Recent research showed that on average brokers were placing business among seven lenders.
As most lending is currently undertaken by half a dozen institutions these statistics are not good for anyone, so change is needed. The market needs fresh thinking, driven by lenders outside of the big six.
They need to find ways to better segment the market. Clever approaches will enable them to identify new market opportunities – and ones that are still appealing from a credit perspective – rather than trying to compete for the same business as everyone else.
This is an obvious competitive positioning strategy, because the market does not simply consist of borrowers with perfect credit scores and low LTVs.
But that seems to have been forgotten. With some clever thinking, lenders can design products for different market segments based on needs rather than convenient credit boxes.
This would represent greater business opportunities for intermediaries who are operating in a market where many consumers believe getting credit is impossible.
But this will mean dealing with more lenders so intermediaries will need to get to know other lenders.
OK, it does seem to be chicken and egg at present. So the solution comes with cooperation and greater understanding between intermediaries and lenders smart enough to carve up the market based on customer needs rather than just risk.
It’s time someone forced the hand of change.