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Monday, May 20, 2019

Opinion > Opinion

Avoiding the 'silo mentality'

Alan Margolis, director of credit and operations at Masthaven | 16:45 Wednesday 2nd May 2018

I’ve just come off a complex bridging case that saw Masthaven deliver an £800,000-plus loan to help a developer complete on a site of four properties they wanted to sell on.

Far from straightforward, the case “ involving a complex security and a complicated repayment strategy – required all our specialist knowledge in order to get it over the line. Internally we celebrated it as a great example of our team coming together to deliver.

But enough of the bigging us up. I mention the case because it was a terrific demonstration of how a short-term specialist lender can approach and resolve the challenges presented to it by a complex case.

The large high street lenders, by sheer virtue of their size alone, find it difficult to take on and process cases in the same way as their smaller, more nimble competitors, such as Masthaven Bank. In the business world, a lot is talked of the 'silo mentality' – an attitude whereby departments within organisations are separated from each other and sometimes wary about sharing information with others.

There can often be physical separation too, with different departments in different buildings or even different cities. Even with modern communication, there is no substitute for people sitting in a room together or gathering around a desk to discuss a case and share ideas, opinions and expertise.

Silo thinking exists in finance and presents additional challenges to larger organisations. We see larger lenders placing loans, products and, more importantly, customers into compartments, holding them against rigid affordability models and traditional box-ticking exercises in the process.

The natural consequence of very large case volumes and the necessary accompanying automation is the viewing of the customer as data to be processed, weighed up and given a yes or no.

Specialist lenders think and act differently. They know the devil is always in the detail, so they start right at the bottom of cases and weave their way up, adding layer upon layer of intelligent analysis as they go. Larger lenders, by necessity, look down from on high, looking to process those cases that tick the boxes to meet their criteria.

Specialist lenders recognise that short-term lending – be it a bridging loan, development finance or other forms – can be complicated. As such, they look at the human, the individual borrower, behind each application, assessing their specific situation and working to deliver based on their needs. Ultimately it boils down to the 'story', including, of course, the essential exit strategy.

The best specialist lenders assign individual underwriters who take on cases and deliver them from inception to completion, taking time to get things right along the way and keeping the introducer informed.

This makes specialist lenders not just the right place for short-term lending, but the natural place.

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