Non-banks Are The Future of Lending

What’s with all the money flowing into the fintech world? And what does all this investment mean – not only for the industry and other potential new players, but also for customers of financial services and SMEs? The answer is that this new wave of non-bank finance and fintech acquisitions is changing the entire economics of disruptive financial services.

As the market matures, niche finance companies and fintechs are becoming an increasingly important alternative in a growing non-bank finance market. Banks are withdrawing from the SME lending space as their risk appetite has changed, and filling the void left by financial institutions are new agile fintechs and other boutique finance companies.



Fintechs – start-ups that use technology to build early-stage financial services sector businesses – are some of the most exciting new ventures in Australia. The sector is starting to mature, with more of these burgeoning businesses now making money. 

According to professional services firm EY’s 2019 EY FinTech Australia Census the majority of niche financial services and fintechs are making money and growing, with the top three types of companies in Australia being: wealth and investment (30%); lending (18%); and data, analytics and big data (18%). As fintech valuations have rapidly expanded in recent years, the companies that empower those businesses have increasingly become strategic for investors.

Mobile apps, cloud services, high-quality data analysis and extreme attention to consumer user experience have combined to create trillions of dollars of enterprise value across the technology sector. Yet, those trends have tended to be more elusive in financial services, which owing to its heavily regulated status, is incredibly conservative when it comes with adoption of new technologies.


However, the non-bank finance market is continuing to expand, as the financial landscape in both Australia and the rest of the world is continually being rewired to be more convenient and faster. There has been a lot of activity with Australian growing non-bank lenders being acquired by bigger global players, particularly within the invoice finance sector.  

CML Group, the parent company of Cashflow Finance and Classic Funding Group, entered into an agreement with online invoice finance platform Skippr for $2.25 million. As well as the CML/Skippr acquisition, SME lender Grow Finance Group (which offers SME finance products including trade finance, invoice finance and asset finance) acquired debtor finance provider Australian Invoice Finance Limited (AIF).

Earlier this year, Sydney-based fintech Waddle was acquired by payroll and accounting tech giant Xero in an $80 million deal. Waddle is a cloud-based lending platform designed to help small businesses access working capital. Waddle has been a part of Xero’s app ecosystem since 2016 and is its seventh acquisition and is a prime example of fintechs complementing the non-bank lending space.

From a strategic perspective, the objective in acquiring these non-bank financial services will help power big businesses in expanding their suite of finance products and offering customers more than ever, with facilities outside of their current services. A one-stop-shop with a bevy of financial options.


The combination of a bunch of technology waves over the past 15 years is finally catching up to the finance industry, and big business are buying in. These recent acquisitions will allow non-bank lenders and fintechs to continue exploring the best ways to help offer small businesses access to capital, and better serve their working capital and other financial needs. Remember, it’s still vital that you seek advice on any financial product you may be considering as you need to understand what you’re getting yourself into.