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September 16, 2019

Assessing trends in the financial brokerage sector

A financial brokerage allows for access between consumers and finance providers, and the business is thriving.

By Christopher Marchant

A financial brokerage allows for access between consumers and finance providers, and the business is thriving.

According to recent results from the Finance & Leasing Association (FLA), broker introduced finance was up 4% in a month to £564m across the UK. Below are some specific examples of how the financial brokerage sector is changing and adapting.

Financial brokerage and loan origination

A panel debate was held on how document digitisation and analysis are driving operational excellence in lending and leasing.

It featured Thomas DeLuca, chief executive officer at AMP Credit Technologies. AMP Credit Technologies operates the Credit Analysis Information and Risk Operations System (Cairos), a loan-origination and portfolio-servicing platform.

As to whether AMP Credit is helping financial brokerages to gather the old type of screen-scraping data and social media data as well as digitising hard data, DeLuca stated: “The starting point for clients is the digitised workflow, so when the proposal comes in it is captured electronically and entered into a system where the credit information is pulled, and further forms of data collection may be utilised.”

He added: “An issue relates to who exactly is going to capture the username and password. If it is the broker, the applicant is entering his bank account details or password of the dealership and it is done on the back end. In many cases the workflows aren’t designed for that.”

Premium broker programmes

SME finance provider White Oak UK has announced the launch of a premium broker programme with the desire to boost their offering to the broker community.

The programme launch comes following the appointment of Matt Phillips to the role of head of broker & strategic partnerships. Phillips said: “Having spent 10 years in the industry, I have developed a real understanding of what businesses and brokers want from a funder. We have used this insight to help deliver a programme to our brokers that gives both them and their clients a funding solution that provides them with everything they need to do business.”

White Oak UK rolled out the premium broker programme as a pilot in January this year to their top performing brokers of 2018. The programme features a dedicated business development manager, and is coupled with dedicated back-office support staff.

Increases in lender pricing

According to research by United Trust Bank, over a third of asset finance brokers expect lender pricing to increase in the next 12 months.

Of the 114 asset finance brokers surveyed, 14.5% responding to the Broker Sentiment Poll believe that pricing in the asset finance sector is unsustainable and 37% expect to see lender pricing increase by this time next year.

However, 71% believe that current lender pricing is about right with a further 14.5% suggesting pricing is too high.

Conclusion

The broker market remains an essential element of financial services. While it looks like it may be rocked by technological advances, it also has the capacity to use these changes to their advantage. The trends show that the future of the financial brokerage will be shaped by those who adapt accordingly to their business surroundings, and utilise any market instability to their benefit.

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