Why do people still choose brokers over bank direct lending?

K

kris75blaaze

New Member
Hope everyone’s had a great start to their week!

Just a question for the group.

I’m a Finance Manager for a bank, and I’ve noticed an interesting trend lately. While the common narrative is that people prefer brokers for the variety of choice, I’m actually seeing more clients leaning back toward Bank Direct.

From my side, the move toward first-party lending seems to come down to two big factors:

1. Time to Write: When you deal directly with the bank, I have the internal authority to approve the file. A broker still has to package the deal and submit it to a lender for consideration anyway, which can add extra steps and time.

2. Sharper Rates: We’re often able to offer much more competitive, sharper rates for first-party lending compared to what might be available through third-party channels.

I’m curious to hear from the group:

If you’re still choosing a broker over going direct to the bank, what’s the primary reason?
Is the choice factor still the biggest draw for you, or do you feel there’s a gap in the bank direct experience?
 
“More clients are leaning back towards Bank Direct.” The fact that 70%+ and climbing of all home loans go through 3rd party channels debunks that statement.

You also can’t offer sharper rates for proprietary lending, as most banks price the same regardless of the source of business. If a client gets a better rate from the banker, we can match it through pricing. Time to write is also just something bankers care about. Finance clauses are generally 5 to 21 business days, and most banks’ SLAs fall within that timeframe.

Also, if you work for the big 4, I guarantee I can get better rates from 2nd tier or non bank lenders than your bank can offer.

There’s literally no reason to go directly to a bank rather than a broker. The good lenders all become brokers anyway, as they can earn tonnes more working 3rd party and can help many more clients.

Ex Home Lending Banker, current Broker.
 
People are just a number in branch land. They don’t do reviews twice a year for customers like brokers do.

They can’t get multiple valuations from different banks like brokers can.

Being able to approve in house isn’t a real benefit to a consumer. It’s more of an ego thing for branch staff.

Bank staff’s main job is to boots profits for shareholders. A broker’s job is to make sure their client is in the best possible product. Legally, brokers have to do that. Branch staff don’t.
 
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