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National Finance Brokers Day (NFBD): Mark tell us why you’re supportive of National Finance Brokers Day.
Mark Bouris (MB): I think the world has changed over the last ten years. Right across the board we have marketplaces in just about every industry. Financial services is not an industry that should be without a marketplace and the people who provide marketplaces are intermediaries and intermediaries in this case in finance home loans or any sort of loan is a finance broker so finance brokers today are forming marketplaces between consumers and lenders whether they’re banks etc. The finance broking industry as such is providing a very important modern day service.
NFBD: Clients now have a variety of different options to fulfill their lending requirements whether they go direct to the bank or they utilise an online lender. Can you share with us your personal thoughts on why you think consumers should seek out and utilise a finance broker.
MB: A borrower has lots of choices. They could go online to each of the lenders and try and garner all the information from each of the lenders as to what suits them best but that’s a mission. The marketplace for borrowing - that is the broker marketplace - is successful because that marketplace has the best knowledge, and the most thorough knowledge, and the most complete knowledge, and the most accurate knowledge and it would be very difficult to repeat that if you’re an individual borrower. I think it would be virtually impossible. There’s hundreds and hundreds of lenders out there and each lender has many, many products and then those products have got to be tailored towards you, the borrower. Brokers or the marketplace which is brokers, generally speaking, know very quickly what product suits your circumstances best. Because it’s not enough just to know what’s out there in the marketplace, it’s gotta be matched with your circumstances. That’s exactly what marketplaces do. They match, they’re like marriage counselors. We see marketplaces in the personal environment where people are trying to be matched with someone for the future of their life, for their life partners. And finance brokers are doing exactly that. They’re matching your total facts and situations at that point in time in their life with those people out there who want the business on the supply side. So we have the demand-side (the borrowers) and the supply-side (the lenders), and the marketplace sits in the middle. So that’s why borrowers should go to the marketplace, it’s best place to be.
NFBD: And with those advantages that you’ve mentioned there have been a number of changes in the lending industry particularly over the last eight months in the investment space, so where do you see the industry heading over the next two or three years?
MB: I think the market place, that is the broker network, is going to become more and more important to the supply-side from here on in. The supply-side, the banks, know they can’t reach everybody and if anything that’s just going to get bigger and bigger. The banks’ reliance on the marketplace and brokers is going to become bigger because it’s happening in the US, it’s happening in the UK, and it’s definitely going to happen here. There are a number of compelling reasons for it. The first compelling reason is that as banks’ lending volumes go down they have to increase their margins to maintain their profitability. In order to maintain profitability you’ve got to control your costs. The biggest cost for a bank today, the biggest cost for the supply-side today is branches and it’s a fixed cost, it not a variable cost. So the biggest opportunity to turn a fixed cost into a variable cost for the banks is by using a broker, as they only pay them when they put a deal up and it gets approved and settled. So the mathematics is extraordinary compelling to the supply-side to make sure they use the marketplace or the brokers as it’s going to create more efficiency in terms of their own use of capital and their own profitability.
NFBD: Well some exciting times.
MB: Yes, some exciting times for the marketplace and also for the borrower because the borrower now doesn’t just rely on one lender like they did in the old days when you had a lifetime relationship with your bank. You did everything with that bank but what you didn’t realise is whether you could have done a better deal with somebody else. Marketplaces strip out loyalty and they strip out the ability for the vendor, that’s the bank, to actually stitch you up. They might give you a great deal here but they might pick it up on another deal over there and this sort of intermediation is a new phenomenon that exists as a result of the internet. It’s a new phenomenon generally in commerce across the world that will continue to grow.
NFBD: Why should the general consumer seek out and notice National Finance Brokers Day?
MB: The consumer should take advantage of National Finance Brokers Day because if everything we do today is about chasing efficiency in our pricing or efficiency in our expense line (our wages don’t necessarily go up and they haven’t been going up for a long time in this country, wages haven’t gone up for a long time, revenue hasn’t gone up in this country for a long time), so us just like the banks, we have to work out how we can maintain our profitability and if we can’t increase the top line what we’ve got to do is reduce the bottom line and the way you do that is by getting the most efficient loan in terms of price and features when it comes to mortgages. And the only way you’re going to get the most efficient result in terms of pricing and features in terms of mortgages is you’ve got to go and see what all the features are. As I said right at the beginning there are very few consumers who can do that properly and accurately and completely. They’re the two points: completeness and accuracy, in other words you cover all the lenders and you do it accurately. The only way you’re going to do that is if you go and see a broker.