After reporting triple-digit numbers in FY23, LoanOptions.ai saw more modest growth last financial year, navigating a “really tricky market to predict”, said founder Julian Fayad (pictured above).
Despite the high interest rates and inflation, the Australian fintech’s brokerage saw deal growth increase by 20% and funded over $96 million for its clients, up 14% from the previous year.
But while its direct-to-customer (D2C) model, which includes personal, car, business and equipment funding, posted solid numbers for any asset finance brokerage, its other channel is what’s turning heads.
“One of my favourite metrics is just how much referrals we have paid out this financial year,” said Fayad.
“Our partner channel (B2B2C) is growing really fast. It is catching up to our D2C model and I imagine this financial year we might see it become our dominant channel.”
LoanOptions.ai’s partner channel allows mortgage brokers to generate leads through their own websites. Brokers can embed a “loan widget,” a customisable tool that captures client details and generates leads.
These leads are either managed by LoanOptions.ai’s asset finance team, which handles the entire loan process and shares revenue with the broker, or by the broker directly using the software on a subscription basis.
This model helps brokers diversify into asset finance without needing expertise in the field, providing a steady stream of qualified leads and additional revenue.
“Our technology is embedded onto other finance systems as a white label product, allowing mortgage brokers and other professionals including car dealers and financial advisers to use LoanOptions.ai technology to better service their clients,” Fayad said.
“This year we paid out over $2.2 million in referral payments concurring with the rapid growth of our B2B2C model. This grew 18% from the previous year in that channel.”
In terms of the technology itself, the fintech launched its latest version, LO 3.0, in December last year.
LO 3.0 is driven by the company’s AutoCompleteEngine (otherwise known as ACE), which Fayad claimed has reduced the loan application process time to as little as five minutes and reduced customer data entry labour by 80%.
The platform is stacked with features, from a bank statement analysis tool to a loan tracker that allows clients to track their loan like a pizza delivery.
With the technology, Fayad said mortgage broker partners can fund their clients’ needs with quicker speeds and more accuracy to the right fit for them.
“Leaning on the tech allows brokers to do more of what they do best, leading to an overall better experience for both the brokerage and the client,” he said.
Importantly for LoanOptions.ai, Fayad said it has the potential to overtake the company’s D2C model.
“There is a very real need in the industry for technology that can simplify, streamline, and ultimately increase business,” Fayad said.
While the partner channel may become the dominant driver of business, LoanOptions.AI isn’t about to forget its roots in its D2C channel anytime soon.
Operating on the same technology, the brokerage settled almost 3,000 loans for clients in FY24, growing 20% from the year before.
But what is perhaps most unique is the diversity of brokerage’s lender share across its panel.
“Our growing and diverse panel of over 88 lenders in Australia and New Zealand allows us to find the best finance solution for every client,” Fayad said.
This led to some interesting facts:
Fayad said that this was never influenced by incentives or any interest other than their clients' best interest.
“We are not like some of the broken brokers out there who only act as puppets for major lenders or in their own best interests,” he said.
LoanOptions.ai’s loan sizes were also diverse, the smallest being $2,000 and the largest being $658,700.
However, the brokerage’s average loan size has taken a hit dropping to $32,800, down from $35,000 the year before.
Fayad said the loan size dropping was largely due to clients’ repayment budgets being eaten up by much higher interest rates.
“What we saw quite frequently were clients choosing the slightly more modest variant of their car or opting out of some additional extras to better accommodate their repayment budget,” Fayad said.
“Higher mortgage rates, higher rent and higher cost of living also caused a squeeze on serviceability and these factors were the main reason for the decline in the average borrow amounts.
“Unfortunately, I think we will only see household debt increase in the near term because many people are just trying to keep their heads above water.”
Despite the difficult conditions, LoanOptions.ai continues to expand.
The company recently launched across the Tasman in New Zealand and opened a new branch and office in Western Australia.
This year, Fayad said the company is focused on helping “thousands more mortgage brokers” to better meet their clients’ needs and “take their business to the next level”.
“We will be launching a new flagship home loan version of our technology for our mortgage broker partners to subscribe to as a software-as-a-service (SaaS) product,” Fayad said. “Everything we do will be to better service our customers and partners.”
