Saffron Building Society's John Eastgate on why direct channels still cannot compete with intermediaries...
During a discussion in the office this week, one of our members of staff (not involved in the mortgage department) observed that it was a shame we had to pay fees to brokers for introducing business and “how much better it would be if we had it all direct”.
It was an understandable comment; we would keep more fee income and we would have a new customer to whom we could cross-sell other Saffron services.
But at what cost? Frankly, it would be huge.
Today's consumer is driven by the perceptions of truth generated by the internet, hence the huge success of comparison sites.
Yet, we all know the vagaries of getting yourself on those, regardless of how well priced your product is.
In these straitened times, consumers go where they think it will be easiest to get the "yes" they crave on their mortgage application, especially if they are not "mainstream".
So, they start with the high street bank that provides their current account.
These behaviours have disappointing consequences. People risk choosing the wrong product from the wrong lender or, worse, they might fail to find that lender that will work with them to help them get the property they desire.
As a smaller lender, we are always delighted when a new borrower approaches us direct.
However, to rely on direct business, we would need to spend a fortune promoting our mortgage service through every channel.
The last time I checked, my marketing budget wouldn't stretch that far.
Given all this, a good broker looks like a pretty efficient route to market.
More importantly, I would argue that a strong broker-lender relationship results in a higher volume of better quality business coming in, which is good for consumers, brokers and lenders alike.
And why wouldn't we all want that?
John Eastgate is sales and marketing director of Saffron Building Society
Claim from SocGen's global markets division
Third annual Hampton-Alexander review
European Commission yields to pressure
Numbers in Adviserland
Retirement sector trends