A nice little video from the IMF describing the Fintech revolution.
Today Kate Carnell, the Australian Small Business & Family Enterprise Ombudsman (ASBFEO), Danielle Szetho, CEO of the industry association Fintech Australia (FA) and theBankDoctor.org published a detailed report on improving transparency in the fintech business lending sector.
This is an excellent piece of work, and will reinforce the legitimacy of SME lending from Fintechs, which from our analysis is growing fast, as the major banks continue to fail in their support of the SME sector in Australia.
The key resolutions are:
- FA and its industry working group will consult with stakeholders to develop a Code of Conduct by June 2018 to cover unsecured business loans by fintech balance sheet lenders.
- FA and its industry working group will work with the ASBFEO to ensure they comply with the Unfair Contract Terms legislation.
- by June 2018 FA and the industry working group would agree on a common set of plain English key terms and conditions to be highlighted in a summary page in all loan agreements.
- ASBFEO will facilitate a discussion between fintechs and the Australian Financial Complaints Authority to explore alternative external dispute resolution services in early 2018.
- ASBFEO will work with the FA to ensure they comply with the Unfair Contract Terms legislation.
- theBankDoctor.org will write an education piece, in conjunction with ASBFEO, specifically for SMEs to help them understand the “ins and outs” of borrowing from a fintech.
I asked TheBankDoctor Neil Slonim what was the most significant outcome from the report:
“The biggest challenge now is for the the fintech lenders to actually work together to meet the commitments agreed upon. It will not be an easy task given the large number of participants (around 30) and the fact that their business models can be quite different. Compounding this is the fact that not all lenders are members of the industry association Fintech Australia so there is only so much FA can do. The final sentence in Kate Carnell’s foreword is telling … I will keenly monitor progress against the resolutions in this report”
Neil also provided some background on the initiative:
This collaborative and ground breaking project has been twelve months in the making and represents a line in the sand on industry self regulation which is needed to ensure this rapidly emerging sector fulfils its potential of becoming a significant source of funding for Australian SMEs.
I started researching fintech business lending some three years ago when I recognized these lenders could help the large number of businesses unable to access bank funding. These SMEs typically want to borrow less that $250,000 and lack property which could be offered as security.
Through the use of technology, fintech business lenders can make a real difference to small businesses but access to funding is one thing, understanding all the terms and conditions is another. It is almost impossible to make apples with apples comparisons between the wide range of offerings, especially in relation to the total cost of borrowing where annualised rates of interest can range from 14% pa to 80% pa. I figured that if someone like me with 30 years experience in business finance struggled with this, what hope do time poor and often financially unsophisticated SME have? So I decided to conduct a survey of fintech business lenders to help SMEs answer three simple questions:
1. Is this the right product for my needs?
2. Do I know exactly what it is going to cost?
3. Do I know that I can’t get a better deal elsewhere?
But as an unauthorized, unelected and unpaid SME advocate, my capacity to get lenders to participate in the survey was limited and then any findings would be unenforceable anyway. That’s when I reached out to Kate Carnell and Danielle Szetho who willingly agreed to conduct this joint project.
Fintech Australia brings its authority and membership base although not all fintech lenders are members of FA and lenders, whether members of Fintech Australia or not, operate different business models and have diverse views. One of the most telling responses in the survey was that lenders were evenly divided on the question of the adequacy of the current level of industry transparency and disclosure. This provides an insight into the challenges of self regulation.
I applaud the lenders who have embraced this opportunity to drive self regulation. With initiatives like the Glossary of Terms, which is published as an appendix to the report, fintech lenders are now setting standards for other non-bank lenders to follow.
Kate Carnell and her team have been constructive and collaborative in helping fintech lenders reach agreement on areas in which more can be done to improve transparency and disclosure. As the banks have learned, Ms Carnell is a no nonsense champion of the small business sector and she can be relied upon to follow up on her commitment to “keenly monitor progress against the resolutions in this report” .
I am pleased our work has brought the issue of transparency and disclosure in fintech business lending clearly into the public arena and look forward to continuing to work with all parties to enable these lenders to become significant, transparent and trusted alternative sources of debt finance for Australian SMEs.
The BIS task force has developed five scenarios which highlight how Fintech disruption might play out, in a 50 page report “Implications of fintech developments for banks and bank supervisors.” Bankers will find it uncomfortable reading!
Under the The Bank For International Settlements (BIS) five scenarios, the scope and pace of potential disruption varies significantly, but ALL scenarios show that banks will find it increasingly difficult to maintain their current operating models, given technological change and customer expectations.
The fast pace of change in fintech makes assessing the potential impact on banks and their business models challenging. While some market observers estimate that a significant portion of banks’ revenues, especially in retail banking, is at risk over the next 10 years, others claim that banks will be able to absorb or outcompete the new competitors, while improving their own efficiency and capabilities.
The task force used a categorisation of fintech innovations. Graph 1 depicts three product sectors, as well as market support services. The three sectors relate directly to core banking services, while the market support services relate to innovations and new technologies that are not specific to the financial sector but also play a significant role in fintech developments.
The analysis presented in this paper considered several scenarios and assessed their potential future impact on the banking industry. A common theme across the various scenarios is that banks will find it increasingly difficult to maintain their current operating models, given technological change and customer expectations. Industry experts opine that the future of banking will increasingly involve a battle for the customer relationship. To what extent incumbent banks or new fintech entrants will own the customer relationship varies across each scenario. However, the current position of incumbent banks will be challenged in almost every scenario.
1. The better bank: modernisation and digitisation of incumbent players
In this scenario the incumbent banks digitise and modernise themselves to retain the customer relationship and core banking services, leveraging enabling technologies to change their current business models.
Incumbent banks are generally under pressure to simultaneously improve cost efficiency and the customer relationship. However, because of their market knowledge and higher investment capacities, a potential outcome is that incumbent banks get better at providing services and products by adopting new technologies or improving existing ones. Enabling technologies such as cloud computing, big data, AI and DLT are being adopted or actively considered as a means of enhancing banks’ current products, services and operations.
Banks use new technologies to develop value propositions that cannot be effectively provided with their current infrastructure. The same technologies and processes utilised by non-bank innovators can also be implemented by incumbent banks, and examples may include:
- New technologies such as biometry, video, chatbots or AI may help banks to create sophisticated capacities for maintaining a value-added remote customer relationship, while securing transactions and mitigating fraud and AML/CFT risks. Many innovations seek to set up convenient but secure customer identification processes.
- Innovative payment services would also support the better bank scenario. Most banks have already developed branded mobile payments services or leveraged payment services provided by third parties that integrate with bank-operated legacy platforms. Customers may believe that their bank can provide a more secure mobile payments service than do non-bank alternatives.
- Banks may also be prone to offer partially or totally automated robo-advisor services, digital wealth management tools and even add-on services for customers with the intention of maintaining a competitive position in the retail banking market, retaining customers and attracting new ones.
- In this scenario, digitising the lending processes is becoming increasingly important to meet the consumer’s demands regarding speed, convenience and the cost of credit decision-making. Digitisation requires more efficient interfaces, processing tools, integration with legacy systems and document management systems, as well as sophisticated customer identification and fraud prevention tools. These can be achieved by the incumbent by developing its own lending platform, purchasing an existing one, white labelling or outsourcing to third-party service providers. This scenario assumes that current lending platforms will remain niche players.
While there are early signs that incumbents have added investment in digitisation and modernisation to their strategic planning, it remains to be seen to what extent this scenario will be dominant.
2. The new bank: replacement of incumbents by challenger banks
In the future, according to the new bank scenario, incumbents cannot survive the wave of technology-enabled disruption and are replaced by new technology-driven banks, such as neo-banks, or banks instituted by bigtech companies, with full service “built-for-digital” banking platforms. The new banks apply advanced technology to provide banking services in a more cost-effective and innovative way. The new players may obtain banking licences under existing regulatory regimes and own the customer relationship, or they may have traditional banking partners.
Neo-banks seek a foothold in the banking sector with a modernised and digitised relationship model, moving away from the branch-centred customer relationship model. Neo-banks are unencumbered by legacy infrastructure and may be able to leverage new technology at a lower cost, more rapidly and in a more modern format.
Elements of this scenario are reflected in the emergence of neo- and challenger banks, such as Atom Bank and Monzo Bank in the United Kingdom, Bunq in the Netherlands, WeBank in China, Simple and Varo Money in the United States, N26 in Germany, Fidor in both the United Kingdom and Germany, and Wanap in Argentina. That said, no evidence has emerged to suggest that the current group of challenger banks has gained enough traction for the new bank scenario to become predominant.
Neo-banks make extensive use of technology in order to offer retail banking services predominantly through a smartphone app and internet-based platform. This may enable the neo-bank to provide banking services at a lower cost than could incumbent banks, which may become relatively less profitable due to their higher costs. Neo-banks target individuals, entrepreneurs and small to medium-sized enterprises. They offer a range of services from current accounts and overdrafts to a more extended range of services, including current, deposit and business accounts, credit cards, financial advice and loans. They leverage scalable infrastructure through cloud providers or API-based systems to better interact through online, mobile and social media-based platforms. The earnings model is predominantly based on fees and, to a lesser extent, on interest income, together with lower operating costs and a different approach to marketing their products, as neo-banks may adopt big data technologies and advanced data analytics. Incumbent banks, on the other hand, may be impeded by the scale and complexity of their current technology and data architecture, determined by factors such as legacy systems, organisational complexity and historical acquisitions. However, the customer acquisitions costs may be high in competitive banking systems and neo-banks’ revenues may be offset by their aggressive pricing strategies and their less-diverse revenue streams.
3. The distributed bank: fragmentation of financial services among specialised fintech firms and incumbent banks
In the distributed bank scenario, financial services become increasingly modularised, but incumbents can carve out enough of a niche to survive. Financial services may be provided by the incumbents or other financial service providers, whether fintech or bigtech, who can “plug and play” on the digital customer interface, which itself may be owned by any of the players in the market. Large numbers of new businesses emerge to provide specialised services without attempting to be universal or integrated retail banks – focusing rather on providing specific (niche) services. These businesses may choose not to compete for ownership of the entire customer relationship. Banks and other players compete to own the customer relationship as well as to provide core banking services.
In the distributed bank scenario, banks and fintech companies operate as joint ventures, partners or other structures where delivery of services is shared across parties. So as to retain the customer, whose expectations in terms of transparency and quality have increased, banks are also more apt to offer products and services from third-party suppliers. Consumers may use multiple financial service providers instead of remaining with a single financial partner.
Elements of this scenario are playing out, as evidenced by the increasing use of open APIs in some markets. Other examples that point towards the relevance of this scenario are:
- Lending platforms partner and share with banks the marketing of credit products, as well as the approval process, funding and compliance management. Lending platforms might also acquire licences, allowing them to do business without the need to cooperate with banks.
- Innovative payment services are emerging with joint ventures between banks and fintech firms offering innovative payment services. Consortiums supported by banks are currently seeking to establish mobile payments solutions as well as business cases based on DLT for enhancing transfer processes between participating banks (see Box 4 for details of mobile wallets).
- Robo-advisor or automated investment advisory services are provided by fintech firms through a bank or as part of a joint venture with a bank.
Innovative payment services are one of the most prominent and widespread fintech developments across regions. Payments processing is a fundamental banking operation with many different operational models and players. These models and structures have evolved over time, and recent advances in technological capabilities, such as in the area of instant payment, have accelerated this evolution. Differences in types of model, technology employed, product feature and regulatory frameworks in different jurisdictions pose different risks.
The adoption by consumers and banks of mobile wallets developed by third–party technology companies – for example, Apple Pay, Samsung Pay,12 and Android Pay – is an example of the distributed bank scenario. Whereas some banks have developed mobile wallets in-house, others offer third-party wallets, given widespread customer adoption of these formats. While the bank continues to own the financial element of the customer relationship, it cedes control over the digital wallet experience and, in some cases, must share a portion of the transaction revenue facilitated through the third-party wallets.
Innovation in payment services has resulted in both opportunities and challenges for financial institutions. Many of the technologies allow incumbents to offer new products, gain new revenue streams and improve efficiencies. These technologies also let non-bank firms compete with banks in payments markets, especially in regions where such services are open to non-bank players (eg the Payment Service Directives in the European Union and the Payment Schemes or Payment Institutions Regulation in Brazil).
4. The relegated bank: incumbent banks become commoditised service providers and customer relationships are owned by new intermediaries
In the relegated bank scenario, incumbent banks become commoditised service providers and cede the direct customer relationship to other financial services providers, such as fintech and bigtech companies. The fintech and bigtech companies use front-end customer platforms to offer a variety of financial services from a diverse group of providers. They use incumbent banks for their banking licences to provide core commoditised banking services such as lending, deposit-taking and other banking activities. The relegated bank may or may not keep the balance sheet risk of these activities, depending on the contractual relationship with the fintech company.
In the relegated bank scenario, big data, cloud computing and AI are fully exploited through various configurations by front-end platforms that make innovative and extensive use of connectivity and data to improve the customer experience. The operators of such platforms have more scope to compete directly with banks for ownership of the customer relationship. For example, many data aggregators allow customers to manage diverse financial accounts on a single platform. In many jurisdictions consumers become increasingly comfortable with aggregators as the customer interface. Banks are relegated to being providers of commoditised functions such as operational processes and risk management, as service providers to the platforms that manage customer relationships.
Although the relegated bank scenario may seem unlikely at first, below are some examples of a modularised financial services industry where banks are relegated to providing only specific services to another player who owns the customer relationship:
- Growth of payment platforms has resulted in banks providing back office operations support in such areas as treasury and compliance functions. Fintech firms will directly engage with the customer and manage the product relationship. However, the licensed bank would still need to authenticate the customer to access funds from enrolled payment cards and accounts.
- Online lending platforms become the public-facing financial service provider and may extend the range of services provided beyond lending to become a new intermediary between customers and banks/funds/other financial institutions to intermediate all types of banking service (marketplace of financial services). Such lending platforms would organise the competition between financial institutions (bid solicitations) and protect the interests of consumers (eg by offering quality products at the lowest price). Incumbent banks would exist only to provide the operational and funding mechanisms.
- Banks become just one of many financial vehicles to which the robo-advisor directs customer investments and financial needs.
- Social media such as the instant messaging application WeChat13 in China leverage customer data to offer its customers tailored financial products and services from third parties, including banks. The Tencent group has launched WeBank, a licensed banking platform linked to the messaging application WeChat, to offer the products and services of third parties. WeBank/WeChat focuses on the customer relationship and exploits its data innovatively, while third parties such as banks are relegated to product and risk management.
5. The disintermediated bank: Banks have become irrelevant as customers interact directly with individual financial services providers.
Incumbent banks are no longer a significant player in the disintermediated bank scenario, because the need for balance sheet intermediation or for a trusted third party is removed. Banks are displaced from customer financial transactions by more agile platforms and technologies, which ensure a direct matching of final consumers depending on their financial needs (borrowing, making a payment, raising capital etc).
In this scenario, customers may have a more direct say in choosing the services and the provider, rather than sourcing such services via an intermediary bank. However, they also may assume more direct responsibility in transactions, increasing the risks they are exposed to. In the realm of peer-to-peer (P2P) lending for instance, the individual customers could be deemed to be the lenders (who potentially take on credit risk) and the borrowers (who may face increased conduct risk from potentially unregulated lenders and may lack financial advice or support in case of financial distress).
At the moment, this scenario seems far-fetched, but some limited examples of elements of the disintermediation scenario are already visible:
- P2P lending platforms could manage to attract a significant number of potential retail investors so as to address all funding needs of selected credit requests. P2P lending platforms have recourse to innovative credit scoring and approval processes, which are trusted by retail investors. That said, at present, the market share of P2P lenders is small in most jurisdictions. Additionally, it is worth noting that, in many jurisdictions, P2P lending platforms have switched to, or have incorporated elements of, a more diversified marketplace lending platform business model, which relies more on the funding provided by institutional investors (including banks) and funds than on retail investors.
- Cryptocurrencies, such as Bitcoin, effect value transfer and payments without the involvement of incumbent banks, using public DLT. But their widespread adoption for general transactional purposes has been constrained by a variety of factors, including price volatility, transaction anonymity – raising AML/CFT issues – and lack of scalability.
In practice the report highlights that a blend of scenarios is most likely.
The scenarios presented are extremes and there will likely be degrees of realisation and blends of different scenarios across business lines. Future evolutions may likely be a combination of the different scenarios with both fintech companies and banks owning aspects of the customer relationship while at the same time providing modular financial services for back office operations.
For example, Lending Club, a publicly traded US marketplace lending company, arguably exhibits elements of three of the five banking scenarios described. An incumbent bank that uses a “private label” solution based on Lending Club’s platform to originate and price consumer loans for its own balance sheet could be characterised as a “distributed bank”, in that the incumbent continues to own the customer relationship but shares the process and revenues with Lending Club.
Lending Club also matches some consumer loans with retail or institutional investors via a relationship with a regulated bank that does not own the customer relationship and is included in the transaction to facilitate the loan. In these transactions, the bank’s role can be described as a “relegated bank” scenario. Other marketplace lenders reflect the “disintermediated” bank scenario by facilitating direct P2P lending without the involvement of a bank at any stage.
Open Banking, where customers can elect to share their banking transaction information with third parties went live in the UK.
This initiative is designed to lift completion across financial services, and of course in Australia, there are early moves in this direction, though the shape of those here are not yet clear. An issues paper from August 2017 outlines the questions being considered by the Australian Review into Open Banking.
What data should be shared, and between whom?
How should data be shared?
How to ensure shared data is kept secure and privacy is respected?
What regulatory framework is needed to give effect to and administer the regime?
Implementation – timelines, roadmap, costs
The report was due to report end 2017. So the UK experience is useful.
In essence, consumers (if they choose to) are able to give access to the data on their bank accounts to selected third parties, which allows them potentially to offer new and differentiated banking and financial services products. In practice, whilst some firms rely on simple (and risky) “screen scraping” the idea is that banks will provide a standard application programme interface (API) to allow selected third parties to access agreed data. Screen scraping is based on sharing the standard internet banking password and credentials, whilst API’s are more selective, using special passwords, which can time-limit access. This is more secure.
In addition, customers give access by logging on to their bank account, and establishing the data share from there, so again is more secure. Also, in the UK, firms wanting to access the data must be registered, and will be listed on an FCA directory. This is to avoid fraud. In addition, there is some protection for consumers if validly shared credential are misused, unlike the current state of play, where if banking passwords are shared, banks may avoid liability.
It is too soon to know whether this is truly a banking revolution, or something more incremental, but in the light of the emerging Fintech wave, we think the opportunities could be large, and the impact disruptive.
For example, Moody’s says the UK’s Open Banking initiative is credit positive for consumer securitisations.
By directly accessing current accounts, the lenders will gain valuable data about its customers’ disposable income and spending patterns. This data will complement the less detailed data that credit reference agencies provide and will result in stronger underwriting and better risk-adjusted returns when prudently applied.
The improved access to information also will benefit the debt collection process. Data on disposable income provides a realistic picture of a consumer’s debt repayment patterns. A clearer picture of consumers’ repayment patterns increases the probability of successful debt collection while ensuring compliance with the UK’s Financial Conduct Authority’s guidelines on fair treatment of customers.
Of the approximately £32 billion of UK consumer securitisations that we publicly rated in 2017, around half were backed by pools solely originated by non-banks. The exhibit below shows that auto and consumer pools, which will benefit most from improved underwriting, are almost entirely originated by non-banks lenders. We include auto-captive bank lenders in the non-bank category since they do not have a material current account presence.
The nine banks with the largest current accounts market share in the UK that will be obliged to share their data are Allied Irish Banks, Bank of Ireland (UK), Barclays Bank , Danske Bank, HSBC Bank, Lloyds Bank, Nationwide Building Society, The Royal Bank of Scotland and Santander UK plc. Four of the nine banks have been granted an extension of six weeks and the Bank of Ireland has until September to meet the technical requirements.
There is an initial six weeks trial during which only bank staff and third parties will be able to test new services.
Moody’s also notes that “the Open Banking requirements coincide with the European Union’s (EU) Second Payment Services Directive (PSD2), which requires all payment account providers across the EU to provide third-party access. For as long as the UK remains part of the EU, it will need to comply with the EU’s legal framework. However, the regulatory technical standards on customer authentication and secure communication under PSD2 have yet to be agreed, meaning that full data sharing under PSD2 likely will be applied no earlier than third-quarter 2019”.
Zürich-based lender, TradePlus24, has selected Australian deep tech startup, Trade Ledger, as its global technology partner to roll out its new trade insurance wrapped lending product across their European lending network, and enter the Australian market.
TradePlus24, backed by Credit-Suisse, chose Trade Ledger because its platform not only automates the entire credit assessment process, allowing for rapid scale, but because it can also assess SME supply chain data in real-time while calculating risk down to the individual invoice in real-time – two things no other lending tech can currently do.
“A major problem for banks and other lenders across the globe is the cost, effort, and perceived higher risk of loan origination in the SME sector in particular,” said Martin McCann, CEO and Co-Founder of Trade Ledger.
“This sector has long been plagued by outdated credit assessment technologies that prevent lenders from easily or cost-effectively acquiring real-time information about persistent risk, individual transactions, or trade document updates.
“The result is enormous uncertainty, leading lenders to either applying a premium, or avoiding lending to individual SMEs altogether. According to PWC’s recently released report, the Australian SME working capital gap is more than $90 billion as a result – though this is on the low side of our estimates.
“By removing these technical limitations around documentary trade processes, and completely automating the credit process, lenders can significantly reduce the cost of loan origination, completely eliminate certain types of risk and fraud, and rapidly increase the volume of their loan book – all without adding extra staff,” continued Martin McCann.
“We are extremely excited to partner with TradePlus24 because we feel their secured global receivables financing solution is unmatched in the Australian market, and allows SMEs and mid-market companies to leverage their domestic and export accounts receivables in a completely new and unique way.
“We believe this makes them one of the most advanced SME lending products in the world, so we’re extremely proud to assist in bringing such a quality product to the local market,” concluded Martin McCann.
The Trade Ledger platform will facilitate TradePlus24’s entrance into Australia, which is a market deemed highly attractive because of its historically high margins and minimal competition from global players.
TradePlus24 expects to select a local Australian banking partner, but wanted a “born global” solution for its technology needs, to automate and manage its entire global operation spanning Europe, Asia, and Australasia, all on one advanced platform.
“To realise our growth ambitions, it was imperative to find a comprehensive technology solution that could be seamlessly applied across our entire global value chain,” said Ben James, CEO of TradePlus24.
“We believe the future of lending is not with slow-moving lenders employing legacy technologies, rather with strategic technology partnerships that give lenders a competitive edge by cracking the SME working capital market.
“It’s our opinion that the Trade Ledger platform is the key to cracking this market for us,” concluded Ben James.
The Australian Securities and Investments Commission (ASIC) has licensed the first crowd-sourced funding (CSF) intermediaries under the new CSF regime.
Seven companies have been issued with Australian Financial Services (AFS) licence authorisations to act as intermediaries able to provide a crowd-sourced funding service. With the grant of these new authorisations eligible public companies will now be able to use the CSF regime to raise capital by making offers of ordinary shares to investors via the on-line platform of one of these intermediaries.
ASIC Commissioner John Price said that this marked a significant milestone for crowd-sourced funding in Australia.
‘ASIC has been assessing applications as a matter of priority, as suitable intermediaries needed to be licensed before fundraising under the new regime could commence. Intermediaries have an important gatekeeper role which will be key to building and maintaining investor trust in crowd-sourced fundraising, so we are pleased to have now issued the first tranche of authorisations,’ he said.
The CSF regime is designed to provide start-ups and small to medium sized companies with a new means to access capital to develop and grow. CSF offers are subject to fewer regulatory requirements than other forms of public fundraising.
The newly licensed intermediaries have now been added to ASIC’s register of AFS licensees. ASIC’s free online search can be used by investors, potential crowd-sourced funders and others to confirm the authorisations held by individual licensees. ASIC encourages both CSF investors and companies to check whether their intermediary holds an AFS licence with appropriate authorisation to provide CSF services.
ASIC has previously highlighted the importance of investors understanding both the benefits and risks of investing via crowd-sourced funding. Further information regarding crowd-funding can be found on ASIC’s MoneySmart website.
On 29 September 2017 the Corporations Amendment (Crowd-sourced Funding) Act 2017 and associated regulations came into effect – establishing a regulatory framework to facilitate crowd-sourced equity funding in Australia.
One of the key objectives of the regime is to reduce the regulatory burden on smaller companies associated with raising funds from the public via the issue of ordinary shares.
Australian fintech Tic:Toc, today announced their world first instant home loan platform will be made available to customers purchasing or refinancing properties in Tasmania. We featured the firm in a recent Fintech Spotlight.
The online home loan, which uses a digital decisioning system to assess and approve finance in as little as 22 minutes, launched in July 2017 and initially excluded Tasmanian and Northern Territory properties from being eligible for finance.
The expansion coincides with the latest results from CoreLogic RP Data, which shows Hobart has had the largest increase in home value year on year at 11.49%, ahead of Melbourne (10.10%) and Canberra (5.84%).
Mainlanders have accounted for 23% of sales in Tasmania to date (REIT), with gross value of sales up 22.7% on last year at the end on the September quarter, putting the Tasmanian real estate market on track to for its highest ever accumulated market value of sales.
Tic:Toc CEO Anthony Baum said while the expansion had nothing to do with the buoyant Tasmanian market, he is pleased that Tic:Toc can now help people purchase Tasmanian properties via a faster and more cost effective home loan offering.
“We have had a lot of customer enquiry about purchasing property in Hobart – particularly from investors living in NSW – and we’ve had to turn them away, until today.
“We’re so excited to now be able to assist these customers get a better home loan experience online, with all of the unnecessary costs stripped from the process.
“We wanted to bring Tic:Toc to as many Australians as possible, as soon as possible, which meant not having a solution to verify customers’ identities at settlement in Tasmania at launch. We’ve worked hard to ensure Tasmanians and those investing in Tasmanian property can now benefit from Tic:Toc too.”
The home loans originated by Tic:Toc and backed by Australia’s fifth largest retail bank, Bendigo and Adelaide Bank, are now available throughout Australia at tictochomeloans.com; with variable comparison rates from 3.59% for live-in, principal and interest home loans.
Just five months from launch, Tic:Toc has already processed more than $340M worth of loan submissions Australia wide and were one of only ten Australian companies globally recognised in the recent KPMG and H2 Venture’s Fintech 100.
Trade financing deep tech startup, Trade Ledger, has made it onto the APAC CIOoutlook “Top 25 FinTech Companies 2017” list after just 5 months with its unique digital banking platform for business banks and alternative lenders, who were previously unable to address the challenging SME sector without high expected losses. See our Fintech Spotlight Series note on the firm.
The list recognises promising fintech companies in the Asia-Pacific region that have not only demonstrated the use of technological innovation to solve an urgent and sizeable problem, but who have also shown an ability to commercialise their innovation for rapid adoption and scale.
“Trade Ledger was always intended to be a global end-to-end platform. The working capital problem we are solving is common to businesses and banks everywhere in the world,” said Martin McCann, CEO and Co-Founder of Trade Ledger.
“Finance providers have never been able to accurately leverage quality operational supply chain data to determine business lending risk, due to not having digital data access or suitable technology for credit assessment technology.
“As a result, most of the world’s SMEs are considered too risky for credit, when the truth is actually that credit modelling and underwriting processes are simply designed for multinationals and large corporations, not for our smaller SMEs.
“The unfortunate reality is that despite their smaller size, these SMEs represent an enormous chunk of the global lending opportunity: neglecting this important segment has resulted in a business loan undersupply to the tune of AU$90 billion each year in Australia, and AU$2.7 trillion globally.
“This essentially represents the size of the unaddressed opportunity for any business lenders wishing to use the Trade Ledger technology,” concluded Martin McCann.
Over 500 companies were assessed by the APAC CIOoutlook research team for inclusion in the final 25 fintech companies list.
These companies were all considered to be at the forefront of tackling market challenges and building technologies that greatly benefited other firms in the finance industry.
However, those who made the final cut stood out from their peers in terms of technological innovation, the size and urgency of the problem they solved, and their commercial prowess in bringing their technology to market.
In a nod to the emerging Fintech SME lending sector, NAB today announced $100,000 unsecured lending for Australian small business owners to grow and expand, backing the strength of their business without the need for security requirements such as property or cash, with a decision is around 10 minutes. As we discussed recently, getting funding for SME ex. security is tough.
The rates look highly competitive at 13.85% relative to many of the other Fintech alternatives.
Customers apply via a fast and simple digital application process, with conditional credit approval granted in minutes. Once application contracts are signed and returned, cash is delivered within 24 hours.
Executive General Manager Business Direct and Small Business Leigh O’Neill said NAB recognises that fast and easy access to funds is critical for small businesses as they grow.
“There is often a perception that access to credit is difficult without a property or other major asset to secure against. That’s why we’ve responded by placing more emphasis on the strength of the business rather than traditional physical bricks and mortar, and we’re doing this at a fair and competitive price,” Ms O’Neill said.
NAB is the only Australian bank to have developed in-house an unsecured online lending tool without a third party referral involved. QuickBiz first launched in June 2016, initially up to $50,000.
The new $100,000 QuickBiz loan is an extension to NAB’s existing unsecured, self-service digital financing facilities, which includes an overdraft and credit card, all unsecured and capped at $50,000 for eligible customers.
“Six months after a QuickBiz loan application, just under half of our customers grew their business turnover by greater than 10 percent. This confirms we have an important role to play by offering finance to businesses with good prospects- it’s the the kick-start they need.”
“Small businesses are the backbone of the Australian economy. We need all parts of the economy – big business, government and industry – to get behind them to move the country forward.”
NAB’s Unsecured Solutions Fast Facts:
- Unsecured QuickBiz loan, up to $100,000 available for eligible Australian SMEs
- Direct connectivity to Xero or MYOB data, or simple financial upload from any accounting package
- Application and decision in under 10 minutes
- Competitive and transparent annualised interest rate charges, 13.85 % – no hidden surprises
For more information on the entire QuickBiz product suite (loan, overdraft) and Low Rate NAB business cards),
Last week, the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2017 was passed into law. The new law, for the first time, regulates Australia’s growing digital currency sector. Similar measures are already in place in the US, Canada and the EU.
It amended the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 to:
- expand the objects of the Act to reflect the domestic objectives of anti-money laundering and counter-terrorism financing regulation; expand the scope of the Act to include regulation of digital currency exchange providers;
- clarify due diligence obligations relating to correspondent banking relationships and broadening the scope of these relationships; qualify the term ‘in the course of carrying on a business’;
- allow related bodies corporate to share information;
- expand the range of regulatory offences for which the AUSTRAC Chief Executive Officer (CEO) is able to issue infringement notices;
- allow the CEO to issue a remedial direction to a reporting entity to retrospectively comply with an obligation that has been breached;
- give police and customs officers broader powers to search and seize physical currency and bearer negotiable instruments and establish civil penalties for failing to comply with questioning and search powers;
- revise certain definitions; and clarify certain powers and obligations of the CEO; and Anti-Money Laundering and Counter-Terrorism Financing Act 2006 and Financial Transaction Reports Act 1988 to de-regulate the cash-in-transit sector, insurance intermediaries and general insurance providers.
One important change was that operators of Australian exchanges for Bitcoin and other digital currencies will now need to register with the country’s anti-money laundering agency.
It also sets out the conditions under which they may trade.They must identify and verify their customers, keep records of transactions, report threshold transactions and suspicious matters, and run an anti-money laundering and counter-terror financing program.
It is now a criminal offence to provide digital currency exchange services without being registered with AUSTRAC and penalties for non-compliance start from two years’ jail and/or $105,000 for failing to register. They go as high as seven years jail and $2.1 million in penalties for corporations and $420,000 for individuals for severe offences.