- Neobanks exploded in popularity during the last decade
- Broker flows to major banks have dropped to record lows
The rise of fintech disruptors in recent years has been fuelled by consumer frustration in the capabilities of the big banks to provide fair and fast financial services for everyday Australians.
From the 2010s when neobanks exploded in popularity by providing digital banking with higher interest rates in savings accounts, to a rise of non-bank lenders following more recent frustrations over the inability of the big banks to provide bridging and similar tailored loan services.
All of this has resulted in a significant shift in perception and use of big banks for the end-to-end financial services that Aussies relied on in decades gone by.
While more bespoke offerings are a key driving force in the exodus from big banks, there has been another consequence of the big banks failing to keep up with the needs of consumers – a significant impact on financial professionals, particularly those operating in the property space.
It comes as no surprise that brokers are shifting more and more to non-bank lenders, and recommending these alternative solutions as an option to their clients.
Banks are continuing to shift their priorities, with Adelaide Bank, one of the biggest writers of bridging loans, recently announcing they’ll no longer be providing the service to new clients.
This is all backed by solid data.
A recent Broker Pulse survey by Momentum Intelligence found that broker flows to major banks have dropped to record lows.
That comes despite Australian Financial Group (AFG)’s latest index reporting that its brokers lodged $22 billion in home loans, an increase of 6.9% on the prior corresponding period.
AFG also suggests that non-major lenders made up 49% of the market, the highest percentage it has ever been, surely a sign that we could see the major banks making up less than half the market before 2022 is out.
We’ve seen an increase in brokers joining Bridgit, as we continue to strengthen relationships with our broker partners who have historically struggled to support borrowers in the bridging loan space through traditional lending avenues.
Ultimately, the big banks have shown their hand here. They are either unwilling or unable to meet the needs of both brokers and consumers when it comes to bridging loan finance.
The next few years will continue to be a boom for non-bank lenders as they continue to fill gaps in the market and offer superior solutions to their customers.
Aaron Bassin is the CEO of Bridgit
