"We listened to advisers and businesses to understand what they need, and probably more importantly, what frustrates them."
We spoke to Angela Norman, head of corporate development at new SME lender Recognise Bank, about what the Bank offers to commercial advisers, its non-property lending proposition, and why a number of lenders appear to be pulling back on their BDM numbers.
CR: Recognise Bank is a relatively new lender. Tell us about your role at Recognise and how you, and the team, work with advisers.
As head of corporate development my role is focused on developing strategic partnerships that will enrich the services we offer SMEs, as well as helping the bank to grow.
This of course includes building our relationships with advisers and working with the relationship managers – our BDMs – to create our regional network.
This gives me a great opportunity to talk to advisers, to understand what they want from a lender and what support their clients need. It’s a true ‘you said, we listened’ approach, because we use adviser feedback to help shape our propositions and services.
I’m also further developing our non-property lending propositions, with enhancements to our Professional Practice loans as well as the introduction of a Healthcare proposition that will initially focus on the medical sector.
CR: Recognise is an SME-focused Bank. You currently offer bridging loans, commercial mortgages, and loans for professional and medical practices – what is the thinking behind this product offering?
We did a lot of research to establish what SMEs want from business borrowing. We listened to advisers and businesses to understand what they need, and probably more importantly, what frustrates them.
As many of the team have worked at mainstream lenders, we knew there were areas that were underserved because other banks don’t have the appetite for that type of funding, such as bridging loans or lending to support retail SMEs.
We also realised markets such as professional practice, medical and healthcare, were really struggling to get funding because many lenders have withdrawn from those sectors. So we developed loans specifically for them that take a more holistic view of their risk profile.
We’ve also recruited specialist BDMs that really know those industries, who can support advisers and talk to the businesses themselves in a language they understand.
CR: There is a big focus at Recognise on the depth and strength of your regional support, through regional directors and BDMs. What is the thinking behind this approach, when a number of lenders appear to be pulling back on their BDM numbers?
The fact so many lenders are pulling back from the regions is one of the major reasons we are building our regional presence. Many banks have centralised everything via call-centres and online chat, which is frustrating for advisers and their clients, because all they want is to talk to someone who understands their circumstances.
It also means BDMs with industry expertise and regional knowledge have been stripped out of the market, with the knock-on effect that often lending decisions lack expert input.
Recognise wants to bring that expertise back by having regionally-based BDMs and underwriters who also understand the local area.
We also looked at the areas where businesses are growing, which is why we have created hubs in the North West, the Midlands and the South East, but we will be setting up more in the future.
CR: What can we expect from Recognise Bank through the rest of 2021 and further into 2022?
We’re currently developing buy-to-let mortgages for professional property investors, which is really exciting. We are also developing our professional practice and healthcare propositions even further because those areas are underserved.
Following our latest fundraise, we also plan to launch personal savings accounts and business savings accounts later in the year. Business savings is another area where SMEs are really poorly served, so it’s all part of our bigger strategy to help small businesses prosper.
CR: What are the biggest challenges facing advisers right now?
Probably poor communication with lenders. Advisers submit applications which seem to fall into a black hole, so it could be weeks before they hear anything and months before they get a final decision.
Not only is this frustrating, for an SME it could be the difference between securing or missing out on a deal. That’s why we’ve created what we call the Deal Team, where the BDM, underwriter and loan manager work on an application together right from the start. With this approach, we aim to come back to the adviser and their client with a decision-in-principle as quickly as possible, when all of the required information has been provided.
CR: What changes do you think we are likely to see in the sector of the coming years?
I think we will see an increased focus on transparency and demonstrating value to the client, particularly around commissions. We’ve seen the way rules around commission have changed in consumer lending, and I think that’s the direction of travel in the business lending sector.
As an industry, we need to make changes now before they are imposed upon us by the regulator. Let’s be clearer to clients around the level of commission and reinforce the value that advisers and lenders are offering them.