With tighter lending criteria and the softer housing market impacting mortgage brokers’ core businesses and the growing range of assets, it’s not surprising that the number of brokers diversifying into asset finance continues to grow.
“The timing is perfect, particularly with the focus on best customer outcomes and more aggressive pricing structures, which is good news for brokers and their clients. Asset finance provides a solid return on investment with positive consumer outcomes – brokers already have the infrastructure in place, which means it won’t cost them that much more,” says Damian Mantini, Platform Finance’s Director Aggregation and Strategic Partnerships.
“Five to six years ago, getting into asset finance was uncharted territory for mortgage brokers. However, with the finance world changing rapidly, a growing number of brokers are asking how they can prepare and make asset finance a regular part of their business,” says Mantini.
In fact, over the past 12 months, Platform Finance has experienced a 45 per cent increase in mortgage brokers partnering with them – a trend that Mantini believes will continue.
“Over the next two to three years, we expect there will be a big increase in brokers diversifying. Since the Royal Commission, we’ve noticed brokers are being more proactive in learning about asset finance and how they can grow their businesses.”
Keys to successful diversification
According to Mantini, the first mortgage brokers who diversified into asset finance at Platform Finance “are doing well” and those who follow will benefit from the lessons learned from these ‘early adopters’, as he calls them.
While mortgage brokers have transferable expertise and clients to help them diversify into asset finance, Mantini has found that education and a supportive infrastructure are keys to their success.
“After identifying that the biggest challenge for mortgage brokers is letting their clients know they also offer asset finance, we put a clear strategy in place four years ago to educate brokers on the benefits of asset finance and give them the tools to educate their clients. We have developed specific resources for our brokers including webinars, workshops, EDMs and point of sale material,” says Mantini.
“Brokers are building relationships and establishing trust with their clients to get them into a home loan, and if the clients are made aware that brokers can also organise asset finance – whether for a car or other depreciable item – down the track, it’s likely they will come back to the broker because they value that relationship.
“We’ve also found that businesses that have successfully diversified their products have been persistent in their approach. It’s important to have clear and constant messaging so brokers can be top of mind when clients are purchasing their next car, for example.”
Energy assets already boosting portfolios
According to Mantini, brokers will benefit from a new and growing range of assets that can be financed.
“While cars are the ‘bread and butter’ in asset finance and equipment finance is also a large part of our business, the next “wave” that brokers can ride is energy finance. Demand from businesses is increasing for products like solar panels and battery storage.
“Over the past year we’ve had a lot of enquiries from businesses. And while lenders are still getting their heads around this sector, we want to ensure we are ready so our brokers can take advantage of the demand, which is why we’ve established a specialist energy division at Platform Finance.”