NAB looks to challenge fintech space

Brokers will be able to offer small business clients (which have been operating for 12 months or more and are making at least $100,000 per year) unsecured loans of between $5,000 and $100,000 on 12-, 24- and 36-month terms.

The product comes with a 12.95 per cent fixed rate for the term of the loan, on a principal and interest basis, with no established cost or service fees.

It provides brokers with instant decisioning (based on 12 months of bank statements and 12 months of business financials from their accounting software), with approved funds being made available one business day after signed documents are returned.

The bank is also offering a QuickBiz overdraft of between $5,000 and $50,000, tied to a customer’s business transaction account, with 14.25 per cent per annum variable rate on balance (as well as a 1.75 per cent per annum service fee, charged monthly).

As well as the two QuickBiz for Broker products, the bank has also announced that it has digitised the secured small business loan application on ApplyOnline, enabling brokers to apply for a mortgage and commercial loan simultaneously and earn commission on both loans.

This loan is for up to $1 million over a 20-year period for commercial security or a 30-year period for residential security.

Speaking of the decision to launch QuickBiz into the broker channel, the general manager of NAB commercial broker, Chris Thomas, said: “QuickBiz for Broker, we believe, will be extremely popular.

“Much of the discussion in the economy is around providing emerging businesses and micro businesses with access to capital where they may not have security. Certainly, right here, right now, the fintech society has really moved to provide solutions in that space. We see QuickBiz as really going head to head with those fintechs around providing up to $100,000 unsecured cash flow finance for small micro businesses that are looking to access that type of financial support, but we’re going to do it in a way that is commercially sensible and we’re going to do it with fair interest rates.”

Steve Kane, general manager of broker distribution, agreed, arguing that while fintechs such as Moula and Prospa were coming to the fore for SME lending, he thought that the “reality is that [the offering] isn’t backed by a major brand, a major bank, it doesn’t have the stability, it doesn’t have the capital base, it doesn’t have the pricing structures and it might not have the longevity”.

“But, this bank is in it for the long haul,” Mr Kane said.

Mr Kane added that while fintechs are successful at the enquiry level, borrowers still prefer to talk to someone face-to-face.

“If we look at the really big fintechs, like uno., their issue is conversion. So, it’s not leads, it’s not the number of people interacting with them. They have in-house brokers, but even then, they are still struggling to get the conversion right. So, many of the fintechs are trying to maximise or monetise a portion of the value chain, but there is no value until someone actually settles the transaction.

“What is clearly obvious to us with all the research that we do, customers... still require to talk to someone. And even the fintechs that are the biggest and most successful in generating enquiries and generating profiles on customers and all of those things — where they are falling over is that they are having to employ either in-house brokers or farming out to brokers to do the face-to-face. And it’s not about [anti-money laundering requirements] or identification — it’s about the customer wanting validation for the directions that they have made.”

Mr Kane suggested that NAB’s digital bank, UBank, would be writing mortgages “hand over fist” if borrowers were just wanting a digital proposition, concluding: “[In] all the research we do with customers, they still want, overwhelmingly, to talk to someone and to meet someone. It’s not so much about not trusting themselves [to make the decision on their own], but they want validation. And that validation need will continue.

“So, we see this as the broker’s opportunity. As much as there is all the noise in the marketplace about fintechs interrupting, and around the regulatory piece, we see this as the opportunity for those brokers that build their relationships with the customers to flourish.”

Brokers operating in “changing times”

Mr Kane added that brokers may have to diversify their offerings given the fact that we are in “changing times”.

He said: “We recognise the value that the mortgage broking channel provides the Australian community and to the economy, and we also recognise that because of the changing times, brokers are going to have to do different things.

“A monoline broker just doing mortgages is still going to be there… but it’s going to be important for them to be looking at what they need to do to broaden their business.”

Mr Kane concluded: “We recognise very clearly that circa 30 per cent of all broker-introduced customers are small business customers. Those small business customers have a need for further products other than just a housing loan, so it is imperative that we start to think forwardly about what we are going to do in relation to providing those products and providing access to capital to small business. 

“It is really an era where small businesses are seeking out support from the broking channel already, but it isn’t clearly defined. We think we are going to bring to market a product and service that is really going to help small business improve their cash flow to understand that they now have an alternative.

“We think this is innovative; it supports the channel; the customers the brokers have; and, in a large respect, it is truly incumbent on Australia’s largest business bank to provide these types of services.”

[Related: NAB won’t ‘back off’ SME lending despite RC scrutiny]