While larger financial institutions have traditionally stayed out of the fintech space, this could soon change, according to some of Australia’s leading experts.
“To date I’ve actually taken the view that I don’t think the banks have really played much in this space because it’s disruptive and it’s easier for them to not necessarily add fuel to the fire or to accelerate that disruption,” said Anthony Millet, CEO of BRICKX, in a panel discussion at the Millennial 20/20 conference in Sydney yesterday (14 November).
This is now changing with new legislation being introduced in Australia that makes it easier for start-ups to enter the market, he said.
“I think we’re going to see a lot of banks participating in this space which is going to be interesting and going to make it more expensive for us to market.”
An example of the banks failing to meet the needs of a key segment of the market came in a later panel at the conference where
Beau Bertoli, joint CEO of
Prospa discussed how small and medium enterprises have been left behind.
“The banking system, even to this day, has not created solutions for small businesses,” Bertoli said.
Prospa took the onerous experience of having to fill out a 25-page application form, having to ask for three years of financials from an accountant, or waiting up to eight weeks for a loan approval and created their own business model to improve on this.
The company also enhanced other aspects of bank-sourced loans including better risk management around credit which has brought in
$500m of SME lending to date, he said.
“The data we use and our technology has far more predictability than standard credit models.”
Speaking on the same panel, David Hyman, co-founder and managing director of Lendi, said his fintech was in discussions to work more closely with the banks in delivering better service to customers by smoothing over pain points around getting to an unconditional approval.
“We’re doing direct integrations with our lenders’ decision tools to drive them back into our platform.”
This will allow customers to log in, create a profile in under five minutes and see suitable loans directly through Lendi’s system, he said.
Related stories:
Inside ASIC’s box of mystery
Fintech first to hit $500m of SME loans
Advice platform adds broker support
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