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Why brokers shouldn’t fear peer-to-peer lending

Nick Moules, peer-to-pere lending, mortgage brokers
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When I noticed a thread proclaiming the death knell for brokers in Australia as peer-to-peer lands, I thought I should give brokers some words of encouragement.

They need you
New platforms like Marketlend and ThinCats Australia will need to effectively reach the business community. They have an online presence, but they need the support of those close to the ground that speak to their target market on a daily basis.

To build scale and therefore awareness, they'll need to do high volumes of deals and they won't do that just by going direct.

Trust me: I work for a UK peer-to-peer lender, rebuildingsociety, so I know what I'm talking about.

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They'll pay you for it
There's the option for a business owner to go to a platform directly and make an application, but why do they come to you in the first place? You can take the hassle of compiling and submitting a case away from the owner – as you do anyway; and trust me, the quality of cases that come through from brokers is markedly higher – and save platforms a lot of time knocking them into shape. At rebuildingsociety, the typical time from initial application to draw-down from an introduced case is half that of a direct case.

Paying a procuring fee at market rate is a cost any new platform will gladly pay.

The UK market was kick-started by brokers
Taking a new product to market is a hard slog – even more so when it's a new product in a new market. The National Association of Commercial Finance Brokers (NACFB) in the UK embraced peer-to-peer straight away, recognising the benefits of speed (weeks vs months for a bank deal), cost (much smaller margins mean value is passed to borrowers and investors) and simplicity (platforms don't need every transaction from the last three years and a 100-page business plan to make a decision!).

Similar bodies in Australia could do the same and refresh their image and membership base.

It's an opportunity to be more entrepreneurial
Find out about the market and contact your clients. A new product is a great excuse to send a mailshot to your database or pick up the phone to someone you haven't spoken to in a while. It's also something different to the big banks. You might now be able to help companies that previously wouldn't have been considered. This isn't to say new platforms will take your scraps, but underwriting criteria will be different, so it's worth revisiting some of your old cases.

We've also seen examples of brokers entering the market as platforms. Where they have access to businesses and wealthy individuals and would previously have referred products to both parties, they now have the opportunity to put them together.

That's what we did. Through our subsidiary, White Label Crowdfunding, we're now helping people across the world enter this market, including ThinCats and Marketlend in Australia.

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