Chapter 7 Invest in Partners for Mutual Profit

If we are together, nothing is impossible. If we are divided, all will fail.

—Winston Churchill

The executive general manager of an Asia-Pacific bank hung her head in frustration. Mortgage margins were shrinking across the industry as wholesale funding costs rose and rose. But her broker channel was resisting accepting lower commissions to bear its share of the pain.

To make matters worse, the bank was competing head-on with these brokers. The bank needed brokers to capture the growing retail mortgage segment, so it had been signing them up. It recognized that customers believed this channel option gave them convenient access to products from multiple lenders and competitive pricing. However, it was never clear which customer segments would be targeted by internal staff and which by brokers. The result was duplication of effort and troubled broker relationships.

The general manager had to make this channel work. The bank was losing ground to competitors and couldn’t afford to lose mortgages because of unmotivated or unhappy brokers. Brokers controlled 30 percent of the mortgage market, and their share was growing. So was their influence, as consumers increasingly turned to them for a full suite of financial products.

Fast-forward six years: revenue from brokers has grown by 35 percent, brokers are cross-selling the bank’s credit cards and insurance products at record rates, and the bank’s declining share of the mortgage market ...

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