Awareness around alternative finance remains quite low in Australia, with just 19% of small business owners realising there are non-bank options, leaving four out of five believing they have no choice but to turn to a traditional institution for help.
Prospa co-founder Beau Bertoli explained, “The alternative finance market may be burgeoning, but it’s still tiny in size. Non-bank lenders are growing and they’re growing quickly, but they’re still very small by scale compared to the big banks.
“We were one of the first to start in this space. We’ve now lent $1.2bn across the Australian market. Although we’ve done great work in that regard, we have about 20,000 small business customers. We estimate there are two million small businesses in Australia, so awareness remains one of the greater challenges we face as an industry.
“But we also have to cut ourselves a bit of slack. The fintech world only emerged six or seven years ago. It’s a new industry, which is really only now starting to find its feet, with companies just beginning to grow and emerge on a larger scale," he added.
Despite there being significant “inertia in banking”, with many small business owners consistent in their go-to being the bank they have an existing relationship with, Prospa attributes much of the success it has found to the overwhelming lack of support the Australian banking system has shown to small business owners.
“We built the business because, as small business owners ourselves, we’d gone into banks and faced the laborious process that more often than not resulted in a rejection. We wanted to not only change that, but find a way to make it really easy for small business owners to find us, simple for them to apply for our products, and give them both a turnaround time and overall experience that was so far ahead of what they’ve had in the banking system," said Bertoli.
According to Alex Brgudac, Prospa head of partnerships, the significant success Prospa has found in such a short period of time has been furthered and confirmed in the third party channel – but, as with the overall awareness, there is still work left to be done.
Brgudac explained, “When I joined Prospa and first went out to talk to brokers, they’d ask, ‘Who’s Prospa? What do you guys do?’
“Today, everyone knows who Prospa is. But, many understand at a macro level, while struggling with the how, highlighting the fact that education, awareness and support are fundamental to our distribution strategy.
“The industry’s been going on for so long that everyone is conditioned with mindsets fixed to a traditional lending way of thinking. Helping open their eyes to a new way to approach lending is at the core of our education program.”
The lender has “worked really hard” over the last five years to build the right support structures and deploy a variety of strategies to support its national network of 10,000 finance brokers across a range of different business types and sizes.
Further, Prospa strives to take feedback from the market and use it to build new products and propositions that are better suited to the type and range of partners it’s working with.
“Our approach is customer-driven. Our new ventures team is an example of that, where we try to incubate new ideas,” explained Bertoli.
“We know that if we can build exceptional customer experiences, then our channel partners will be very happy to offer those experiences to their customers. Poor experiences, and they won’t.
"2020 is going to be a record year for Prospa. We have new propositions coming to market. The same great service from our team is going to get even better. Watch this space," he finished.