So what’s new in the non-bank finance sector, and what does this mean for your business growth opportunities?
The demand for niche financial services has never been so strong. This demand is partly due to the findings of the banking royal commission, which has been big news for the last couple of years.
As a result, we are starting to see some transformation in the sector and it’s all for the better, for all types of customers. Business customers in particular are benefiting from a shifting of the scales toward more tailored, non-bank finance options.
Skilled operators with many years in the finance industry are using their agility and sophisticated understanding of client needs to service gaps in the market. They are developing bespoke offerings, responding to industry needs in ways that the big banks are not able to do.
Traditional financiers are finding themselves limited by regulation, red tape and bureaucracy. And there are plenty of players in the market ready to fill that void.
For professional service firms this has been welcome news. We are finally seeing financiers who recognise and place value on experience and business skills and are not reliant on algorithms to predict loan repayment and security.
What will the landscape look like in 5 years?
By 2025, the bulk of the recommendations from the commission will be dealt with, and the industry will have settled somewhat, with the following main shifts expected:
- Much better service – a very sophisticated and ethical customer care philosophy will underpin service – customers will simply walk if they are not getting top-class attention.
- More competitive rates – pricing models will change – the way banks charge fees, for what, and when, will be completely over-hauled. We are already starting to see this with NAB recently announcing they will ditch 50 business bank fees.
- A refined product offering – banks will continue divesting themselves of non-core business areas and focus on the deposit and loan business. Divestments will also help fund further investment in technology and service standards.
So what’s new in the non-bank finance sector, and what does this mean for your business growth opportunities?
Despite some of the dire evidence to emerge from the commission, it is certainly not all doom and gloom. There will always be a place for the big banks, and they are working to implement essential changes to prove their relevance.
The attention on the industry is also positive for those exploring financing options, as it’s shifted the power even more in favour of the receivers, rather than the providers, of funding. For professional service firms there are an increasing number of lenders who will provide finance without requiring bricks and mortar security.
Both individuals and business alike know that they have choice and understand that, even more than ever, they no longer need to put up with bad service or products that don’t meet their needs.
As is always the case in a free market – those that are good at meeting client’s business needs are rising to the top, and those who are not will fade into the background.