Leveraging partnerships is key for mortgage brokers looking to diversify into the highly specialised commercial space, according to Yuan Chong, co-founder of disruptive Sydney brokerage Sqale.
“There’s no point in being a jack of all trades and a master of none,” Chong (pictured above) said. “In this industry, I believe you need to be a master of one. That's where I found the solution lies – in strategic partnerships.”
As the saying goes, wisdom comes from those who have seen the mortgage industry from both sides of the fence.
Wiser still are people like Chong who have experienced three different perspectives – as a business development manager (BDM), a broker, and a business owner.
“I've had the privilege of being involved in three distinct sides to the industry,” Chong said. “Firstly, as a BDM and specifically a national development manager (NDM), I observed the challenge of introducing the idea of diversification to mortgage brokers. I found that many were hesitant to explore new areas despite the potential benefits.”
Like many others, Chong then made the transition to becoming a broker.
Attending events and immersing myself in this role, he realised there are significant time and resource constraints when learning an entirely new facet of lending.
“It was daunting. The question that came to mind was how one could balance specialisation with expansion. This was probably a very common thought process for most mortgage brokers attending these events,” Chong said.
Finally, as a business owner running his own a brokerage, Chong faced a crucial question: how to “swiftly and cost-effectively establish a team of experts”.
“I found that the core challenge here was similar to what I had seen as a BDM – it was all about managing time, costs, knowledge, and experience. These were the hurdles potentially hindering the diversification efforts of mortgage brokers,” he said.
“I realised that becoming a subject matter expert and a trusted advisor is the key to success. I understood that I can leverage this knowledge through partnerships.”
With rising interest rates and a slowdown in new homes being bought, many mortgage brokers have been looking to diversify into other asset classes.
This is particularly the case for commercial finance, which by some metrics, is about to boom.
While Chong understands the desire to diversify and scale, he also is an advocate of mortgage brokers remaining skilled within their niche.
“Mortgage brokers are highly skilled professionals and achieving great outcomes with home loans requires a monumental effort. Whilst I’m qualified to do mortgages, I wouldn’t do it purely because it’s not my specialty,” said Chong.
“Successful mortgage brokers excel at what they do because they possess in-depth knowledge about home loan products, credit policies, nuances, and most importantly, they stay updated with the ongoing and frequent changes in the industry.”
However, Chong said that there is a way forward that allows brokers to both diversify and specialise.
In June 2022, Chong brought his experiences together establishing Sqale – a tech-driven partnership that helps mortgage brokers and accountants connect with experts to better assist their clients.
Essentially, through these partnerships, mortgage brokers can scale and diversify their business whilst still being an expert in the mortgage space.
“The challenge is how to enable mortgage brokers to create a commercial lending division within their business without taking away their expertise,” Chong said.
“In my view, they need business partners who can assist their self-employed clients with commercial business loans. This is an area that I believe can generate significant revenue for mortgage brokers, provided they have the right trusted partners in place.
“Naturally, this expansion becomes an extension of their service offerings, without the need for the time, experience, and resources required if they were to establish this division themselves.”
This is why Chong refers himself and the services that Sqale offers as being a “broker’s broker”.
“Much like a mortgage broker is a trusted adviser between their client and the lender, I act as the trusted adviser between mortgage brokers and lenders in the realm of commercial business loans,” he said. “It's not just about adding new services; it's about enhancing your overall value proposition and the client experience as a trusted advisor.”
To hear more about Yuan Chong’s story, keep an eye out for Australian Broker Talk’s upcoming podcast.
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