A piece in our industry news feed has interested me today. When Key Commercial Finance was set up in late 2007, the high street Banks dominated commercial lending, and only 15% of all UK commercial lending was routed through an intermediary. At the time, when questioned, I told people that in the USA, 80% of all commercial lending was routed through a broker. Businesses there saw brokers as their first point of call. I suggested (slightly tongue in cheek and wanting to be optimistic about my chances of success) that the UK tends to follow the USA in many things, with perhaps a big increase in broker use to come in the UK.
Of course, no one could have predicted the impact of the 2008/2009 recession and financial crisis. This led to high street lenders massively curbing their appetite to lend. Then, with super low interest rates driving investors to find better returns for their money, the challenger Banks were born. I recall Aldermore setting up in 2009 which at the time was a great new development and the first of the new big names to get going.
So how things have since changed! There are now dozens of challenger Banks with full Banking licences, and the high street Banks have lost their massive domination of the market. Banking, and lending in particular, is now much more fragmented, with (including specialist property lending and invoice finance) perhaps c. 500 commercial lenders out there. Even now, every month brings new players in the market.
So how is your average SME or property investor meant to find the best rates & terms for their needs? Through a broker of course. Which I think best explains how my prophesy of 2007 has pretty much come true!