Next Generation Lending in Australia

The Australian lending industry is witnessing a revolution with alternative and innovative lending processes providing better, faster and more convenient access to credit while delighting the consumers in the...

Gary Shepherd 21st September 2015

The Australian lending industry is witnessing a revolution with alternative and innovative lending processes providing better, faster and more convenient access to credit while delighting the consumers in the process. There is a tremendous opportunity for online and marketplace lending to establish meaningful presence in the Australian financial services sector. Australia’s lending industry is dominated by four major banks with a combined market share of 75-85 percent. However, these banks are focused more on mortgages and deposits than on unsecured consumer lending. In addition evolving consumer behavior, in part driven by new technology, has been a catalyst for innovation and has altered the financial services landscape.

online-lendingA recent KPMG survey predicts that the online lending industry will grow over $20 billion in Australia in the next 5 years – a good 15 percent of the current financial ecosystem. Recently representatives of the lending industry gathered at the Next Generation Lending Conference in Sydney, Australia to discuss the emerging trends in the industry. More specifically, they discussed the emergence of consumerism in the sector centered around personalization, speed, and automation, and the growth of Australia’s nascent alternative lending segment.

Leaders from Australian alternative lending industry, including Stuart Stoyan from MoneyPlace, and Sunil Aranha from ThinCats Australia, spoke about the need to serve the consumers without entangling them in an array of forms and documents. Consumers today are demanding simpler financial solutions, fast responses and access anytime, anywhere, and alternative lenders are striving to fill this need by leveraging technology to provide speed and automation.

Even large institutional investors stand to gain from these disruptors. The current financial slide wiped out millions of dollars of investor money across markets. Imagine if that money had been invested in a marketplace or an online lending platform with a risk exposure of just 1-2 percent through loan fractionalization and you have your answer. No wonder institutional investors are making a beeline for alternative lending investments.

The Australian Securities and Investments Commission (ASIC), Australia’s financial regulator recognizes the opportunity and is keen to support this shift as well. ASIC representatives were part of the Next Generation Lending conference and were looking for opportunities to collaborate with the industry. In fact, they have recently launched an online ‘Innovation Hub’ to foster start-up collaboration and growth.

Incumbents are now under pressure to adapt to this disruption. They are transforming their business models to support the customer experience of tomorrow and learning how to build their innovation portfolio to lay the foundation for a sustainable competitive advantage. The major banks are aggressively developing their digital offerings and improving their loan approval speeds. Westpac Bank, for example, has initiated a project called ‘The Garage’ – a specialist team working to fast track innovative new customer products. Another leading finance company, Liberty Financial, has launched a complete broker software app called ‘Spark’ where consumers can ask any question relevant to lending and borrowing. By investing in a technology solution that is agile and flexible, banks can thrive and compete with the new entrants. Digitalization, speed and automation were the key themes that strongly resonated with traditional as well as non-traditional lenders during the conference.

Next-Gen borrowers need Next-Gen lenders. Competitive advantage in the online lending market is a race to close loan applications quickly and accurately. In other words, he who finishes first, wins the deal. Cloud Lending Solutions with its simplified technology that takes as little as 6 clicks from application to funding can certainly help innovative lenders provide more efficient and accurate lending with a world class user experience. In addition, we can also power the new class of lenders that can quickly close complex loans through our collaborative online document management and due diligence process management feature called ’Deal Room’. At Cloud Lending Solutions, we are powering both simple and sophisticated lending processes all the while providing a “Wow” borrower experience.

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