Are online comparison tools diminishing the role of commercial finance brokers?
by Arvinder Mangat, Head of Commercial Mortgages
Niche Commercial, August 2004
FACT: The sale of commercial property is labour intensive, taking a lot of broker time.
MYTH: The use of online comparison tools or instant quotes will rob brokers of an opportunity to show their expertise.
FACT: Commercial brokers and lenders know first-hand how labour intensive the process is. Any residential broker that has dipped their toes into the field of commercial property may think again after their first deal took more than 6 months to deliver them any sort of fee.
MYTH: Some lenders tell us that as long as their introducers continue to deliver the deals they like, (in most cases these have been done without such technology) the impact and the use of online comparison tools will have little to do with the delivery of commercial mortgages.
FACT: Lenders such as Norwich & Peterborough Building Society and intermediaries like Moneysupermarket have embraced online comparison tools have seen and understand that their businesses can benefit from this offering as well as helping their customers.
MYTH: Offering such tools on your website turns your offering into a commodity, or a "sweet shop".
Commercial finance is very difficult to turn into a commodity, but presenting quotes to customers is what your customers want. These customers run businesses, or are seeking to purchase a property. The most valuable commodity of the small business owner is time. Borrowers, brokers and lenders can benefit from this technology.
The use of these tools enables the following benefits:
Effective Filtering
The online channel is a place where customers expect an instant quote. This is something that has been inherited from personal finance . In delivering such a quote you are able to ask the customers questions en route. From this you can then determine whether the customer is appropriate for your sales force to contact.
We have found that 30-80% of online customers are best satisfied by presenting them with accurate and informed quotes, not human contact. The range varies depending on the type of commercial finance you are offering.
Listening to your customers is a simple message. Significantly, such a customer is satisfied by what you offer online.
Focus your sales team on the most appropriate transactions
With some customers satisfied by what your online channel has to offer, there will be others that need more attention. By giving them an online quote, or putting your brand in front of them, you can start to establish a relationship with them. This will be further reinforced when your sales team make contact.
This is where the human intervention is most appropriate. What the online channel can do, today, is to help make that first phone call more effective. Significantly in the commercial finance arena, the call is just the beginning of securing a transaction. What it can also do is help prioritise prospects. For example a broker or lender that has a specialist appetite can further focus.
Some brokers may be concerned that there doesn't appear to be a role for them in this set up. The reverse is true. Every telephone call becomes an informed call, and when an informed skilful broker makes a call to a customer he is able to use his expertise to respond to that customer's requirements even better. Brokers are then able to do what they do best; assess and package the most appropriate commercial transaction for their client by building on the electronic relationship a quote or quotes has already established.
Think of how many calls you could have saved if your online channel presented quotes to customers who didn't seek to transact today?
Next step, underwriting:
Connecting the sales and underwriting teams of your offering is where this integrates next. Again the benefits are for your sales teams and underwriters via process enhancements.
For example, if you can't help a customer with a particular type of security or for other reasons, you can begin to ask these questions before your sales team even speak to them. [This saves both teams' time.]
Adopters
Norwich & Peterborough Building Society is one of lenders that have seen the benefits of this. Their online offering also offers alternative quotes from other lenders under certain circumstances. They are doing two things: First, their customers are satisfied when online, even if they can't help. Secondly, they then have a more constructive call with those customers who progress to acquiring commercial property.
What this means is that the expensive and skilled resources of this lender make contact with only the most appropriate customers. The quotes and the underlying technology have enabled this.
Conclusion
Contact will always be required for commercial finance transactions to close. In all cases the comparison tools don't replace the need for contact; instead they focus the time of the professionals on the customers that they can best help.