Is fintech your solution to avoiding the big four banks?
Fintech is being heralded as a disruptor to the big bank’s small business lending sector.
In Australia, our major banks didn’t in fact leave much to disrupt with their notorious reluctance to finance and forced long payment terms - among a raft of other difficulties in obtaining a loan.
But what is fintech exactly and why should businesses care?
It has been called the “new financial technology revolution”, where start-ups and finance companies are using software to create innovative ways to make mobile payments, money transfers, obtaining loans and even asset management a much easier process.
This “revolution” has in fact been around for some time, but only now starting to gain considerable momentum.
Start-ups such as Prospa, OnDeck, GetCaptial, Capify, SocietyOne and Moula are fast becoming credible competitors to the big banks in the field of small business lending.
These new fintech companies may not have to work so hard to convince small business owners to move away from the banks.
It was recently reported that about 60 per cent of SME loan applications are rejected every year, mostly because they don't fit with a bank's risk bias or were poorly presented by the borrower or broker.
This typically resulted in a bad credit rating simply because their lending history shows that they failed to secure a bank loan in the past.
So what does Australia’s fintech sector currently look like, and are these start-ups ready to take on the banks?
A recent Ernst & Young report ranks Singapore fourth overall behind Britain, California and New York in terms of global fintech ecosystems.
Australia in fact came in fifth in the survey, behind Germany but ahead of Hong Kong. We ranked third behind Britain and Singapore in terms of fintech policy, including regulatory regimes and tax policy.
Australia’s leadership in fintech means that it’s never been easier to start a business or expand one.
Through cutting out communication inefficiencies and bureaucratic costs, businesses have more money to play with and more opportunities to grow.
If you are a small business owner or a start-up founder, knowing about the fintech solutions available to you could save you time and money in the quest to scale your business.
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