Fintech startup Trade Ledger makes APAC “Top 25 FinTech Companies 2017” list

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.

NAB Launches Online SME Unsecured Lending Product

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),

Australian Bitcoin Exchanges Now Must Be Registered

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.


ASIC’s Fintech “Sandbox” To Remain Unchanged

ASIC has released a consultation paper  and a review of its regulatory sandbox, introduced in December 2016.


In the review ASIC proposes to retain class waivers known as the fintech licensing exemption, that allow eligible financial technology (fintech) businesses to test certain specified services without holding an Australian financial services or credit licence for up to 12 months. The exemption is subject to a number of conditions, such as client and exposure limits, consumer protection measures, adequate compensation arrangements, and dispute resolution systems.

The fintech licensing exemption is a world-first approach that allows eligible fintech businesses to test certain services for up to 12 months without an AFS or credit licence.

Outside of the fintech licensing exemption, many fintech businesses rely on exemptions provided under ASIC’s relief powers. They have provided a number of exemptions from the licensing requirement for offering certain types of products and services. This is because, depending on the nature, scale and complexity of the products and services offered, it is not always appropriate for a business to obtain a licence and meet all of the usual regulatory obligations. They have provided relief for ‘low value’ non-cash payment facilities, the provision of generic financial calculators, and some services for mortgage offset accounts.

ASIC had committed to reviewing its fintech licensing exemption following 12-18 months’ operation.

ASIC Commissioner John Price said, ‘by introducing ASIC’s fintech licensing exemption,we have given a range of fintech businesses the chance to test their ideas without needing a licence.’

‘Even in cases where interested fintechs have discovered that they were not able to make use of the fintech licensing exemption, we have found that its introduction has encouraged businesses to come forward and consider their other options that result from the flexibility in ASIC’s existing regime.’

ASIC’s current fintech licensing exemption allows eligible businesses to test specified services for up to 12 months with up to 100 retail clients, provided they also meet certain consumer protection conditions and notify ASIC before they commence the business.

To date, four fintech businesses have used the fintech licensing exemption. Relying on the exemption, one business tested its financial services (providing advice and dealing in listed Australian securities); two businesses are currently testing advisory and dealing services in deposit products; and one business is testing acting as an intermediary and providing credit assistance.

In addition, over a dozen fintech businesses have also contacted ASIC about using the fintech licensing exemption.The consultation period closes on 27 February 2018.

ASIC also launched their Innovation Hub in 2015, and has worked with 233 fintech businesses that cover the spectrum of fintech.


DigitalX Announces Plans In Key Cryptocurrency Exchanges

DigitalX Ltd, has announced today that the ASX-listed blockchain software and initial coin offering corporate advisory firm, is dipping its toes into cryptocurrency exchanges.

The Perth-based company has more than $18 million in liquid assets, including $5 million in cash, more than $10 million in bitcoin and about $2 million in ether, power ledger (POWR) and etherparty (FUEL).

The Board of DigitalX has initially approved the use of up to $1 million for the provision of market making services, offering both a buy and a sell price.

The company has begun a risk of cryptocurrency exchanges, with a focus on the Australian marketplace.

DigitalX will also utilise arbitrage trading to take advantage of mispricing across approved exchanges.

Market making will involve providing liquidity to both sides of the cryptocurrency market while maintaining a small open position in the asset being traded.

DigitalX will maintain bid and ask limit orders below and above the spot price. These orders are regularly cancelled and updated as the spot price changes.

The company says this strategy is expected to produce the best results when price volatility is high.

DigitalX says it doesn’t require an Australian Financial Services License to buy and sell the company’s digital currency on digital currency exchanges under the current regime.

“DigitalX has a strong track record dating back to 2014 as one of the leading liquidity providers in the Bitcoin marketplace, supplying wholesale Bitcoin liquidity to exchanges, commercial operators and institutions,” says DigitalX CEO Leigh Travers.

“We wound down our trading desk last year due to a lack of funding. However, our strong financial position, together with the appreciation in the value of Bitcoin, has allowed us to reignite this service.”

The company in June announced a $4.35 million investment from Blockchain Global Limited.

DigitalX decided to take $2 million of the investment in bitcoins rather than Australian Dollars.

At last report, the company held 453 Bitcoins. At today’s price of $US16,838, DigitalX’s holding would be worth $USD7.63 million.

UK Lifts Counter Cyclical Buffer

The Bank of England release their Financial Stability Report today, which includes the results of recent stress tests.  Though the stress tests show that UK Banks could handle the potential losses in the extreme scenarios, the FPC is raising the UK counter cyclical buffer rate from 0.5% to 1% with binding effect from 28 November 2018. In addition buffers for individual banks will be reviewed in January 2018, to take account of the probability of a disorderly Brexit, and other risk factors hitting at the same time.

They highlighted risks from higher LTI mortgage and consumer lending, and the potential impact of rising interest rates. They still have their 15% limit on higher LTI income mortgages (above 4.5 times). They are concerned about property investors in particular  – defaults are estimated at 4 times owner occupied borrowers under stressed conditions! Impairment losses are estimated at 1.5% of portfolio.

Beyond this, they discussed the impact of Brexit, and potential impact of a disorderly exit.

Finally, from a longer term strategic perspective, they identified potential pressures on the banks (relevant also we think to banks in other locations). There were three identified , first competitive pressures enabled by FinTech may cause a greater and faster disruption to banks’ business models than they currently expect; next the cost of maintaining and acquiring customers in a more competitive environment could reduce the scope for cost reductions or result in greater loss of market share and third the future costs of equity for banks could be higher than the 8% level that banks expect either because of higher economic uncertainty or greater perceived downside risks.

Here is the speech and press conference.

The FPC’s job is to ensure that UK households and businesses can rely on their financial system through thick and thin. To that end, today’s FSR and accompanying stress tests address a wide range of risks to UK financial stability. And they will catalyse action to keep the system well‐prepared for potential vulnerabilities in the short, medium and long terms.

In particular, this year’s cyclical stress test incorporates risks that could arise from global debt vulnerabilities and elevated asset prices; from the UK’s large current account deficit; and from the rapid build‐up of consumer credit. Despite the severity of the test, for the first time since the Bank  began stress testing in 2014 no bank needs to strengthen its capital position as a result.

Informed by the stress test and our risk analysis, the FPC also judges that the banking system can continue to support the real economy even in the unlikely event of a disorderly Brexit. At the same time, the FPC has identified a series of actions that public authorities and private financial institutions need to take to mitigate some major cross cutting financial risks associated with leaving the EU.

The Bank’s first exploratory scenario assesses major UK banks’ strategic responses to longer term risks to banks from an extended low growth, low interest rate environment and increasing competitive pressures enabled by new financial technologies. The results suggest that banks may need to give more thought to such strategic challenges.

The Annual Cyclical Stress Test

Today’s stress test results show that the banking system would be well placed to provide credit to households and businesses even during simultaneous deep recessions in the UK and global economies, large falls in asset prices, and a very large stressed misconduct costs. The economic scenario in the 2017 stress test is more severe than the deep recession that followed the global financial crisis. Vulnerabilities in the global economy trigger a 2.4% fall in world GDP and a 4.7% fall in UK GDP falls.

In the stress scenario, there is a sudden reduction in investor appetite for UK assets and sterling falls sharply, as vulnerabilities associated with the UK’s large current account deficit crystallise. Bank Rate rises sharply to 4.0% and unemployment more than doubles to 9.5%. UK residential and commercial real estate prices fall by 33% and 40%, respectively. In line with the Bank’s concerns over consumer credit, the stress test incorporated a severe consumer credit impairment rate of 20% over the three years across the banking system as a whole. The resulting sector‐wide loss of £30bn is £10bn higher than implied by the 2016 stress test.

The stress leads to total losses for banks of around £50 billion during the first two years ‐ losses that would have wiped out the entire equity capital base of the banking system ten years ago. Today, such losses can be fully absorbed within the capital buffers that banks must carry on top of their minimum capital requirements. This means that even after a severe stress, major UK banks would still have a Tier 1 capital base of over £275 billion or more than 10% of risk weighted assets to support lending to the real economy.

This resilience reflects the fact that major UK banks have tripled their aggregate Tier 1 capital ratio over the past decade to 16.7%.

Countercyclical Capital Buffer

Informed by the stress test results for losses on UK exposures, the FPC’s judgement that the domestic risk environment—apart from Brexit—is standard; and consistent with the FPC’s guidance in June; the FPC is raising the UK countercyclical buffer rate from 0.5% to 1% with binding effect from 28 November 2018. In addition, as previously announced, capital buffers for individual banks will be reviewed by the PRC in January. These will reflect the firm‐specific results of the stress test, including the judgement made by the FPC and PRC in September. These buffers can be drawn on as necessary during a downturn to allow banks to support the real economy.


There are a range of possible outcomes for the future UK‐EU relationship. Consistent with its remit, the FPC is focused on scenarios that, even if the least likely to occur, could have the greatest impact on UK financial stability. These include scenarios in which there is no agreement or transition period in place at exit. The 2017 stress test scenario encompasses the many possible combinations of macroeconomic risks and associated losses to banks that could arise in this event. As a consequence, the FPC judges that, given their current levels of resilience, UK banks could continue to support the real economy even in the event of a disorderly exit from the EU.

That said, in the extreme event in which the UK faced a disorderly Brexit combined with a severe global recession and stressed misconduct costs, losses to the banking system would likely be more severe than in this year’s annual stress test. In this case where a series of highly unfortunate events happen simultaneously, capital buffers would be drawn down substantially more than in the stress test and, as a result, banks would be more likely to restrict lending to the real economy, worsening macroeconomic outcomes. The FPC will therefore reconsider the adequacy of a 1% UK countercyclical capital buffer rate during the first half of 2018, in light of the evolution of the overall risk environment. Of course, Brexit could affect the financial system more broadly. Consistent with the Bank’s statutory responsibilities, the FPC is publishing a checklist of steps that would promote financial stability in the UK in a no deal outcome.

It has four important elements:

– First, ensuring that a UK legal and regulatory framework for financial services is in place at the point of leaving the EU. The Government plans to achieve this through the EU Withdrawal Bill and related secondary legislation.
– Second, recognising that it will be difficult, ahead of March 2019, for all financial institutions to have completed all the necessary steps to avoid disruption in some financial services. Timely agreement on an implementation period would significantly reduce such risks, which could materially disrupt the provision of financial services in Europe and the UK.
– Third, preserving the continuity of existing cross‐border insurance and derivatives contracts. Domestic legislation will be required to achieve this in both cases, and for derivatives, corresponding EU legislation will also be necessary. Otherwise, six million UK insurance policy holders with £20 billion of insurance coverage, and thirty million EU policy holders with £40 billion in insurance coverage, could be left without effective cover; and around £26 trillion of derivatives contracts could be affected. HM Treasury is considering all options for mitigating these risks.
– Fourth, deciding on the authorisations of EEA banks that currently operate in the UK as branches. Conditions for authorisation, particularly for systemic firms, will depend on the degree of cooperation between regulatory authorities. As previously indicated, the PRA plans to set out its approach before the end of the year. Irrespective of the particular form of the United Kingdom’s future relationship with the EU, and consistent with its statutory responsibility, the FPC will remain committed to the implementation of robust prudential standards. This will require maintaining a level of resilience that is at least as great as that currently planned, which itself exceeds that required by international baseline standards.

Biennial Exploratory Scenario

Over the longer term, the resilience of UK banks could also be tested by gradual but significant changes to business fundamentals. For the first time, the FPC and PRC have examined the strategic responses of major UK banks to an extended low growth, low interest rate environment combined with increasing competitive pressures in retail banking from increased use of new financial technologies. FinTech is creating opportunities for consumers and businesses, and has the potential to increase the resilience and competitiveness of the UK financial system as a whole. In the process, however, it could also have profound consequences for the business models of incumbent banks. This exploratory exercise is designed to encourage banks to consider such strategic challenges. It will influence future work by banks and regulators about longer‐term issues rather than informing the FPC and PRC about the immediate capital adequacy of participants.

Major UK banks believe they could, by reducing costs, adapt to such an environment without major changes to strategy change or by taking more risk. The Bank of England has identified clear risks to these projections:
– Competitive pressures enabled by FinTech may cause a greater and faster disruption to banks’ business models than they currently expect.
– The cost of maintaining and acquiring customers in a more competitive environment could reduce the scope for cost reductions or result in greater loss of market share.
– The future costs of equity for banks could be higher than the 8% level that banks expected in this scenario either because of higher economic uncertainty or greater perceived downside risks.


The FPC is taking action to address the major risks to UK financial stability. Given the tripling of their capital base and marked improvement in their funding profiles over the past decade, the UK banking system is resilient to the potential risks associated with a disorderly Brexit.

In addition, the FPC has identified the key actions to mitigate the impact of the other major cross cutting issues associated with a disorderly Brexit that could create risks elsewhere in the financial sector.

And on top of its existing measures to guard against a significant build‐up of debt, the FPC has taken action to ensure banks are capitalised against pockets of risk that have been building elsewhere in the economy, such as in consumer credit.

As a consequence, the people of the United Kingdom can remain confident they can access the financial services they need to seize the opportunities ahead.

Fintech MoneyMe secures $120 million capital facility

Australian consumer lending fintech, MoneyMe, has finalised an AU$120 million asset-backed wholesale securitization facility led by $100 million from global investment manager, Fortress Investment Group, and joined with $20 million of bonds issued by corporate advisory, Evans & Partners.

We discussed MoneyMe a few weeks back, as a good example of the innovative new players pressing in on existing lenders with digitally sassy offerings to target market segments. We expect more disruption in the months ahead.

The funding places the fintech in an ideal position to continue capturing an even greater share of the digitally-savvy millennial consumer market over the next 3 to 5 years through an expanded product range, and additional delivery channels.

“A capital investment of this magnitude is recognition of the strength and depth of our value proposition, and an indication of the strong potential for Australian fintechs to capture serious wholesale market funding,” said Clayton Howes, CEO and Co-Founder of MoneyMe.

“A securitization warehouse structure and our institutional-grade treasury function akin to the major banks – combined with advanced automation and personalization capabilities, data-driven product integrity, cutting-edge technology for scalability, and a relatable brand personality – is a sure-fire way for Australian fintechs to attract the interest of global investors.

“This type of validation by a global investment management company, Fortress Investment Group, affirms a funding path that will now allow us to capitalise on growth and market share opportunities where bank branch models are not a natural fit in this digital age.

“As we further increase our independence and position as a mainstay in the improved distribution of consumer finance, we see this validation as a win for Australian fintech as a whole,” continued Clayton Howes.

Evans & Partners, the corporate advisory firm that led the bond issuance, has raised over $1.5 billion since 2008. The bond issued in this transaction is a publicly-tradable security, which investors are attracted to for the stability, yield, and track record of performance in this emerging sector.

The substantial capital injection will be used to fund continued loan book growth and facilitate both the expansion of MoneyMe’s distribution channels, and the launch of a series of niche loan products targeting the lucrative millennial market.

“As the millennial generation ages and gains even greater consumer power with their increasing incomes, their credit needs will also change and mature with them,” continued Clayton Howes.

“Our aim is to be there throughout their credit lifecycle journey, seamlessly delivering real-time finance solutions in the locations and format that allow focus to remain on the consumption experience and not the transaction itself,” concluded Clayton Howes.

More On The Digital Banking Revolution and Fintech

We had great reactions to our earlier piece on the Digital Banking Revolution, and where Consumers fit in the Fintech Stack, following the release of our latest Quiet Revolution report.

Of particular interest was our Banking Digital Innovation Life Cycle analysis, as shown below, and includes a number of enhancements:

[Editors Note: Diagram above updated to include Distributed Ledger 27 Nov 17]

We have made a short video describing the approach, and discussing the elements in the diagram. We also highlight what we judge to be the top three most important innovations.

You can obtain a free copy of our Quiet Revolution report,”Time For Digital First“,  which includes our latest consumer research, and is discussed in the video.


Fintech Spotlight – Tic:Toc:The 22 Minute Home Loan

This time, in our occasional series where we feature Australian Fintechs, we caught up with Anthony Baum, Founder & CEO of Tic:Toc.

Whilst there are any number of players in the market who may claim they have an online application process for home loans, the truth is, under the hood, there are still many manual processes, workflow delays and rework, which means the average time to get an approved loan is often 22 days, or more.

But Tic:Toc has cracked the problem, and can genuinely say they can approve a loan in 22 minutes. This represents a significant improvement from a customer experience perspective, but also a radical shift in the idea of home lending, moving it from a “specialised” service which requires broker or lender help, to something which can be automated and commoditised, thanks to the right smart systems and processes. Think of the cost savings which could be passed back to consumers!

But, what is it that Tic:Toc have done? Well, they have built an intelligent platform from the ground up, and have turned the loan appraisal on its head, through a five-step process.

The first step, when a potential customer is seeking a home loan, is to start with the prospective property. The applicant completes some relatively simple details about the home they want to purchase or refinance, and the system then applies, in real time, some business rules, including access to multiple automatic valuation models (AVMs) to a set confidence level, to determine whether a desktop valuation, or full valuation is required to progress, or whether the prospective deal is within parameters. If it is, the application proceeds immediately to stage 2. In the case of a refinanced loan, this is certainly more often the case.

In the second step, the business rules at Tic:Toc focus on the product. They have built in the responsible lending requirements under the credit code. This means they can apply a consistent set of parameters. This approach has been approved by ASIC, and also been subject to independent audit. Compared with the vagaries we see in some other lender and broker processes, the Tic:Toc approach is just tighter and more controlled.

Up to this point, there is no personal information captured, which makes the first two steps both quick, and smart.

In step three, the Tic:Toc platform takes the application through the eligibility assessment by capturing personal information and verifying it through an online ID check, and then makes an initial assessment, before completing a financial assessment.

In step four, for the application to progress, the information is validated. This may include uploading documents, or accessing bank transaction information using Yodlee to validate their stated financial position. Tic:Toc says their method applies a more thorough and consistent  approach to the financial assessment, important given the current APRA focus on household financial assessment and spending patterns.

After this, the decisioning technology kicks in, with underwriting based on their business rules. There is also a credit underwriter available 7 days a week to deal with any exceptions, such as use of retirement savings.

The customer, in a straightforward case if approved, will receive confirmation of the mortgage offer, and an email, with the documentation attached, which they can sign, and send the documents back in the post. So, application to confirmed offer in 22 minutes is achievable.

The lender of record is Bendigo and Adelaide Bank, who will provide the loan, and Tic:Toc has a margin sharing arrangement with them, rather than receiving a commission or referral fee. Of course the subsequent settlement and funding will follow the more normal bank processes.

Since starting a few months ago, they have had around 89,000 visits from some 66,000 unique visitors and in 4 months have received around $330m of applications, with a conversion of around 17% in November. Anthony says that initially there had been quite a high rate of people applying who were declined elsewhere in the first few weeks, but this has now eased down, and the settlement rate is improving. They also had a few technical hiccups initially which are now ironed out.

In terms of the loan types, they only offer principal and interest loans (though an interest-only product is on the way), and around 50% of applications are for refinance from an existing loan.  Around 75% of applications are for owner occupied loans, and 25% from investors.

The average loan size is about $433,000. However, there are significant state variations:

In the short time the business has been up and running, they have managed to build brand awareness, receive a significant pipeline of applications, and lay the foundation for future growth. The team stands at 40, and continues to grow.

The firm also has won a number of innovation awards.  They have been listed in the KPMG and H2 Venture’s Fintech 100 (as one of the emerging stars); was a finalist, Best Banking Innovation in the Finder 2017 Innovation Awards; and a standout (and case study), in the Efma Accenture Distribution & Marketing Innovation Awards.

Looking ahead, Tic:Toc is looking to power up its B2B dimension, so offering access to its platform to broker groups and other lenders. Whilst the relationship with Bendigo and Adelaide Bank has been important and mutually beneficial, they are still free to explore other options.

In our view, the Tic:Toc platform and the intellectual property residing on it, have the potential to change the home lending landscape. Not only does it improve the risk management and credit assessment processes by applying consistent business rules, it improves the customer experience and coverts the mysterious and resource heavy home loan process into something more elegant, if commoditised.

Strangely, within the industry there has been significant misinformation circulating about Tic:Toc, which may be a reaction to the radical proposition it represents.

Reflecting on the conversation, I was left with some interesting thoughts.

First, in this new digital world, where as our recent Quiet Revolution Report showed, more households are wanting a better digital experience, it seems to me there will be significant demand for this type of proposition.

But it does potentially redefine the role of mortgage brokers, and it will be a disruptive force in the mortgage industry. I would not be surprised to hear of other lenders joining the platform as the momentum for quicker yet more accurate home loan underwriting grows.

As a result, some of the excessive costs in the system could be removed, making loans cheaper as well as offering a quantum improvement in customer experience.

Time is running out for the current mortgage industry!

Digital Lending; On The Up

S&P Global just published their 2017 U.S. Digital Lending Landscape report.

They estimate that 15 of the most prominent U.S. digital lenders grew originations at a compound annual growth rate of 129.4% during the five-year period ended Dec. 31, 2016. Going forward, they project slower growth for the industry as lenders focus on building sustainable businesses
with higher quality borrowers.

They predicts that these lenders will originate $62.84 billion in new loans during 2021, up from $29.31 billion in 2016. This represents a CAGR of 16.5% for the five-year period ending Dec. 31, 2021.

Personal-focused lending is projected to grow at a CAGR of 12.4% to $24.31 billion by 2021. The small and medium enterprise and student-focused lending segments are projected to grow faster, with respective CAGRs of 21.5% and 18.4%.

Regulation remains unclear for the industry, but signs of progress have emerged during the past year. Regulators have started to take a closer look at digital lending in an attempt to create a fair and clear regulatory framework.

Venture activity picked back up during the first three quarters of
2017, with $832.5 million raised by the lenders in our analysis.
Student-focused lender Earnest was acquired by student loan
servicer Navient for $155 million in November.

Interest rates and loan sizes have remained relatively unchanged over the past year as lenders focus more on adjusting the rates and loan sizes associated with specific credit grades.

As regulators take a harder look at digital lending, corporate
governance and management teams must ensure that their
companies are beyond reproach. 2017 was the second consecutive year in which a high-profile CEO has been forced to
leave their company.