SYDNEY, Sept 11, 2017
Small business loan specialist OnDeck Australia expects a growing number of brokers to move into alternative lending, in addition to the move from residential to commercial lending, due to increased competition in traditional markets and as a means of revenue diversification.
Michael Burke, who joined OnDeck Australia as Head of Sales in February this year, said the number of brokers diversifying into the SME space would continue as there was growing momentum and demand from clients.
“Brokers are not only looking to move into online lending because of the speed and ease of doing business it offers, but because their time-poor customers are demanding a more convenient solution involving faster turnaround times,” Mr Burke said.
“Brokers are telling us that they find the OnDeck platform and business model an efficient way to do business as it provides them with an effective way to build their own client relationships.”
Mr Burke, whose remit is to facilitate the expansion of OnDeck’s broker channel, also said a growing number of traditional mortgage broking houses were looking at product diversification due to increased competition in the industry.
“As a result, brokers have to expand their offering to include residential, commercial, asset, equipment finance and more,” he said.
Brokers are seeing value in writing small loans in large numbers with online lenders, saving them time and effort which they can use towards more complex transactions with larger banks.
“This provides a means of diversifying their business in a strategic manner,” he said.
“Typically, brokers have realised they haven’t suggested commercial products to their self-employed clients – a major untapped opportunity which could lead them to offer broader financial solutions to their existing client base.”
OnDeck is looking to replicate its successful partnership with MYOB by seeking alliances with commercial loan brokers, mortgage brokers and other business finance brokers to offer unsecured small business loans via their broker platforms.
“There’s great synergy between our two companies in terms of innovation, technology and customer experience. We would like to continue to provide an online lending solution to small business owners by expanding our industry relationships,” he said.
Commercial loans steady at around $8 billion
The Mortgage & Finance Association of Australia said the value of commercial loans originated by residential mortgage brokers was stable at close to $8 billion, while the number of brokers writing commercial loans had increased.
The MFAA’s Industry Intelligence Service Report found the total value of new commercial loans originated was $7.9 billion in the six months ended March 31, 2017, slightly lower than the $8.2 billion reported in the six months ended September 30, 2016.
The number of brokers who wrote a commercial loan during the period rose 10 per cent to 2,650 brokers. Anecdotal evidence continues to support the high levels of interest and activity amongst aggregators and brokers for diversification of their income streams and amplification of their product suites.
Set to expand
OnDeck recently added two new state-based Business Development Managers (BDMs) to foster the growth of its broker channel in Queensland and Victoria. Michael Rayburn, previously the National Sales Manager at OnDeck has also been engaged as the BDM to support brokers in New South Wales.
In 2018, the company plans to further expand its team of BDMs and account managers to strengthen its broker offering.
“We are identifying key personnel to bring on board to help OnDeck expand and enhance business opportunities across the country,” Mr Burke said.
Broker accreditation grows
OnDeck has a rigorous accreditation process that it uses for brokers under the Funding Advisers Program (FAP) which fosters industry credibility and enhances the OnDeck customer experience.
“The response from brokers has been phenomenal so far. We expect further growth in accreditation as more brokers recognize the benefits of doing business with us,” Mr Burke said.