Mortgage Advice Bureau (Holdings) PLC (LON:MAB1) Chief Executive Officer Peter Brodnicki caught up with DirectorsTalk for an exclusive interview to discuss the mortgage market, the MAB business model, how the business looks compared to IPO, the main drivers for continued growth and growing the business in a technology enabled world
Q1: Peter, if I can start with the mortgage market, how would you describe it and where are you seeing the most activity at the moment?
A1: I think there are three standout areas of activity right now.
First-time buyers continue to be the strongest growth segment in the purchase market especially in new build where help-to-buy applications have actually never been higher. In the buy-to-let area, in purchase where it’s pretty stable there currently after the falls we initially experienced however buy-to-let re-mortgage remains very strong and accounts for around 70% of all buy-to-let lending currently. In terms of overall re-mortgage market, that continues to strengthen and now, that mortgage intermediaries can also advice on product switching with the customer, can be offered a retention product with their existing lender, the opportunities have never been greater for borrowers.
With technology development starting to simplify the mortgage application process and advice available in more convenient ways for our customers, the mortgage is becoming a far more flexible and reviewable product that can be used to purchase, capital raise, support retirement planning or simply switch or re-mortgage to ensure you never pay more than you need to for your mortgage.
Q2: Can you give us a simpler overview of your business model and what you put your success down to?
A2: Firstly, I just want to explain the role of a mortgage intermediary which is to help borrowers research, receive advice and apply for mortgages with a choice of over 12,000 products from around 100 different lenders, currently 73%-74% of UK mortgages are arranged through mortgage intermediaries.
The MAB model is on one level a network for mortgage advice firms that, in exchange for turnover charge, we provide full compliance services and access to the widest range of lenders, mortgages and insurance products. In addition, MAB positions itself as a strategic partner for ambitious and high-quality intermediary firms. We support them with adviser and lead source recruitment delivering bespoke technology solutions which we develop in-house to optimise the customer and adviser experience and achieve a very high advice and quality standard level. We also deliver targeted training, marketing and business consultancy solutions for those firms. Uniquely, MAB are also effectively a franchise model where mortgage intermediary firms adopt Mortgage Advice Bureau trading style which in the region of 70% of our firms do right now.
Mortgage Advice Bureau is the most recognised intermediary consumer brand in the UK and has won over 70 awards in the last 5 years under that brand. Through our branded distribution alone, MAB can provide face to face advice in every UK postcode which is now supported by an increasing amount of telephone advice with technology offering increasing levels of speed, ease and convenience. We do not actually employ any of the near-1,110 advisers and the model is actually extremely cash generative and capital light. We’re a market share model that has performed consistently year in year out in a relatively flat market as well as previously throughout the recession. I think our specialist approach along with our brand offering, strong technology proposition and reputation for quality and innovation has enabled us to attract many of the leading UK intermediaries which we continue to do.
Q3: So, how does the business look today compared to IPO nearly 3.5 years ago?
A3: Well, I think we had a very high quality and loyal team when we listed in November 2014, since then the business has invested further by strengthening the senior management team of 7 real key appointments made. The latest was actually Ben Thompson just a week or so ago, the current CEO of AIM-listed ULS Technology who will be joining the main Board in June as our Managing Director.
Mortgage Advice Bureau has a reputation, I believe, for attracting and retaining exceptionally high-calibre individuals which I believe is down to our reputation of being highly innovative and always aiming to set the bar higher in every part of our proposition. The quality of appointments such as Ben I think is a reflection of our ambition to lead the technology-led transformations we see coming in the intermediary sector. Through that process, I think it’ll put us in pole position to increase our market share and further still, in the years to come.
Q4: What are the main drivers for continued growth that we’ve seen at MAB?
A4: Our year-on-year increases in adviser numbers has and will continue to be a main driver of turnover growth, 50% of our growth is organic, the rest is achieved by attracting new and ambitious firms to our business.
We’re confident of maintaining our growth targets although adviser numbers can be lumpy and can often be second-half year loaded but we still see that moving forward as a strong growth opportunity for us.
With technology developments planned, we believe that we’ll start to see a marked step up in adviser productivity across much of our distribution in a few years’ time and that will help us further increase market share growth.
As well as investing and bringing in some of the very best talent in our industry to MAB, we’ve also made some strong strategic investments since IPO. We anticipate further investments this year, especially in terms of technology solutions that can help us deliver more faster in terms of the customer and adviser experience and of course lead generation which will be increasingly more technology-driven.
Q5: Talking about technology, how do you see the future for Mortgage Advice Bureau in a growing technology enabled world?
A5: Technology developments can only be beneficial to the customer and we intend to leverage everything technology can deliver to provide better customer choices and greater ease in the way that they research, the way they receive advice and apply for a mortgage. Robo advice, as such, doesn’t exist today but technology enabled advice is here now and evolving daily and our position is very clear, whatever the customer expects, we will deliver and where possible, more.
Technology is actually in our DNA, we have always built our own technology solutions in-house which is very unusual in our sector which means we are very agile which we believe is crucial at a time the technology developments are moving at some pace.
I think technology will transform the intermediary sector and further enhance the huge value mortgage intermediaries deliver to their customers and I believe MAB, with its executive management team and Board, are ideally placed to capitalise. As a result of that, I expect our market share to continue to grow, our proposition has never been stronger, to attract new firms and advisers with some exciting opportunities to increase the pace of growth at 2020/2021 and beyond.