Competition among Australian lenders has reached new heights, driven by a boom in new entrants to the market as non-bank fintechs continue to chip away at traditional lenders.

According to AUSTRAC, there are now over 600 non-bank lenders and financiers in the Australian market.

And the loan books of non-bank lenders are growing as they attempt to disrupt the sector with low rates and fast approvals.

ASX-listed Harmoney (ASX:HMY) is the latest non-bank lender to report a record increase in its loan books.

The latest quarter showed record new originations, with its Australian new customer originations growing to $31 million, a massive 885% growth over the previous corresponding period.

Harmoney’s total loan book now sits just over half a billion dollars, and it’s already showing cash NPAT breakeven on a pro-forma basis.

The NZ-based company hires a team of data scientists and engineers to develop an artificial intelligence (AI) based technology that enables its Libra ending platform to automate the approval of loans.

“This technology broadens our ability to provide financial products to more Aussies and Kiwis with no additional customer acquisition cost,” says Harmoney’s CEO, David Stevens.

Another fintech lender that’s growing rapidly and also reported a record quarter is Plenti Group (ASX:PLT).

Plenti’s loan originations book grew by 140% to a record $256.4m in Q2, compared to the same quarter last year.

Its total loan book now stands at $915m, and is very much on track to meet the $1 billion goal by the end of this year.

“Our growth is broad based.  I think it’s really representative of us gaining market share,” Plenti’s CEO Daniel Foggo told Stockhead earlier this week.

He said that large incumbents like banks are struggling to keep up with customer needs, and that has provided an opportunity for nimbler fintechs like Plenti to displace them and take market share.

The rise of financial wellness apps

Another segment that’s growing rapidly within the fintech space is financial wellness platforms.

New data revealed in a Backbase commissioned study conducted by Forrester Consulting shows that Australia’s banking sector is moving to fully embrace digital financial wellness tools as a way of gaining and keeping customers.

The Regional Vice President for Backbase in Asia Pacific, Iman Ghodosi, said that digital money management and financial wellness apps are no longer a gimmick – as the neobanks, fintechs and disruptors have shown.

“We’re not far from these apps being the primary interface between banks and their customers across the sector,” Ghodosi said.

He said that we’ve entered the ‘Engagement Banking Era’, an evolution that stresses a one unified platform approach for banking.

Once the realm of smaller fintech players, Ghodosi believes the big banks are now starting to wake up to the opportunity in financial wellness apps.

“One can see how fintechs and neobanks have had a head start,” Ghodosi explained.

“There is also a lack of understanding within legacy institutions (big banks) on who owns the budget for these types of initiatives.”

This confusion has allowed fintechs that provide financial wellness apps like Douugh (ASX:DOU) to grow rapidly.

Although its main market is the US, Douugh has also started to look into the Australian market with the acquisition of the Goodments business, which has now been rebranded to Goodments by Douugh app.

Launched in Australia in 2017, Goodments is a leader in the responsible investing space that matches ESG-minded people with stocks and ETF investments that align to their values.

Shares in DOU continued their climb off recent lows this morning, after the company announced a tie-up with US company Zero Hash which will see it integrate a cryptocurrency wallet and trading capabilities into the Douugh app.

 

Share prices today:

 

 

At Stockhead we tell it like it is. While Plenti Group is a Stockhead advertisers, it did not sponsor this article.

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