Automated systems have their place but lack the creative thought and understanding needed from commercial brokers
A lot of marketing material has been produced recently espousing various sourcing and quotation systems, suggesting they are the holy grail, or at least some form of panacea, for all manner of commercial finance ills.
We have no issues with such systems and use them ourselves when appropriate. However, that is the important caveat. ‘Appropriate’ usually applies when everything related to a potential case is entirely product driven, which makes it easier for an automated system to determine ‘If this, then that’. This is much more common with buy-to-let funding.
In the world of commercial finance, things are rarely that straightforward. No system I have come across has had the ability to say: ‘If I just tweak the structure of this loan here, or apply this interpretation of the business accounts there, I believe I can get a certain lender to take a view and fund this client.’
Thankfully, automated systems have not advanced to the point where they can provide this kind of creative thought and understanding. I remain convinced, for the time being at least, that the human ability to assess information and shape it into something that, by necessity, may not entirely resemble the original is key to a commercial broker’s craft and to finding the best outcome for the borrower.
And do not get me started on whether machines can master the art of negotiating better terms with a lender. The majority of lenders are not on sourcing systems anyway because many of them do not have either products, as such, or the type of prescriptive policy or pricing criteria necessary to achieve accurate automated output.
A good example of this is a recent case where a client called to ask if we dealt with a particular lender because he had spoken to someone who had “run it through their system” and provided terms which, while not bad, were slightly short of the requested debt level.
We could deal with that lender. However, it became clear the company had extra cash resources set aside for another project, which, while available, it did not want to tie up for a long period.
An alternative lender agreed to take the surplus funds as a temporary measure to cover the slight shortfall in rent, enabling the originally requested debt amount to work within the lending policy. A full cash sweep in operation for the first year would allow the lender to release the cash held as the debt would have reduced to meet its standard policy requirements.
The borrower got not only the amount requested but at a rate over 1 per cent a year lower than the original deal presented to us.
While not every deal is like the one above, we see our fair share of cases that require quite a lot of shaping to get the client even close to what they want. Currently, no artificial intelligence is capable of this kind of thought.
And it is really so much nicer dealing with people anyway, don’t you think?
Jane Simpson is managing director at TBMC