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New research has illustrated the disconnect between brokers and the up-and-coming fintech sector, with one non-bank lender expressing concern over what the divide could mean for borrowers.
The research from invoice financer Apricity Finance found an overwhelming majority – 84% – of brokers don’t feel confident in their grasp on fintech lenders, some going so far as saying they know nothing at all, despite around three-fourths agreeing the sector will only continue to grow over the next 12 months.
According to Linden Toll, Apricity CEO, this carries concerning ramifications for consumers.
“Fintech lenders – those that promise fast, online approval without taking time to understand the applicant’s needs – are now a large part of the landscape for SME lending and a welcome addition to an environment where it’s tough to obtain finance. However, they are not without risk and the importance of getting advice from a broker or another third party, cannot be underestimated,” he said.
“With everything from confusing interest rates, a generic application process, and sometimes a lack of transparency, fintechs may still have some way to go before they are ready to offer the high level of service that many SMEs require.”
The Apricity research also found that half of the brokers surveyed believe fintech solutions are often not tailored to the specific needs of a business.
Further, it clarified how brokers differentiate their services from fintechs, such as through finding better rates for their customers, providing additional business advice outside of securing finance, giving personal service and building a trusting relationship.
Over 60% of the brokers said they help clients understand how to be approval ready for loan applications, something that “fintechs are notoriously bad at.”
Further, the research highlighted that 38% of brokers said they help clients manage cashflow and grow the business – “something that fintechs, by definition, can’t do,” according to Apricity Finance.
“We know how brokers add value to their customers and it’s not just on getting the cheapest finance, it’s about customer service, personalisation, risk management, business advice and being a mentor and a friend. Something that fintechs may always struggle to do,” said Toll.
