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As small businesses, in particular, hit roadblocks with sourcing finance from traditional lenders, Federal Treasurer Scott Morrison's latest comments paint a picture of a more competitive financing market for clients and firms alike to access.
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Treasurer's fighting words make way for alternative lenders
03 August 2018
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9 minute read
Mr Morrison is set to spruik the benefits of its Open Banking reforms, which begin their phased introduction next year.
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By 1 July 2019, all major banks will be required to make data on credit and debit card, and deposit and transaction accounts available to customers, followed by data on mortgages and financial products in the months and years after. You can read about the reforms in full here.
Opening data to customers and third parties is intended to make switching banks, and therefore many lenders, less of a pain point for consumers. Coupled with government support for fintech lenders, Mr Morrison anticipates a more buoyant Australian financing market.
“It is our job to create and foster an environment where these exciting fintech firms can thrive and compete on fairer terms with the big lenders, and can forge their own path,” Mr Morrison says.
Mr Morrison will look to couple these promises with a lashing of the major banks, inspired by the revelations of the royal commission. Large-scale lenders are the traditional heartland of lending for many small businesses in Australia.
This fits in with a broader narrative unfolding in the accounting profession. Accountants and their small business clients are increasingly looking to alternative lenders for sources of finance, which is seeing specialist mortgage brokers and lenders populate the market.
“Once upon a time it was concentrated by the banks and the banks dictated the rules and now with these new players, there's a lot more on offer and they've all got various conditions attached to their loans but in the main, it's become easier if you don’t have hard assets to gravitate to some of these new providers who have got a bit more flexible lending terms,” Institute of Public Accountants senior tax adviser Tony Greco previously told Accountants Daily.
“If the banks won't lend then absolutely there are other lenders who are prepared to step into that void,” he said.
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