Fintech lenders wary of tighter regulation
(26 April 2016 – Australia) New entrants to the online business lending market have told the Australian Financial Review that their growth is largely due to being unregulated.
Speaking to Fairfax, “fintech” lenders have said that although they have enjoyed free reign, they expect tougher regulation in the near future.
Founder of online lender, Moula, Aris Allegos said: "Right now, regulation is limited outside of traditional [know your customer] and [anti-money laundering] compliance.”
"To that end, there's a lot of opaque pricing and limited transparency."
Perth based Kikka Capital’s chief executive, David Brennan said that its operations was set up with stricter regulation in mind. The small-business lender started providing an unsecured line of credit to business using US lender Kabbage's software in September.
"The idea of regulation in a credit market will be that ultimately you look at suitability and affordability of products. Our credit products are based on suitability and affordability," he said.
"We haven't built it with a specific [thought] 'this is going to happen in 18 months’ time', but we have built it in a way that will protect us if and when [regulation] does happen."
In March, research from East & Partners Business Banking Index (BBI) found that more than one third of Australian Micro businesses and small to medium enterprises (SMEs) have applied for a loan with non-bank providers in the last six months.
Further, the BBI found that nearly 1 in 4 customers of Australia’s “Big Four” have applied for loans with non-bank lenders over the same period.
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