If you mention small or medium-sized businesses (SMEs), many people will think of independent shops or tradespeople rather than the mortgage industry.
However, many mortgage brokerages are part of the 5.4 million SMEs in the UK, which collectively account for around 60% of employment in the country. Many also sit at the smaller end of the scale, with fewer than 50 employees.
A significant proportion of these smaller firms now face huge challenges as they recover from the operational and financial disruption caused by the pandemic. Indeed, Legal & General’s 2021 State of the Nation report recently revealed that three-quarters of SMEs are currently carrying business debt.
In addition to this, smaller brokerages often face long-standing issues around resource limitations, including slower internal processes, smaller teams and, critically, less capacity to invest in new technology.
This presents a huge problem as smaller firms help thousands of customers to navigate the housing ladder every year. Just as SMEs are the backbone of the UK economy, smaller brokerages are the backbone of the mortgage industry and they deserve our wholehearted support. We can provide that support in many ways, but perhaps the most important elements are technology and inclusion.
Ensuring all voices are heard
It is vital that the voices of smaller firms are heard if we are to ensure that the advice sector does not become an echo chamber. As part of this approach, organisers must ensure that events are welcoming to firms of all shapes and sizes. Industry events are a great opportunity to strengthen relationships, build new business leads and discuss the outlook for the sector, so it is vital that firms of all sizes have an opportunity to attend.
This change is not something that just happens by itself, it requires a clear strategy and a conscious effort. This mission is something we are committed to. We want to make sure we use our resources to support smaller brokerages and ensure their voices are heard. Support for smaller brokerages needs to start with inclusion, but technology also has a role to play.
Using technology to punch above your weight
A smaller brokerage can also punch well above its weight if it is armed with the right tools. As such, we recently offered a fully or mostly-funded licence for the end-to-end mortgage platform Smartr365 to 1,000 new joiners. Providing access to tools like this helps to streamline the operation of businesses which might otherwise struggle to invest time and money into tech.
With the bigger industry players having already invested heavily in tech some time ago, it is vital that smaller firms also develop their offering if they are to avoid losing market share.
Our ambition to help small advice firms is also backed by our creation of a new team dedicated to supporting the adoption of technology within smaller brokerage firms.
The testing economic conditions mean that having access to relationships, tools and events, could be the reason that a smaller firm stays afloat for another year. It is crucial that larger firms understand and appreciate the value that smaller firms bring to our industry through their diligence, flexibility and personal service.
Helping smaller firms not only benefits the firms themselves, but also consumers, who will likely experience a more streamlined mortgage journey. Greater industry communication and collaboration will pay dividends for all.
Legal & General Mortgage Club head of broker and propositions Clare Beardmore
