NEW RESEARCH aimS to establish current trends and best practice in the growing financial technology (fintech) lending market to small and medium enterprises (SME).

Fintech small business lenders will be surveyed as part of a collaborative research project by the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) with industry organisation FinTech Australia and independent SME finance expert Neil Slonim from theBankDoctor.org.

Fintech lenders are an emerging alternative to banks for small business loans, often through seamless and highly automated online application, assessment and decision processes. 

Ombudsman Kate Carnell said fintech lenders had potential to “fill the gap left by traditional bank lenders in the marketplace”, particularly as awareness, trust and confidence in alternative lending grew.

Ms Carnell commended the sector for being proactive to ensure best practice and transparency.

“But with rapid growth in the number of lenders and the variation of fintech products, it becomes more difficult for SMEs to make informed decisions about which products and lenders best suit their circumstances,” Ms Carnell said.

“The survey will collect information from fintech lenders that can shed light on some of these issues.

“Results will be published in a report to identify industry best practice and help SMEs to better understand their fintech borrowing options.

“The survey results will also inform fintech lenders how they can help SMEs by improving the transparency of their lending products and by clearly communicating the rates, costs, terms and conditions of their products.”

FinTech Australia CEO Danielle Szetho said FinTech Australia was pleased to work with the ASBFEO and theBankDoctor.org.

“This work will help us to understand how the industry is currently servicing SMEs and steps we might take as an industry to improve the SME community’s awareness and understanding of alternative lending products,” Ms Szetho said.

“What is clear is that banks have not been adequately servicing the SME community’s needs and fintechs have stepped in with new loan products to help fill that gap.

“This is proving to be a very beneficial and cost-effective source of funding for SMEs. This research will help even more SMEs to invest in their growth and benefit from alternative lending products.”

Neil Slonim from theBankDoctor.org said, “It is not easy for small business owners to assess whether borrowing from a fintech lender is the best option for them, and if so, which lender they should choose.

“There are around 30 fintech small business lenders now operating and their websites, through which they engage with their customers, all appear to be much the same.

“As a not-for-profit SME advocate we are pleased to be working with the ASBFEO and FinTech Australia to raise understanding and transparency in a sector which is becoming increasingly relevant to small business owners.”

www.asbfeo.gov.au/consultation/fintech-survey

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AUSTRALIA’s new crowd-sourced funding (CSF) rules are in from September 29 and the Australian Securities and Investment Commission (ASIC) is now accepting licence applications from CSF intermediaries.

Under the CSF regime, eligible public companies can make offers of fully paid ordinary shares to a large number of investors via the online platform of a licensed intermediary. Generally, the CSF regime reduces the regulatory requirements for public fundraising and the intermediaries will play an important oversight role in this process.

ASIC Commissioner John Price said the new system balanced the need for regulatory oversight with supporting innovation.

“ASIC welcomes the start of the new crowd-sourced funding laws,” Mr Price said. “Crowd-sourced funding helps both start-ups and small to medium sized businesses and investors access the opportunities that are available from an innovative economy.

“It is also important for investors to understand the benefits and risks of crowd-sourced funding and we encourage them to refer to the materials on crowd-sourced funding on our MoneySmart website,” he said.

For companies to access the benefits of the new CSF regime, ASIC must first license suitable intermediaries to provide crowd-funding services. Providers of CSF services must hold an Australian financial services (AFS) licence.

Mr Price said to facilitate implementation of this regime as soon as possible, ASIC’s Licensing team would consider applications from CSF intermediaries as a matter of priority.

ASIC has released further details of its approach to the assessment of CSF intermediaries, and the information required for both new licence and variation applications seeking CSF service authorisation.

ASIC has also released an update to ASIC Form 206 which can be used to convert an existing company so that it is eligible to use the new CSF regime.

www.asic.gov.au

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SUPPORT for innovative financial technology (fintech) development has helped Australia become the second largest alternative finance market in the Asia-Pacific region after Singapore, with US$610 million raised in 2016.

A KPMG, Cambridge Centre for Alternative Finance and Australian Centre for Financial Studies report revealed Australia’s market grew more than 50 percent over the last year, leapfrogging Japan, and now makes up more than 30 percent of the total Asia-Pacific alternative finance market.

Alternative finance provides new business models for lending and other forms of finance including balance sheet lending, peer-to-peer lending, crowdfunding and invoice financing. The report confirmed the positive impact the Federal Government’s fintech agenda is having in making Australia a global fintech hub.  

“This is a fantastic outcome and reinforces Australia’s leading global position in the development and use of fintech,” Federal Treasurer Scott Morrison said. “It reflects the hard work and dedication by those in the sector, and shows the actions of the Turnbull Government to support the fintech sector are making an impact.”

Mr Morrison said long-term growth of the alternative finance market would depend on regulations that strike an appropriate balance between protecting consumers and encouraging financial innovation.

“It is therefore encouraging that the (KPMG) report detailed positive attitudes on Australia’s regulatory settings, with around two thirds of respondents considering Australia’s regulations to be ‘adequate and appropriate’,’ Mr Morrison said.

Since releasing its fintech statement in March 2016, the Federal Government has moved to ensure Australia has the right policy settings in place to make it easier for FinTech businesses to succeed in this country, the Treasurer said..

He said the government also legislated to support the Australian fintech sector to become a global leader by extending the crowd sourced equity funding framework to proprietary companies and removing the double taxation on digital currency.

The full report is available on the KPMG website.

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FINANCIAL technology innovator AfterPay has won the inauguralAustralianOrganisation of the Year award at the FinTech Australia National Awards 2017.

Known as the ‘Finnies’, the awards are curated with and for the Australian financial technology (fintech) industry.

Retail payments innovator Afterpay was awarded for its revolutionary approach to payment technology that allows customers to ‘buy now, receive now and pay later’.

“It’s truly an honour to accept this award from FinTech Australia and be recognised amongst our peers and the fintech community,” Afterpay managing director Nick Molnar said. 

“The retail industry is changing and innovation is key to keeping up with customers, who now have more power than ever in the way they choose to pay. We are proud to be able to offer a payment option that resonates with Australian consumers, and helps to stimulate sales and grow retail businesses.”
Afterpay recently celebrated its 12-month anniversary listing on the Australian Securities Exchange (ASX) and now has more than 650,000 customers and over 4,300 retail merchants.

Mr Molnar said the platform continued to maintain a strong pipeline of Australia’s leading brands and has reported it currently processes about 15 percent of total online fashion retail and three percent of total online retail in Australia.

Over the past 12 months Afterpay has launched an anticipated iPhone and iPad app which shot to number one on the App Store within 48 hours of announcing the launch to its customer base. Afterpay is also branching out into department stores announcing significant partnerships with household Australian brands including Myer and Big W.

The fintech winner has also accelerated by partnering with e-commerce platforms, global heavyweight BigCommerce and established local Neto, as well as payments provider Tyro Payments.

Mr Molnar said Afterpay had hit it off with a range of consumers, in particular millennials, which comprise 73 percent.

“Retailers are truly connecting with millennials on a personal level and the advocacy through their customers has been incomparable,” Mr Molnar said.

Heavily focused on expanding to broader retail categories and consumer demographics is the way forward for Afterpay, he said.

The substantial increase to over half a million customers embracing the ‘buy now, receive now, pay later’ payment option reinforced this vision, he said.
www.afterpay.com.au

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