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The burgeoning trend of fintech disruptors in recent years has made one thing clear – big banks are failing to satisfy everyday Australians to some extent. Fintech startups attempt to fill finance-related needs normally provided by big banks, but faster. Neobanks, which have shot up in popularity over the last decade, provide digital banking with higher interest rates. More and more non-bank lenders have surfaced to bridge demand gaps with bespoke loans.
All these have resulted in “a significant shift in perception and use of big banks,” Aaron Bassin, CEO of bridging loans firm Bridgit, wrote in The Property Tribune. The days of big banks being the go-to for end-to-end financial services are long gone – or, at least, fast fading. Adelaide Bank, a leading writer of bridging loans, has already announced it will no longer provide the service to new clients.
One other consequence of big banks’ inability to keep up with consumer needs is the shift away from banks by financial professionals. Property brokers, in particular, are recommending non-bank and alternative solutions as viable options to their clients with increasing normalcy. A recent Broker Pulse survey by Momentum Intelligence found that broker flows to major banks were at their lowest, even as the Australian Financial Group’s latest index reported brokers lodging 6.9% more home loans than before.
The same index by AFG said that non-major lenders made up close to half of the market, the highest percentage it has ever been. The market could very well see major banks making up less than half of it by the end of the year, Bassin predicted, noting an increase in brokers joining Bridgit for its strong support of broker partners in the bridging loan space.
The next few years will be a reckoning for big banks as non-bank lenders rush to fill gaps in the market and offer superior solutions to customers, The Property Tribune reported.
