Panayiotis Rougalas
In the insurance industry, brokers are an established part of the system. Known in Greek as “insurance agents” or “intermediaries,” they offer clients a range of insurance products, find customers and earn commissions based on the type of policy and the insurance company the client chooses.
Banks also work with loan brokers, although not in Cyprus. The practice is well established abroad, where it is widely used. Essentially, a client approaches a broker, who searches for the best loan available from the banks operating in that country. Brokers do not receive a salary. Instead, their earnings depend on the loans they successfully arrange for their clients.
Loan brokers do not currently operate in Cyprus, but no legislation is in place that would need to be introduced before they could begin operating on a large scale. The profession is effectively open to anyone. Sources suggest that some banks in Cyprus would like to see loan brokering enter the local market, although no collective discussions have taken place so far. For now, these remain informal ideas inspired by practices in other countries or by the experiences of Cypriot bank executives who have worked abroad and encountered the system firsthand.
There is no need to look far for an example. Loan brokering is already well established in Greece. Statistics suggest that more than 14% of loans granted by Greek banks have been arranged through brokers rather than through the traditional process of a customer walking into a branch, applying for a loan and dealing directly with a bank employee. In such cases, the employee's involvement was unnecessary.
In Cyprus, the banks themselves regularly show that many banking jobs may no longer be needed. Since the boom years of 2012, when the sector employed nearly 13,000 people, banks have cut their workforce to around 6,000. These are the facts, according to official figures from the Association of Cyprus Banks.
If Cyprus adopts the loan brokerage model, how many bank employees will be left? Half of the current 6,000? Two-thirds? Imagine this major change becoming a reality if the model enters the Cypriot market. How many banks would be willing to stop paying salaries and instead pay brokers a commission for each loan they successfully arrange?
At the same time, many argue that adopting this model would increase competition among banks and benefit consumers. However, until the system is widely implemented, it is difficult to know whether the results would be positive or negative.
