Australia’s alternative lending sector will become mainstream as early as 2020, according to a global online small business lender.
Speaking earlier this week at the inaugural AltFi Australasia Summit in Sydney, OnDeck CEO Noah Breslow said Australia’s rapidly evolving alternative finance market – estimated to be worth approximately $4.9 billion – had the potential to outpace the US market in its shift towards becoming mainstream.
According to Mr Breslow, Australian market drivers fuelling the speed of this shift include the heightened challenge SMEs face in accessing funding through traditional sources, faster technology adoption, greater relative investment and the more concentrated nature of the market.
“There is clearly a huge opportunity in the Australian market. While, from the customer point of view, alternative lending is still in the ‘low awareness’ phase, we would expect the shift to mainstream in Australia to happen over a shorter period of time than in the US,” he said.
“The market is more concentrated and customer expectations are already higher, so we could see ‘leaders’ emerge much faster than in the US.”
Mr Breslow noted that over the past two years, Australia has seen a rush of new market entrants across both consumer and small business lending, and an overall increase in investment in the sector.
He added that reaching the mainstream phase could eventually lead to consolidation and some players being squeezed out of the market altogether.
“From a lender point of view, having a robust funding infrastructure, a supportive and clear regulatory environment, access to credit and payments data, and strong distribution partners, are all critical success factors for the ongoing competitiveness and viability of the sector,” he said.
“Collaboration among the various industry participants will be crucial to ensure customers are put first and offered the highest levels of service possible, and that trust is developed in this fast-emerging sector.”
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