Setting the stall out

Mark Bergin is

director of sales and marketing at db Mortgages

Of the many considerations when setting up a new mortgage lender, one of the foremost is how and what to take to the market. It is a question that can provide many answers, some of which are as complex as the market in which we all work.

First of all, how do we access the consumer? That was a simple choice for us at db mortgages, as the market has switched heavily over the past 10 years to an ethos of intermediary generated business, and perhaps just as important is where the experience of many of our staff lay. Whether packager, or direct, or a combination of both, which seemed the obvious choice, offering us a varied and valuable distribution.

We took the decision to roll out on a gradual basis rather than a ‘big bang’ approach. This was first and foremost to ensure our staff, processes and technical support had the chance to grow and develop over the first few months, as inevitably we would need to ‘fine-tune’ along the way. It probably came as no surprise that the route chosen for this initial launch was via the packager distribution channel. Again this was done through a phased approach over a few months, and even as I write this, we are still bringing more packagers on board.

Merits

The merits of a packager distribution are many and some might say obvious, but to list a few:

• Packagers provide a valuable instant access distribution channel through to point-of-sale broker.

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• Their experience and knowledge of the market especially in the specialist sectors of self-cert, buy-to-let and non-conforming.

• They have a highly trained quality workforce that can provide expertise and sales acumen whenever it is required.

• Both quantity and quality in terms of fully packaged cases, thus easing the processing requirements on a lender, so we can provide a slicker service.

Closely linked to this is the ethos of packagers themselves, who have demonstrated an entrepreneurial dynamism over many years and have adapted and changed to market conditions. Competition is fierce in this market and no one can rest on their laurels or they will swiftly lose out.

In the next phase of our roll out strategy, we will approach the direct market, including networks and mortgage clubs, as well as those wishing to deal with the lender direct. Looking at thedistribution of some of these it is a route that cannot be ignored.

Providing choice

Whichever route a broker chooses to access – and it really is about providing them with the choice – we must ensure their experience is one of simplicity and speed, ensuring service remains the focus. It was therefore imperative that when we looked to build our online website functionality, it was done after discussion with both packagers and brokers alike, rather than in isolation. The feedback so far has been very positive and there is still a lot more to deliver over the coming months. This is where the incoming lenders have an advantage in being able to build to the current and even future market’s requirements rather than try and cope on outdated legacy systems.

And finally what is the offering to be? Well it has been out there for a few months already. The products offered will be in the self-cert, buy-to-let and non-conforming areas. But to make a difference, there must be more than offering the same as the other specialist lenders in these areas. Criteria differences and pushing some of the established boundaries on products will show that the new entrant really means what it says, and that the new lender can bring extra value to the broker. We will be delivering some new initiatives on product over the next few months that will help differentiate us from the rest.

Increasing quality

Over and above the criteria on the product side, is how the consumer is treated and what the technology can deliver. This can range from a simple but robust affordability model, or for example, a cascade process both up and down the adverse tiers. The right technology for the appropriate distribution can increase the quality of service while at the same time help reduce overall costs, and not just for the lender.

So when setting the stall out, nothing should be considered on its own, as it is the combination of product, service, technology and distribution that makes the difference. Time will tell who will be the winners and losers in the longer-term but from what we have seen so far, it seems there is a place where the lender, broke and customer can all reap the benefits.