65,960

$64,770

60,000

$63,318

$50,680

$48,679

40,000 30,000 20,000 10,000 0 NSW & ACT

Vic

Qld

WA

SA

Tas

NT

National average

Source: MFAA Industry Intelligence Service, 9th Edition

36

the square” when it comes to growing their business and their brand, Srbinovski says.

“How well are you known in the local community? Have you had coffee with every potential referral source in your local area?” he asks.

“Be an active member of the business community and don’t forget to have a digital presence and spend time on your online profile to allow your existing and new customers to get an understanding of you and your business.”

Looking closely at the population figures per broker, Vala says that if you assume a third of those 1,528 Australians are homeowners, that still leaves just over 1,000 customers per broker who may want to refinance, draw on equity, or make a straight purchase.

As a commercial lender, he sees the other opportunities these figures offer.

“Most of these people have cars that turn over on a semi-regular basis – say every four years – so that alone creates a market for asset finance transactions,” he says.

“And this is separate to personal loans, working capital facilities, commercial loans and commercial and residential SMSF facilities. It suggests there is still a very large market to target.”

With more than half of all residential loans in Australia written by mortgage brokers, Mitchell says the industry is flourishing and the figures indicate “there is still room to grow”.

“Credit is becoming more complex and consumers are looking for expert advice, and the professionalism of the broking industry is being further reinforced with new regulations,” she says. “When you pair this with many banks decreasing their branch footprint, the outlook for broker growth is strong.”

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FEATURES

LEADERSHIP

Leaders in the new world As businesses and industries continuously change and the working world adapts, Richard Maloney writes that leaders must do so as well

IT’S OUT with the old and in with the new.

The last decade has seen industries and businesses moving at a faster pace than ever before, and to cope with this rapid evolution, leaders, executives and CEOs must adapt to a more modern and agile style of management.

Gone are the days of age-based seniority and parental leadership tactics based on control.

Today’s employees embrace a flatter management structure, flexibility, accountability, empowerment, development initiatives and continuous learning.

Before you can strive towards becoming the inspiring leader you need to be, it’s important that you identify where you sit within the seven levels of leadership. The first five levels are very much yesterday’s approach to leadership, and the remaining two are about becoming the new and innovative leaders of tomorrow. Now is the time to become a more refined, mindful and introspective leader – one who understands that leadership is not about you but about what you can do for others, and how you can best enable them to shine.

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1

The disliked manager

The disliked manager is usually someone who has moved up through the ranks of the organisation and has been promoted into a leadership role purely due to seniority. This person has a lot of industry knowledge and knows the environment quite well but does not understand the true ethos of leadership.

They have a poor ‘command and control’ approach to leadership and are therefore disliked and disrespected by their team.

2

The disrespected manager

The disrespected manager has gone from being disliked to being somewhat liked but has yet to earn the respect of those they lead. There is a considerable learning curve involved in becoming a successful leader, and how long the person stays at this stage depends entirely on their own commitment and skills development.

3

The manager/leader

The manager/leader now understands that there are two distinct skill sets required to becoming a leader: one must be both a great manager and a great leader to lead effectively. This person is learning; they’re reading books or listening to audiobooks, they’re eager and they’re using their initiative. At this point, they’ve attained the two crucial key qualities: they’re a good leader and a good manager, and after a while this takes them to the next level.

4

The respected leader

The respected leader has now earned respect as both a manager and a leader. This person is leading more effectively and harmoniously within a team that is receptive and responsive to their newly refined style of leadership and shared goals.

5

The accomplished leader

The accomplished leader has been in the role for a while and consistently demonstrates excellent values.

They have developed a successful, inclusive, admirable approach to leadership, and they are maintaining the levels of respect they have earned through a shared vision and group empowerment.

These first five levels of leadership are focused on the outer environment: on becoming a strong leader in the environment in which they have been placed. The following levels, on the other hand, are more focused on an inner style of leader-

and life, but the stress-free leader ensures that when they find themselves in a place of stress, they don’t stay there. They assess whether their thought processes are coming from a place of fear, control or emotion (brain-focused thinking), or whether they are coming from a place of empathy, understanding, intelligence and acceptance (heart-centred thinking), and they adjust their decisions accordingly.

7

The intuitive leader

As you go up the scale from six to seven, you’re moving into a higher state of self-awareness, and you are now able to self-regulate on a whim.

Now is the time to become a more refined, mindful and introspective leader, one who understands that leadership is not about you ship. One doesn’t have to have attained the accomplished leader level to embark on levels six and seven, but an accomplished leader who evolves through these next steps will quickly be seen as a revered influencer by those around them.

6

The stress-free leader

The stress-free leader is somewhat focused on themselves in terms of their own self-awareness and their ability to self-regulate and see the world from a different level – from the coach’s box, you could say.

They’re beginning to understand that their outer world is a reflection of their inner world, and that everything is neutral until you give it meaning. It’s about recognising your thoughts and actively changing them where necessary, and consistently reprogramming your mind.

Stress is an unavoidable part of work

Your intuitive leadership skills are becoming so refined that you are tapping into your inner intelligence with your everyday decision-making, and rather than chasing life, you’re in flow with life, trusting that your direction is clear and purposeful as you’re now so in touch with your inner compass.

The intuitive leader truly embodies the next generation of leadership.

Richard Maloney is the CEO of Quality Mind Global, an international mindfulness business with over 500 clients in 30-plus countries.

He is also founder of the number one employee engagement licensing company in the world, Engage & Grow Global.

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FEATURES

WORKPLACE CULTURE

The negative impact of an urgent culture Over the years workers have become busier and everything more urgent, but there can be a heavy cost for both you and your team, says Dermot Crowley

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UNPRODUCTIVE URGENCY and the resultant reactivity it creates has become an acute and chronic issue in many modern organisations. We all seem to be moving at a million miles an hour, running from meeting to meeting and dealing with email after email.

When did everything get so busy and become so urgent?

Urgency is a reality in our workplaces, but it is important that we don’t become victims of it. We need to take control and learn to manage it. If we don’t, we will pay a high cost when it comes to our productivity. You

downtime and rework that is created because of unnecessary urgency. Too much reactivity can lead to avoidable mistakes due to wasting time and resources on redoing work.

An increase in stress levels In their white paper “A Theory of Workplace Anxiety”, Bonnie Hayden Cheng and Julie McCarthy cite research indicating that 40% of Americans feel anxious during their workday, and 72% of these people say they believe this anxiety affects their work and personal lives.

When you consider the role a leader plays in navigating the challenges of a complex and volatile environment, not having enough time to think is very problematic may see urgency as just part of the territory, working in a fast-paced, customer-driven organisation. You may not realise the cost of unproductive urgency to you and your team.

So let’s explore the cost of urgency to ourselves and our businesses.

Avoidable rework Rework is a hidden but very real cost to businesses. In manufacturing organisations, a lot of effort goes into reducing wastage and rework in the manufacturing process.

If a part is not manufactured correctly the first time, there is a very measurable cost to the bottom line for that product. So factories will have systems and processes in place to reduce the error rate. In fact, this is one of the key stats that is measured daily. The efficiency of the manufacturing process is measured constantly to maximise productivity and profitability.

But unlike in manufacturing, knowledgework organisations may not see the wastage,

Now of course there are many factors that might contribute to workplace anxiety, including cranky bosses, unhelpful colleagues and unrealistic workloads. But urgency is definitely a major part of the picture.

Increased anxiety is bound to affect performance and wellbeing. We do not think as clearly when we are anxious, we don’t feel as motivated, and sometimes we just opt out because of it.

A drop in quality of work Whether we are reacting blindly to incoming urgency, or leaving things until the last minute ourselves, the quality of our work suffers. We make mistakes because we rush things. We compromise the finished product because we run out of time. And in the knowledge workplace, we lose the time to stop and think.

A recent KPMG Global CEO survey found that 86% of global leaders have struggled to find time to think about two of

the most critical drivers in their businesses: disruption and innovation. In Australia that percentage has crept up to 94%. When you consider the role a leader plays in steering the organisation in the right direction and navigating the challenges of a complex and volatile environment, not having enough time to think is very problematic.

Burnout and attrition This is the big one for me. If urgency becomes the norm in a team or organisation, it becomes part of the culture. While organisations may be able to operate through periods of high reactivity in short bursts, if working in the reactive zone becomes a longterm part of the culture, then burnout and attrition will surely follow.

People might not be able to name it as a reason, but they will have feelings that have built up over time: feelings of increased stress, agitation and frustration. They might not mention chronic urgency as an issue, but they may say that they can no longer cope with the hectic pace. They may suggest that they would prefer a role that gives them more control over their work.

I believe that most people want to do meaningful work that makes a difference.

But working in a reactive culture can feel like constantly walking into a headwind. It is hard work. So, I reckon we need to take the issue of unproductive urgency seriously and put measures in place to minimise it as much as possible. We will never totally eradicate urgency, nor should we, but we can learn to use it in a more mindful and purposeful way.

Dermot Crowley is one of Australia’s leading productivity thought leaders, the director of Adapt Productivity, and author of Urgent!, Smart Work and Smart Teams.

www.mpamagazine.com.au

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FEATURES

INNOVATION

Four innovation leadership skills to master As automation continues to rewrite the future of work, Evette Cordy highlights four qualities all leaders must have if they want to keep up with the pace of change TO THRIVE in an increasingly complex and unpredictable new world, leaders will require the skills of the future. To lead growth agendas, what matters most is not leaders’ intellectual intelligence or confidence in what they know, but how they deal with what they don’t know. It’s also about whether leaders are courageous and inspire their teams to seek creative ways of commercialising solutions. It is this innovation leadership that will give companies a competitive advantage in the face of continuous disruptive change.

Innovation agendas often fail not because of a lack of process or tools but because people lack the skills required for innovation leadership. Do your leaders have the necessary skills for the future? Here are four that will turbocharge your organisation’s innovation efforts:

1

The ability to handle ambiguity

Ambiguity is around us. We don’t know what we don’t know, yet we like to know because it helps us feel more comfortable and in control. Leaders’ need for certainty

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can kill innovation. It reduces their ability to let go of the known and make space for new, unknown insights and ideas.

Imagine you’re in a leadership team meeting and someone asks how the latest innovation project is going. All heads turn to the leader, waiting for their response. They don’t know yet – it’s too early; they haven’t even defined the right problem to solve, yet

thinking. Sit with ambiguity and plan to ‘not know’ for a bit longer.

2

A curious mindset

Leaders should spend less time in the office and more time walking in their customers’ shoes to view the world through their eyes and discover their hopes, fears and values – noticing what delights them and

Leaders who can hold space for ambiguity and continue to inspire their teams in the face of increasing complexity are those most likely to create a pathway to breakthrough thinking they feel compelled to respond. Leaders need permission to say, “I don’t know yet, but we’re learning a lot”.

Leaders who can hold space for ambiguity and continue to inspire their teams in the face of increasing complexity are those most likely to create a pathway to breakthrough

observing their irritations, frustrations and pain points.

L eaders who c uriously obser ve what customers say and do and seek to understand what deeply matters to them will find the most valuable problems to solve – and, in doing so, will create more

www.mpamagazine.com.au

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meaningful solutions for customers. By creating such an environment of curiosity, leaders can inspire employees to ask questions, to learn, and to seek problems and solutions. Employees are more open to discovering new things, leading to richer insights and platforms for problem-finding – and, ultimately, innovation.

Here are five questions leaders can encourage their employees to ask regularly: Why? How might we?

What if ?

Why not?

What did you learn?

3

Creative thinking

Creativity is critical for breakthrough thinking and innovation, and scientific research has shown that creativity can

be cultivated. The more flexibly and imaginatively that leaders approach challenges, the easier it will become to generate original ideas.

Research has suggested that people who are good at creative thinking are also good at seeing connections and generating more original ideas. By training our leaders’ abilities to see connections, we can boost their ability to think creatively.

Thinking of alternative uses for an object is a simple activity to train leaders’ minds to make new connections and, in turn, boost their creative thinking. This exercises your mind by stretching beyond the obvious uses to imagine an object outside of its usual context.

Pick a random object, such as a paper clip.

Now take precisely three minutes to write down as many alternative uses as you can.

Challenge yourself to come up with more than 20 ideas in three minutes.

Being brave

Most of us spend 99% of our workday playing it safe, following the rules, processes and protocols. Structure and order are there for a reason, but any deviation from the norm can be viewed as negative, risky or dangerous to the integrity of the organisation.

Imagine you’re in a leadership meeting and hold a strong view on which ideas should be prioritised based on the rigorous customerled process your team has been through to develop and prioritise the ideas, completely disagreeing with what has been decided. Yet you sit there and nod your head in agreement.

In most cases, conformity is the norm.

Leaders don’t choose to agree with others because their perception has altered – they go along with it because they don’t want to stand out. Many leaders fear failure, being wrong, looking silly or feeling embarrassed at work. This happens often and is costly to innovation efforts. Leaders need to embrace risk-taking, challenge the status quo, and bravely speak up and dissent.

Are you ready for innovation to thrive in your organisation? These four leadership skills should be practised and mastered alongside a robust innovation process to enhance your innovation efforts. Consider incorporating them into leaders’ job descriptions and KPIs to encourage and reward such behaviours.

And keep in mind that these are not one-off activities – to become skilled, they require repeated effort and discipline.

Evette Cordy is an innovation expert, registered psychologist and the chief investigator and co-founder at Agents of Spring.

She uses curiosity and creativity to help organisations create human-centred products and services and facilitate new ways of thinking. She is also the author of Cultivating Curiosity: How to Unearth Your Most Valuable Problem to Inspire Growth. For more information, visit agentsofspring.com.

www.mpamagazine.com.au

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PEOPLE

BROKERAGE INSIGHT

Offering more than mortgages For the founder of More Than Mortgages, Deanna Ezzy, being a mortgage broker goes beyond writing loans. She prides herself on forging real relationships and using her position to help those in need ANY BROKER will tell you that relationships with their customers are important to them, but for Deanna Ezzy, founder of More Than Mortgages, this is something that is really evident throughout her work.

Her commitment to her customers and the relationships she has with them was reflected in a recent experience she describes.

Earlier this year she had a phone call from the brother of a client; he wanted to help his brother with his financials while he was in hospital recovering from an illness. Over the

following few months Ezzy had several conversations with them both, and just a couple of months ago the client called her to say hello and wish her luck during the pandemic. A week later, the client’s brother called to say he had passed away.

“It dawned on me that Chris had called me the week earlier to say goodbye before he died,” Ezzy says.

“I feel blessed and humbled by the experience. It was yet another example of how being a mortgage broker can often mean a

CHARITABLE GIVING While More Than Mortgages (MTM) founder Deanna Ezzy was attending a gala dinner/fundraiser for the Reach for Nepal Foundation around two years ago, she emailed herself a reminder to set up a business bank account solely for charity work and donations.

She did just that, and now, every time the brokerage is paid, a percentage of the gross income is transferred to the charity account. As the account grows, Ezzy finds causes close to her heart that she can contribute to. For instance, MTM partnered with Rotary to organise an event called DANCE (Domestic Abuse Needs Community Evolution), raising around $3,800. It not only paid for all admin costs and design work but also matched the funds raised and provided a cheque for $7,500 to Doris Women’s Refuge in Canberra.

“Every book I’ve ever read about ‘rich people’ says they always give back to the community. I figured that if I want to be one of these ‘rich’ people, I should do the same, right?! I say that tongue in cheek, but it certainly feels enriching to give back in some way,” Ezzy says.

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lot more to people than you realise.”

Not every story is as poignant, but that doesn’t mean they’re not important. Ezzy spends time each month with her team, reading new reviews, and she has thank-you cards pinned up around the office.

“The physical cards are pinned up in front of us all day, also to remind ourselves that sometimes when things get a bit stressful or we’re feeling overworked (as all mortgage brokers do!), we can look up and be reminded of how much we’re helping and impacting our clients,” she says.

The idea for More Than Mortgages (MTM) came about in April 2017, and the brokerage began trading that November, out of the office of Ezzy’s previous employer in Deakin, ACT. A few months later she moved into a new office in Kingston; in fact, it was the same space in which she had first started with her previous employer.

“It was like coming home in a way,” Ezzy says.

MTM focuses on residential homeowners, with a clientele that comprises about 70% owner-occupiers and 30% investors.

Before founding MTM, Ezzy had spent several years at another Canberra-based brokerage as one of its senior brokers. Over a period of about five years she did around

www.mpamagazine.com.au

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FAST FACTS Company: More Than Mortgages Founder: Deanna Ezzy Location: Canberra, ACT Year founded: 2018 Number of employees: 5 Services offered: Residential

“It was yet another example of how being a mortgage broker can often mean a lot more to people than you realise” 70% complex lending deals, but as this type of lending took much more time per application, she made the decision to focus more on owner-occupiers in her new business.

“I find owner-occupier lending is more personal and emotional for the client, and I love being a support for people who are going

through the homebuying process,” she says.

Now almost three years into running MTM, Ezzy has been right there for borrowers through the royal commission and now the coronavirus pandemic. Noting that the market is “forever changing”, she says the one thing these experiences have

taught her is that nothing is guaranteed.

In Canberra the market has changed much less than in other parts of Australia, Ezzy says; houses show consistent and solid growth in most suburbs.

But she knows the current environment is posing different risks. With JobKeeper payments stopping and levels of continued lockdown meaning people can’t go out and work, many homeowners won’t be able to make mortgage repayments. Property investors are affected too, with many tenants unable to pay their rent.

Rather than focusing on the emerging risks of the current environment, Ezzy is focusing on the solutions she can offer to help her clients.

The first thing she’s doing to prepare her business over the next year is ensuring that her processes are as systemised as possible.

This includes changing the brokerage’s CRM system, implementing a document collection system and hiring more staff.

“I also want to focus on growing my current team, personally and professionally, by mentoring and offering support, guidance, training, and also feeding them leads so that they can grow their own client base,” Ezzy says.

www.mpamagazine.com.au

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PEOPLE

CAREER PATH

THE RIGHT CHOICE The new head of distribution at Mortgage Choice has been supporting brokers for years

2006

GAINS EARLY INSIGHTS

David Zammit started his finance journey as a relationship manager at Next Financial. After more than two and a half years in the job, he joined ANZ as a private wealth manager. “These roles were fantastic starting points for my career – one was in a small boutique business and the other at one of the largest institutions in the country. They gave me insight into how to leverage the nimbleness of the smaller player, while at the same time the size, scale and efficiency of a larger institution.”

2015

KEEPS CUSTOMERS HAPPY After four years and significant growth in Citi’s NPS, Zammit was appointed head of banking and wealth management. He was responsible for client engagement across all product lines of Citi’s retail bank in Australia, including mortgages, investments, foreign exchange, deposits and insurance. At a time when most wealth and mortgage businesses were experiencing declining volumes due to regulatory changes and the royal commission, Citi saw its highest NPS and volumes.

“We were the first Citi business globally to remove cash from its branches and then remove branches altogether. Instead, we used these resources to invest in commercial spaces that were better suited to our clientele, digital proposition and shift away from direct mortgage sales to fully support the broker network.”

Looking ahead

AIMS TO DRIVE BROKER SUCCESS Having started in his new role at Mortgage Choice after the coronavirus restrictions were imposed, Zammit is looking forward to connecting with his colleagues face-to-face and building strong relationships.

Recognising that demand for brokers has “exploded in the last decade”, he believes Mortgage Choice is perfectly placed to help its brokers grow as they face an upheaval in market conditions and regulatory changes.

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2011

JOINS TEAM OF HIGH PERFORMERS Approached by a headhunter, Zammit moved to Citi Australia, where, as vice president, investments, he managed the consumer bank’s investment division. As a “high-performing team”, they achieved triple-digit growth in an environment in which most advisory businesses were shrinking. “Our client experience was the key driver of this result, with record NPS growth.”

2020

TAKES ON NEW CHALLENGE After the former general manager of distribution resigned at Mortgage Choice, Zammit was approached and offered the position. His duties include ensuring that franchise owners and loan writers have access to resources like technology, and that they look after the best interests of their clients.

He also supports them in developing marketing and sales skills. Zammit believes his experience at Citi and in earlier roles prepared him for this new challenge. “I have been working closely with our mortgage broker partners for several years to build their clients’ success, their business success and significant growth for the Citi mortgage business through that strong partnership.”

“The support that Mortgage Choice provides its franchisees and brokers to drive their success and scale will set them apart.

Joining a team and contributing to that growth across the country is exciting”

www.mpamagazine.com.au

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AMA20 P

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Finalists will be announced in September. Winners will be revealed live and celebrated at the highly anticipated black-tie awards gala on 16 October at The Star Sydney.

BE PART OF THE INDUSTRY EVENT OF THE YEAR Visit australianmortgageawards.com.au for table reservations or sponsorship opportunities

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PEOPLE

OTHER LIFE

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

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Age at which Alycia Inglis began skiing

Length of the famous La Vallée Blanche ski run in France

2006

Year Inglis became a broker

LIFE ON THE SLOPES

Alycia Inglis recently went to Cha monix in Fra nce to ski the fa mous La Vallee Bla nche, a n off-piste route full of crevasses a nd avala nche risks

STONETURN MORTGAGE broker Alycia Inglis began skiing at the age of 10, when her dad took her and her brothers to Falls Creek, a short drive from their home in Wodonga, Victoria. She fell in love and would often take day trips on the bus to continue learning new skills on the slopes.

The broker of 14 years is not alone in her love of the snow: her partner snowboards and they enjoy doing runs and competing against each other.

“I love the adrenaline rush and the thrill of skiing through fresh powder and being in beautiful locations,” Inglis says.

Those beautiful locations she mentions are all over the world. She and her partner have travelled to Chamonix in France, Japan, Austria and Aspen in the US to hit the slopes.

Her favourite place was Zermatt, in Switzerland: a “charming and romantic” 15th century farming community.

“It also has hundreds of kilometres of runs, and you can ski in and out of Italy,” Inglis says. “So, we’d get up in the morning, ski to Italy, eat lots of homemade pasta and local wine and ski back to Zermatt to finish off the day. Magical.”

www.mpamagazine.com.au

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• • •

Alycia Inglis fell in love with skiing as a child, and can’t wait to return to the slopes around the world i

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