Fast Fintech lenders (meaning those that promise quick, online approval often without getting to understand the needs of the SME borrower) are now a large part of the lending landscape for SMEs and a welcome addition to an environment where it can be tough to obtain finance. However, the importance of getting advice from a broker or another third party, cannot be underestimated.
We recently conducted a survey to find out more about how the growth of these lenders is affecting the finance broker community and their clients. The results mirrored the significant growth we are seeing in the non-bank lending sector. The survey found that 63 per cent of brokers have seen a significant increase in the uptake of Fintech providers in the last 12 months – a trajectory that is expected to continue.
In addition to this, invoice finance is increasingly becoming a preferred finance option for Brokers and SMEs with 84 per cent of Brokers surveyed having recommended invoice finance in the last 12 months.
How are brokers adapting to these market changes?
Our survey showed that Brokers are adapting to this changing landscape by building on their key differentiating factors, namely that SMEs should always come to a broker for finance advice that is tailored to their business needs. There have been a number of instances where businesses have been lured by the promise of quick approvals and unsecured finance but have been unable to sustain the high interest rates and terms of the loan ongoing.
The opportunity for Brokers is to leverage their inherent strengths to differentiate themselves and solidify their position as trusted advisor in a changing marketplace.
The research showed that brokers differentiated their services from Fast Fintechs in a number of important ways: ‘better rates for their customers (25%)’, ‘additional business advice outside that of just securing finance (39%)’, a ‘personal service and their trusting relationship with their customers (54%)’, ‘doing all the legwork for securing the finance (34%)’, and ‘all of the above (64%)’.
Brokers were asked what advice they provide to their customers that is above and beyond finding the best finance option. The responses were; ‘how to be approval ready for loan applications’ (63%) and 38 per cent said it was advice about ‘managing cashflow and growing the business’.
The findings went on to highlight another key consideration for brokers when recommending a financial product to their clients; the importance of reliability and service (price was ranked third).
When asked about invoice finance, 84 per cent of the brokers who responded said they have recommended invoice finance to their customers in the past 12 months, and 59 per cent of respondents said they believe that the demand for invoice finance will increase over the next 12 months.
Additionally, reliability and predictability were seen as the most important factors when recommending a financial product – followed by service from the provider. Price and commissions were the least important.
Apricity provides invoice (or debtor) finance to Australian and New Zealand small and medium sized enterprises (SMEs) that supply to large customers. We provide a fair, flexible solution that helps businesses grow.