Specialist bridging lenders entering the market and offering a wider variety of products are leading the way when it comes to innovation in the industry.
Tom Belger, writing in the October issue of the NACFB Magazine, says that prior to the 2007 crisis, banks mainly provided bridging finance for home purchase and improvements. But, he says, the rise of self-certification in the early 2000s sparked a broader range of services.
Mr Belger, who is a senior reporter at Bridging & Commercial, asks if banks could do bridging lending; and he sought answers from the likes of Matthew Tooth, at LendInvest. He said:
"Being able to offer bridging lending is mainly down to experience and understanding of the sector. The right structure in bridging finance means staff that really understand what they are doing, and flexible funding supported by fluid processes.
"There is no reason that a bank can't deliver on this. In fact, banks already compete in bridging finance and some players have become very effective at improving their processes to be faster and more nimble."
But Mr Belger points out that many lenders have pointed to the necessity of fast decision making and turnaround times as a hindering factor for traditional lenders, claiming they weren't best placed for this niche type of finance.
Max Strange, who is the managing director of Funding 365, argued that bridging finance was a specialised business where non-standard features required underwriting flexibility. He added that it is
"simply the nature of banking that large organisations are required to have strict underwriting rules which must be adhered to, unless a lengthy credit committee process has been completed.
"The larger a bridging lender gets, the worse its service generally gets -- particularly as this relates to specialist loans."
Meanwhile, Scott Marshall, who is the manager director of Roma Finance, says that he agrees that in the past banks have found it difficult to enter the bridging space due to the required speed in making decisions. He insists that banks' hierarchical structures mean that they rarely have the right experienced staff in the right place at the right time to make decisions "on what are often complex transactions that we have to make as specialist lenders".
John Sealey, who is the CEO of Hope Capital, says that many of the banks "simply do not have the infrastructure in place to order in order to turn around a bridging loan in the time required".