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New research into broker sentiment towards “fast fintech” lenders has shown that brokers believe new online players may be falling short of customer expectations and are not tailoring solutions to customers’ needs.
Research conducted by invoice financier Apricity Finance has shown that while a vast majority (74 per cent) of brokers are aware of growing prominence of fintech lenders in business finance, 84 per cent of brokers “could know more” about the ever-changing fintech space.
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According to the lender, the fact that the vast majority of brokers have acknoweldged that they could know more is a reflection of the speed of changing in the fintech sector, with many new lenders and offerings having been brought into market this past year alone.
Indeed, 63 per cent of brokers agreed that they have witnessed an increase in fintech lenders over the past 12 months, and 73 per cent said it was going to increase in the next 12 months. Moreover, 15 per cent of respondents suggested that the array of lenders may be a barrier for SMEs trying to obtain finance, with these businesses instead choosing to go through a broker.
Apricity’s survey suggests that brokers also believe the customer service offering from “fast fintechs” (online lenders who promise fast approval for loans) are not able to replicate the customer experience offered by brokers, nor know their clients’ requirements as well.
According to the study, 50 per cent of brokers believe that fintech business finance solutions are “not tailored to a customer’s specific businesses”, while a majority of brokers see a number of important points of difference between applying for finance online through a fast fintech and utilising the services of a broker.
One such point of difference is helping businesses become approval-ready prior to applying, with 63 per cent of respondents stating this as the top differentiator between using a broker and applying online directly, while 38 per cent stated that providing financial advice for managing cash flow is what sets them apart from fast fintech lenders.
Linden Toll, CEO at Apricity Finance, commented: “Fintech lenders (meaning those that promise fast, online approval) are now a large part of the landscape for SME lending and a welcome addition to an environment where it’s tough to obtain finance.
“However, they are not without risk, and the importance of getting advice from a broker or another third party cannot be underestimated.
“With everything from confusing interest rates, a generic application process, and sometimes a lack of transparency, fintechs may still have some way to go before they are ready to offer the high level of service that many SMEs require,” Mr Toll said.
Mr Toll elaborated on the ways in which brokers differentiate themselves from automated online application processes.
The research showed that brokers differentiated their services from fintechs in the following ways:
- better rates for their customers (25 per cent);
- additional business advice outside that of just securing finance (39 per cent);
- personal service and their trusting relationship with their customers (54 per cent);
- doing all the legwork for securing the finance (34 per cent)’; and
- all of the above (64 per cent).
He concluded: “We know how brokers add value to their customers, and it’s not just on getting the cheapest finance, it’s about customer service, personalisation, risk management, business advice and being a mentor and a friend.
“Something that fintechs may always struggle to do.”
[Related: REA banks on broker network]
