Private banking branches within Australian banks are a valuable and underutilised resource for mortgage brokers looking to provide tailored solutions to high-income clients, according to a prominent mortgage broker.
It’s no secret that net migration is set for a significant increase with almost 1.5 million migrants expected to call Australia home in the next five years.
What's not widely recognised is that Australia has the highest number of high net-worth individuals, defined as those earning US$1 million or more who are expected to migrate in the world, according to Henley and Partners – beating the United Arab Emirates and Singapore.
While most home loans can be serviced through banks’ retail channels, Redom Syed (pictured above left), director of Confidence Finance, said banks also maintained private channels aimed at serving premium customers with unique needs.
“These customers are often high-income individuals, such as business owners or those with complex financial profiles,” Syed said. “For instance, think of someone in a tech company receiving unconventional compensation, like a substantial amount in shares rather than a regular wage.”
Syed said he had found private bankers useful where applicants “don't neatly fit” the residential lending criteria.
“For example, when a client earns $80,000 in personal salary but earns significant equity and has a net worth of over $10 million, the standard checks might not approve them,” Syed said. “This is where private banks shine; they offer more flexibility to understand and cater to complex financial situations. In essence, they provide banking tailored to affluent individuals.”
While there are several benefits for brokers when using a private banker, it’s important to note that banks have different eligibility criteria, particularly around income thresholds.
For instance, Syed said some private banking access requires a relatively high benchmark while smaller banks have lower criteria, making private banking accessible to clients who are, for example, looking to buy a $3m home and own a business.
Customers in this profile often have distinct requirements and may prefer to not visit branches and handle their banking needs over the phone.
“Private bankers are well-equipped to meet these demands.”
From a broker's perspective, Syed said private bankers often helped “rescue deals” that wouldn't pass standard lending policies.
“If the client is strong enough, private banks can go the extra mile to secure the funding, even if it doesn't adhere to the bank's standard lending limitations,” Syed said. “This flexibility can be a significant advantage.”
To illustrate this, Syed said he had recently secured a loan for a premium client involved in a townhouse development project.
“The retail channel couldn't approve it, but the private banking channel recognised the client's high income and potential, which led to approval,” he said. “This deal would likely have been rejected elsewhere and certainly within the retail channel.”
“My private banker offered enhanced service during and after approval and had the flexibility to accommodate the specific customer requirements.”
While most brokers understand the usual process of facilitating a mortgage loan, it may not be immediately clear how to access private channels.
Syed said contacting private banking channels typically involved collaboration with major banks.
“Brokers can start by reaching out to a bank's Business Development Manager (BDM), who can refer them to the private banking team when specific client needs align with private banking criteria,” he said.
Over time, brokers may establish direct relationships with private bankers.
While Syed is no stranger to fostering these healthy broker-banker relationships, he said his partnership with Westpac private banker Rohini Srinivas (pictured above right) in particular had “greatly benefited” his brokerage.
“I’ve written thousands of loans so it’s not everyday that I don’t know how to answer something, or I haven’t encountered before,” he said.
“Rohini sees a different set of customers to most brokers a lot of the time so she often has solutions I would never have thought of or even know about. She’s very good at managing relationships. You just present a problem to them, and they offer different solutions.”
With channel conflict a major industry concern, brokers may have concerns about introducing private bankers into the client relationship, fearing that they might lose clients to the direct channel.
However, Syed said private bankers don't attempt to take clients away but rather collaborate to meet unique needs and ensure brokers are compensated for ongoing relationships.
With more wealthy migrants entering the country potentially having complex requirements, the time may be right for brokers to access private banking for complex client needs.
“Private bankers work hand in glove with brokers, focusing on meeting the client's unique needs,” said Syed. “The introduction of a private banker should be seen as an opportunity to offer a more comprehensive and tailored service to clients.”
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