This as interest rates shift and as China re-opens to Aussie businesses
Exciting opportunities await commercial and asset finance brokers over the next 12 months to three years, according to industry experts at a recent CommBank event.
At a CommBank Industry Leadership Forum, the leaders of three industry bodies said that with the Australian economy now at more than full employment and with China looking to re-engage with other markets, the future is looking bright for Australian businesses.
And given that business leaders were increasingly becoming time-poor, brokers could offer them real benefit by proactively supporting business growth and helping business owners cut through complexity and reach their growth ambitions.
Great appetite for commercial and asset finance
Ian Burnett (pictured above, far left), general broker and agency services at CommBank, has noted an uptick in broker new business, both commercial and asset finance, at CommBank. But asset finance drawdowns continued to be impacted by supply issues.
Customers kept saying, “I need to get new equipment because this truck’s not going to last forever,” but it’s taking 12 to 18 months for the equipment to get into the country.
“Even if you flicked a switch tomorrow and the supply issue went away, I think it's going to take 18 months at least, and probably longer, for that to bleed through,” Burnett said. “From a broker's perspective, I think the asset finance industry is in a very, very good position.”
In contrast, client decision-making has slowed for some commercial broking customers, according to Sarah Lalor, CommBank general manager of term loans and business financial assistance.
“Although we’re not seeing any significant uptick in impairments, we’re seeing a slowdown in decision making as customers wait to see what happens with interest rates,” Lalor said. “Brokers are working effectively with banks to provide certainty that the funding's going to be available when the customer needs it.”
Watch now: How can brokers harness opportunities in the commercial property market?
Lender propositions in focus
Burnett said that despite an increase in interest rates for borrowers, banks continued to experience a high level of competitive pressure, particularly “among the major banks and for bigger-ticket transactions.”
“I think lenders will be thinking hard about what sort of loans the different segments of the market need, and the most appropriate terms and conditions,” he said. “From a broker's perspective, that’s good news. Brokers can look at the different lender propositions and marry them up with a customer's circumstances and needs.”
The panel were of the same view that brokers were continuing to do well.
“The best run broking businesses are going to get stronger,” said Matt Atkin (pictured above, second from the left), president of Commercial & Asset Finance Brokers Association of Australia (CAFBA).
Upskilling and accreditation of commercial brokers
Atkin said there is a need to provide pathways for the increasing number of brokers who are moving from the consumer side into the commercial broking market, to ensure they are educated, qualified, and that they’ve got the right mentors, thus empowering them to provide the right solutions to clients.
“We’re two years into what we think will be a four-year process to go through the professional standards process. It’s the number one priority at this point of time for CAFBA,” he said.
Grant Cairns (pictured above, third from the left), CommBank EGM of business lending, said CommBank, too, has a role in this, with its Broker Education & Skills Training (BEST) framework as a great example.
Cairns said BEST includes guidance for brokers on how to help defend against scams and fraud.
“We're trying to get education out to as many businesses as possible,” he said. “The volume and the sophistication of scams is increasing which is why it’s so important businesses are vigilant and keeping themselves cyber safe.”
To prevent these attacks, the federal government is looking at privacy around customer information, Atkin said.
Anja Pannek (pictured above, far right), CEO at Mortgage & Finance Association of Australia (MFAA), is also advocating on the privacy front.
“If privacy changes come in, we want to make sure that they are fit for purpose in what is an already heavily regulated industry,” Pannek said.
“We’re very focused on innovation and the Consumer Data Right legislation (CDR), which I believe will be a game changer for how brokers work with their customers and further deepen that relationship.”
David Gandolfo, director at Quantum Business Finance, identified the other issues facing Australia’s small businesses, including rising energy costs, the cost of funds and finance access, and job skills, and supply chain problems for both goods and workers.
Brokers have reasons to be cheerful
The future for commercial and asset finance broking is bright, the panel said, with Pannek adding that the industry should shift its mindset from future-proofing to future embracing.
“I think we’re in a fantastic place at the moment,” she said. “The industry is performing very well on health metrics, on market share and putting the consumer at the centre of everything that brokers do.
“I think we have a unique opportunity for the first time in a long time to look forward and see what the future presents for brokers. Importantly, how areas like technology, AI, and automation will actually help the broker get closer to their customer, help them be more efficient and help them work with their customer even earlier in their journey overall.”
Another plus, Atkin said, is that broking businesses do better when interest rates are moving because customers are looking for options.
“So, whether you are in commercial, equipment finance, or residential mortgages, I see the next three years as being actually quite bright,” he said.
Burnett, too, was positive about what the future holds for brokers.
“The next 12 months is probably going to be jam-packed full of new innovations that extend the commercial broking market, so I'm very optimistic about 2024 and beyond,” he said.
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