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The Turnbull government has high hopes that Australian fintech lenders and mandatory comprehensive credit reporting will revolutionise business lending.
The number of fintech start-ups in Australia increased from fewer than 100 in 2014 to 579 companies in July 2017, according to Treasurer Scott Morrison, who noted that in August alone, fintech lenders facilitated $12 million in more than 1,000 loans.
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Speaking at the FinTech Australia Collab/Collide Summit in Melbourne on Thursday (2 November), Mr Morrison pointed to Sydney-based SME lender Prospa, which has a loan book worth $450 million, as evidence of a successful fintech industry.
“It has 12,000 customers and growing at warp speed,” the Treasurer said.
The federal government is making significant changes to the Australian banking environment to facilitate competition and help new entrants, launching a regulatory sandbox for fintech development and changing legislation to allow more operators to call themselves a “bank”.
An “open banking” initiative, driven by the Productivity Commission, will give customers greater control of their banking data and feed into the Turnbull government’s latest announcement: mandatory comprehensive credit reporting (CCR) from 1 July 2018.
“This will be a game-changer for both consumers and lenders, and will lead to greater competition in lending and naturally provide better access to finance for Australian households and small businesses,” Mr Morrison said.
“This will not only grow businesses and our economy but can also change our daily lives.”
The Treasurer is confident that the new regime — which will give lenders greater transparency of a borrower’s “true credit position” — will lead to better deals on business loans.
“Small business owners can spend less on financing costs and more on investment in business growth,” Mr Morrison said.
