With the Australian economy returning to more normal lending conditions, non-bank lenders are competing on a level playing field again, said Jake Sanders (pictured above left), Firstmac’s head of third-party sales.
The good news is that Australian borrowers are becoming more aware of non-banks as an option. It has long been pointed out, for instance, that the reason why SMEs didn’t use non-banks was that they were not aware that such an option existed.
The biannual Scotpac SME Growth Index, which has been measuring the levels of awareness of non-banking lending options since 2014, showed how awareness of non-banking options has improved over the years – from wallowing in the high teens or low 20s in the pre-pandemic, slowly starting to rise during the pandemic, then suddenly shooting up to 47% in March this year.
Low awareness was partly due to a lack of trust and poor service, but non-banks have worked hard to improve these areas, becoming a genuine and much-needed alternative to traditional banks with their innovative and market-leading services.
“The business’s ethos is to be relentlessly committed to fairness, transparency, and professionalism, and to consistently prioritize relationships with brokers, aggregator partners, institutional investors, and industry peers alike,” said Peter Vala (pictured above right), general manager for partnerships and distribution at Thinktank.
“Non-banks have emerged as a valuable and vital part of the Australian finance sector over the past 30 years, offering borrowers choice and competition while driving innovation and lifting service standards.”
Brokers, of course, played a leading role in this shift of attitudes.
Brokers help clients understand the lending options on offer. They also educate borrower groups, such as SMEs or sole traders, who don’t have the time or resources to conduct market research. Brokers provide the latest knowledge in a lending market where products and services change quickly.
It’s a win-win situation for both brokers and non-banks. Non-banks get to have their services known to the public, while brokers can expand their arsenal of products that might attract borrowers.
“Many brokers want to be able to offer a range of solutions to their clients, as this typically leads to stronger and deeper relationships, new advocates, and potential new revenue streams,” Vala said.