We recently carried out a benchmarking survey of the service standards of asset finance lenders serving the broker market. The 20 responses we received represented 18% of the broker market, providing a valuable snapshot from some of the largest and most important brokers in the market.
One of the most interesting survey findings was the apparent contradiction that while strength of relationship is now considered less important by brokers when choosing where to place business, a change in relationship manager is one of the biggest drivers of improvement in finance company service standards (the other major driver being an improvement in prop-to-payout processes). One example given was how a change in BDM led to a threefold increase in business given to a lender. Others described how a new relationship manager made the lender "more approachable" or how a lender now "understood our business".
Can this contradiction be correct?
Subsequent discussions with broker principals confirmed it. Over recent years, willingness to give business to a lender because of a friendly or long-lasting relationship has declined significantly, with the emphasis now much more on price and service. The relationship manager is, however, an integral part of that service proposition – possibly as the "tip of the spear" – so how the relationship manager performs really matters.
In speaking with broker principals, it became clear that the approach to relationship management varies significantly – not just by lender but also within the same lender. This was reflected in a wider spread of survey results for each lender and inevitably means inconsistent service levels with volume opportunities lost.
Lenders place a lot of emphasis on achieving process SLAs but clearly don't drive the same level of measurement or consistency in their approach to relationship management. While celebrating the added value that individuals can bring, ultimately this is a role definition, management control and performance management issue that is losing lenders business.
Relationship management between two organisations is of course broader than just one person, and this needs to be reflected in how finance companies consider their broker partners. Other elements of the relationship, such as transaction support and updating, reporting, training and assistance with growth initiatives should not be an afterthought.
A key concern amongst brokers is access to someone with the ability to progress a deal that needs to be moved forward. While this is often the BDM, it doesn't need to be. For example, one broker suggested more emphasis on dedicated internal sales support contacts as BDMs are not always available to assist. From an organisational perspective, this should make sense for the lender – internal staff are usually more available than BDMs, cost less and don't distract BDMs from generating new business volume.
The key point is that someone is available and capable, not who it is. There was significant annoyance when there was a lack of responsiveness from the lender. As one broker suggested, lenders should remember that "The need for human intervention is still there at times and when it is needed, a knowledgeable, skilled and conscientious person makes all the difference."
There is an opportunity for a lender to develop a best practice model, around which the organisation's approach to managing broker relationships can be centred and against which performance can be monitored.
Drawing on feedback from brokers about what works and what does not, it means assessing current work practices, reprioritising, realigning roles and responsibilities, changing behaviours, cutting back on non-value-adding activities, capacity planning and driving a consistent culture across the organisation, backed up by appropriate measurement and performance management.
For any lender who gets this right, the rewards are substantial.
To discuss this further, please contact Peter Hunt.
