Where we are now
Over 6 in 10 home loan borrowers now use a broker (but only 2 out of 10 businesses – and this will change rapidly now that businesses are getting access to a lot of borrowing options which were not previously available to them).
And, a recent survey showed that 1 in 4 borrowers who were with a High Street Bank are looking to move away from their current bank.
Food for thought for the Big Banks you would think…..
In the beginning…
Before I started my finance business, I had identified that banks were not always a borrower’s best friend.
It was not that they were necessarily ‘against you’ (although that sometimes was the case from anecdotal evidence you would hear). Rather, their service levels and service responses and pricing advantages were ‘neutral’ or ‘non-existent’ for existing customers.
For new customers, they would fall all over you, even making out that you had access to a ‘relationship manager’. In reality, once the loan was signed up, and you were locked in, your relationship manager never contacted you again with respect to your loan.
Now, this scenario is nothing new to those who are used to dealing with large institutions. Phone companies, energy utilities, finance institutions, insurance companies – they all tend to look after new customers better than their existing customers.
As someone who has studied marketing, I never quite understood this given that it is cheaper to retain an existing customer than find and sell to a new one. But then again, I do understand because I also know these large institutions rely upon ‘customer apathy to change’. Because of this reluctance to change, institutions, who largely play a numbers game, take the view that they can reduce the cost of servicing existing customers to pretty close zero and only lose a small number of customers to churn.
Unfortunately, what they seem to miss (or perhaps underestimate) is the silent aggravation they cause amongst customers who want more and want better – and who, if they are given a real choice, will ‘up and go’.
So, what does this have to do with brokers?
Well, brokers provide the tools for customers to positively action change without the customer having to do the hard work (ok, there is still a bit of hard work to do but most of the heavy lifting is done by the broker – assuming you have a good broker!).
Here are some reasons why you can consider using a broker (and yes, we are in this for a free plug for BIR Solutions so read on! 😊 ).
- As noted above, your money is most likely to come via a broker who will source a great deal for you; perhaps from one of the Big Banks but perhaps from a non-retail bank or a credit union or non-bank financier. There are over 30 lenders to choose from – and apart from the Big Banks, most of them only use finance brokers to get their products to you.
- Going down to your local high street Big 4 Bank is like shopping from a ‘one brand’ retailer. You have to buy what they are selling – and if you don’t fit into their branded dress or pants, tough luck.
- Banks are not required to give you their cheapest product. If you end up buying a more expensive product when a cheaper one would do, well, again, your tough luck.
- No bank is required to update you if they come up with a better offer for their customers. In fact, they tend to reserve these ‘better deals’ for new customers they are trying to woo.
- Banks don’t review your loan and its suitability until….. well, until you make the decision to refinance.
- You don’t have a relationship manager (particularly if you have to ring a 13 number!).
If you would like to find out more about how to get a great deal from a broker, give us a call – and since we like to be personal, you can ring us now 1300 989 878 or email us at moreinfoplease@bir.net.au