The National Australia Bank (NAB) recently reached an agreement to sell 100% of its broker aggregation business – PLAN Australia, Choice and FAST – to Loan Market Group.
Under the agreement, the leading brokerage house will acquire 100% of the three broker aggregation from NAB, the business credit licensee and compliance service provider BLSSA, the associated broker aggregation technology, including the Podium technology platform, and related commission systems and sales and operations.
However, the four companies – Loan Market, PLAN Australia, Choice and FAST – would continue to operate independently of each other, Loan Market Group said. They will continue to have their own respective aggregation agreements, management, and corporate sales and marketing teams.
Commenting on the purchase at the time of the announcement, Loan Market Executive Chairman Sam White said, “The acquisition means we can provide more options to our members. This will allow our business owners to decide on the value proposition and support structure they need to thrive. “
Mr. White has now provided more details on these options and the business models brokers may adopt after the acquisition is completed and the three NAB aggregation firms will begin operating under the umbrella of the loan market.
Speaking to The Adviser, the chairman of Loan Market said the acquisition would allow Loan Market to give brokers choices around the business model they would like to incorporate into their operations.
“For a broker to join a group, they could either join under a branded model or join under a flat-rate model or a wholesale model,” White said.
“We wanted to be able to give brokers different choices for what type of service they were going to get and what they would pay for. It’s a different value proposition than the aggregation service and that was something that was important to us as well. “
Mr. White explained that Loan Market operates on a percentage model, while FAST charges a fee per transaction, which primarily focuses on business transactions, but also provides residential real estate services. Choice offers a fixed fee model for brokers.
“PLAN Australia has more of a flavor of sub-aggregation where they work with bigger companies,” added the aggregation manager.
According to Mr. White, the prospect of being able to offer brokers choices around the business models they would like to adopt drew the big brokerage into this buying transaction.
“Brokers can choose what type and level of service they want, what they want to include and what they don’t want to include,” he said.
“I think that means the more options brokers have, the better it is for them.
Explaining further, Mr White said, “They can start with a business and say, ‘You know what, that doesn’t quite suit me, I want to switch to a different kind of model.’
“Our vision is [for brokers] to be able to do that without [them] having to change aggregator or change accreditation. “
According to Loan Market, the main brokerage is aiming to integrate this new framework and this new structure by the end of 2021.
The conclusion of the purchase agreement is expected to take place at the start of calendar year 2021.
The deal would result in a total of around 5,000 brokers in Australia and around 1,500 brokers in New Zealand, according to White.
What is driving the consolidation of aggregators?
The Loan Market NAB-owned aggregator purchase contract is not the only deal up to 2021. Other mergers are also underway next year.
Completion of this merger is expected to take place early next year, which would also bring together around 5,000 brokers in Australia under the umbrella and around 1,500 brokers working in New Zealand.
Speaking about this trend of aggregator consolidation, the president of Loan Market said technology was a key driver, which he said remained a costly investment.
He said Loan Market needs scale to continue investing in technology and services for brokers, while maintaining its current culture.
“So that we can all invest more in technology in the future, there are two ways to do it,” White said.
“First, we charge our existing brokers more or we have more brokers who pay less. We believe that it is better to have more brokers who pay less, as this gives them a better return on their activities. “
He added that the big brokerage is wondering how it could have invested in the technology if it continued to operate under its current model.
“We were concerned in the future that if we were just a Loan Market, for the things we wanted to do, we would have to charge our brokers a lot more for the technology in the future,” White said.
“What we’re seeing now is that it gives us the ability to really invest more without having to charge brokers more.”
The future of aggregation
In conclusion, Mr. White stressed that the tendency to consolidate aggregators would not reduce competition between them.
“I think for brokers we will probably see a bit more consolidation, but there will still be a lot of choice for brokers in the future, because even if groups consolidate, I think they will still have different channels. marketing and different options for brokers, ”he said.
He also said that the level of choice of aggregators for brokers will not decrease, adding that if aggregators can share technology, they will operate under different business models.
“Even with our merger, we are not changing any choices with brokers. We’re just trying to keep very distinct business models – it’s under one roof and we’ll get some scale to invest in the technology, but the brokerage choices won’t change, ”White concluded.
[Related: 2021: The year of aggregation consolidation?]
Malavika Santhebennur is the Mortgage Securities Reporting Editor at Momentum Media.
Prior to joining the team in 2019, Malavika held positions at Money Management and Benchmark Media. She has been writing about financial services for six years.