In times of economic uncertainty, brokers are faced with challenges as clients become more unsure and reserved. Combine this shifting financial landscape with marked improvements in technology capabilities and brokers may struggle to remain competitive.

While the current financial climate is defined by rising interest rates and record inflation - which has led banks to tighten lending regulations such as the acceptable debt to income ratio - brokers still have the distinct advantage of providing value to both new and existing clients.

By staying on top of regulatory changes and embracing market trends, brokers can successfully diversify their financing options, offering not only a more streamlined approach to lending, but also richer investment strategies. 

Challenges facing brokers today

The challenges confronting brokers today are essentially twofold. On one hand, borrower behaviour is changing as a direct result of the economic climate. This is because in a financial landscape where interest rates and inflation are objectively higher than normal, borrowers are either shying away from obtaining loans that are more expensive to secure or struggling to gain approval. 

Borrowers may be struggling to gain approval due to stricter bank lending criteria. For example, some major banks have changed the debt to income ratio they will accept on loans. This ratio calculates an individual’s total monthly debts and divides it by their monthly income. By implementing stricter requirements around this ratio, traditional financing options for some borrowers may become limited.

On the other hand, technological advancements are steadily transforming modern broking practices and processes. In a digital first world, borrowers have increased expectations surrounding elements of both speed and flexibility. In fact, borrowers are increasingly favouring completely digital means. Rather than filling out paperwork and mailing documents back and forth, there is an expectation that broker processes be digitised. 

For brokers, the rise in borrower reliance on technology can be difficult to navigate. In a field where client relationships need to be created and nurtured, brokers must find the balance between maintaining these connections and integrating the right technology. This way, things like cumbersome onboarding processes can be streamlined by technology, leaving more time for client-facing activities. 

Adapting to market changes

In order to stay competitive in the shifting financial landscape brokers must adapt to market changes. One of the best ways to confront the change is to look to diversify financing options. By exploring other fields such as alternative lending and private lending, brokers are not only expanding their horizons but also offering more comprehensive strategies and solutions to clients.

Diversification can pay dividends, especially in times where the economy is characterised by inflation and high interest rates. With high interest rates comes a slowdown in the housing market and in turn, clients who need different revenue streams. Through diversification brokers can expand into different product areas ranging from commercial property to asset finance so that they can offer more holistic solutions to clients. 

In order to stay competitive in the current financial landscape brokers must also stay informed of regulatory changes and trends pertaining to the broader market. As one example, brokers should know which banks have changed their debt to income ratio before encouraging clients, who may now no longer qualify, to pursue a loan. 

In addition to regulatory changes, brokers must also be up to date when it comes to government incentives and the like. This way, they can provide clients with the right information to maximise these opportunities right from the start. 

There is also an element of trust to consider. When borrowers can consult with a well informed, confident and knowledgeable broker, there is a real sense of ease. This is paramount when you consider that in tough financial climates, borrowers are typically highly cautious. 

Another market change revolves around the use of technology. By embracing technology to digitise and therefore streamline processes, brokers are essentially being provided with an assistant that handles the most repetitive aspects of the job. While providing benefits by way of increased speed and flexibility, technology also affords brokers with more time. More time to investigate market changes and more time to build client relations. 

The role of alternative financing in helping brokers stay competitive

One of the keys to broker’s remaining competitive in the modern market is diversification. Alternative lending is one method of diversification. Taking place through online platforms that unite borrowers and investors, alternative financing is a non-traditional approach to investing.

A non-bank lending option, alternative financing is able to do away with cumbersome policies and processes by wholly embracing technology in order to offer flexible and streamlined services for borrowers and investors alike.

As such, alternative lenders, like Briqwise, are more accessible to everyday individuals, particularly those who may be shut out of traditional lending as a result of stricter regulations surrounding lending requirements. 

By offering flexible services, alternative lending can encompass different, more out of the box strategies. With an ability to solve more unique finance challenges, alternative lending is a great means by which brokers can help retain clients and attract a new client base. 

Staying ahead in a competitive market

In a challenging market brokers need to adopt different tools in order to stay competitive. By implementing a variety of strategies, brokers are not only offering existing clients access to deeper strategies and solutions, but also, becoming an attractive proposition to new clients.

By taking the time to remain informed, all while being open to embracing relatively newer practices in the industry such as alternative lending and technology led processes, brokers can showcase a variety of lending characterised by deeper and more streamlined solutions. 

At Briqwise, we strive for a win/win for everyone - brokers, borrowers and investors. We’re here to help brokers embrace alternative financing. If you need help with alternative financing, contact our friendly team at kamsen@briqwise.com or neil@briqwise.com.

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