Alternative finance providers have sparked a revolution in SME lending, according to a global fintech lender, and in a cooling residential property market it is more important than ever for brokers to keep up.
Lachlan Heussler, managing director of Spotcap Australia, said the SME lending sector has seen the most significant disruption from alternative finance players.
“Once an oligopoly, there are now more than more than 20 key players in Australia’s lending market. Many are concentrated in the SME lending space, where we have arguably seen the most disruption.
“The SME lending sector was ripe for disruption because it has always been difficult for a small business to access finance. Even with the help of an established broker applications were cumbersome, time consuming and more often than not, likely to be rejected.
“Alternative lenders like Spotcap have created easy-to-use online applications and developed innovative models which evaluate the real-life cash flow of a business rather than focusing on what assets the business itself or business owner may have. These disruptive innovations have made credit more accessible for SMEs and swiftly transformed the lending market.”
Whilst alternative finance providers have already provided much needed competition in the lending market, Heussler says the sector will gain even more traction this year as traditional lenders and brokers embrace the disruption.
“Although the alternative finance sector will always have a focus on innovation, partnerships and collaborations will be an even greater priority this year.
“By the years end I believe all four of the major banks and a number of smaller financial players will partner with an alternative lender. These collaborations won’t be confined to the banking system, super funds, non-bank financial institutions and industry bodies will also be a key focus. For example our work with the FBAA and MFAA has already allowed a significant number of brokers to add small business loans to their portfolios. These kinds of partnerships will continue to be a key focus this year.”
This will ultimately be driven by increasing demand by small businesses for a more efficient service.
“A short time ago small businesses tolerated a lending environment which stood in the way of growth and innovation. Today businesses are more willing to shop around for a better service from both traditional and alternative providers,” Heussler said.
“Our broker partners tell us their clients are now more willing to explore alternative solutions and we’ve also seen it first hand in our loan book. Spotcap has experienced significant month-on-month growth in the number of loan applications received since we launched just over eight months ago.”
Spotcap’s co-founder and CEO Toby Triebel will be joining other industry leaders to speak at the AltFi Australasia Summit 2016
in Sydney on Monday 29 February. The summit is the largest P2P and marketplace lending conference ever held in Australia.
For more information and to register to attend brokers are invited to click here.
AltFi is the world’s number one alternative finance-focused conference, and the only event to scrutinise the full gamut of alternative financing products. 2016’s conference will be about the new lending world of P2P, marketplace lending and direct on-line lending.
P2P and marketplace lenders are taking on the banks in Europe, US, and now Australia and New Zealand by linking borrowers with debt investors via online platforms. Over the past decade the volume of loans on US platforms have doubled every year. In 2014, marketplace lenders originated $14bn in consumer and small business loans.
The AltFi Australasia Summit 2016 will provide an opportunity to take a deep dive into what is transforming the manner in which money is invested and borrowed, providing a bold new asset class for investors in the process.
Hear from a host of leading international experts from some of the largest global platforms. They will provide an overview of what is happening in the international non-bank lending market, lessons learned. Then our local Australian and New Zealand platforms will take us through the Australian market and discuss how it is likely to evolve.
The AltFi Australasia Summit 2016 will be held in Sydney on Monday 29 February 2016.