‘It’s been great for us’: ASX fintechs are benefiting from the banking crisis
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Anthony Nantes, chief of peer-to-peer lending platform Wisr (ASX:WZR), says loan originations grew 49 per cent in the September quarter compared to the previous period, and he is putting it down, partly, to the banking inquiry.
The royal commission revealed appalling baheviour which have cost major banks and financial institutions more than $7 billion.
That’s coincided with a 208 per cent increase in traffic to Wisr’s website. In the last quarter Wisr’s home renovation loans — an areas traditionally dominated by the big banks — grew by 26 per cent.
>> Scroll down for a list of ASX fintechs and their share price performance over the past year
Discount online share trading platform SelfWealth (ASX:SWF) managing director Andrew Ward said their sign-up numbers began to tick up in June and July, which he puts down to the banking inquiry rather than marketing spending.
“One of the biggest queries [we receive via the website] is we don’t trust the banks anymore but can we trust you? We don’t know who you are,” Mr Ward told Stockhead.
Property investment platform Domacom (ASX:DCL) chief Arthur Naoumidis says “it’s been great for us, it’s absolutely fantastic”.
He wants to muscle in on property lending as the banks tighten conditions for retail borrowers and stop lending to self-managed super funds (SMSFs) entirely.
Domacom allows individuals and SMSFs to invest in property as a syndicate.
They’re planning to access cheap offshore funding so those syndicates and SMSFs can use the debt to buy property, rather than raising the whole sum.
“At the moment it’s money for jam. They can borrow money at 3 per cent in the US and loan it out at 6 per cent in Australia.”
Others have questioned whether the banking royal commission revelations have affected the entire industry, however.
Raiz (ASX:RZI) head George Lucas is seeing seeing scepticism generally for all financial services.
“The negative sentiment towards the big banks has filtered through the entire financial services sector, so we’re not seeing a negative or a positive result,” he told Stockhead.
Any short-term optimism is likely to be outweighed by increased perceptions of risk in the financial sector right now right
The banking royal commission has, so far, uncovered a vast array of malpractices from AMP’s admission in April that it misled regulators to the hard sell phone tactics Freedom Insurance’s (ASX:FIG) allegedly used on vulnerable people.
It’s been followed by a Labor-led Senate inquiry into debt management firms — the pay-day lenders and buy-now-pay-later firms such as Afterpay (ASX:APT) that escaped QC Kenneth Hayne’s gimlet eye in the banking inquiry.
Cyan Investment Management fund manager Dean Fergie says fintech is a strong play over the next five years, but over the next three to six months “it might be wiser to sit out and wait”.
“The problem with fintech at the moment is everything is very expensive. It’s been a theme for a while and it’s got a really strong underlying fundamental thematic,” he told Stockhead.
“But at the same time [there is a lot of negative sentiment around and] the market is inclined to sell off a lot of this stuff and doesn’t want to pay big forward multiples.”
Picking fintech stocks
While some fintechs such as Wisr have made strong share price gains over the past year, there are also plenty of car crashes in the sector, as our table below shows.
Domacom’s listing price was 75c in 2016 and it has never again attained that height. It closed on Monday at 9c.
They struggled to get the IPO done as well, extending the offer several times, and lifting the amount they wanted to raise and engaging an expert to consider its working capital needs on the request of the ASX.
SelfWealth listed 12 months ago as a social media-enhanced trading site but is building the business on cut-price $10 trading.
Their IPO price was 20c but their shares have also remained in the doldrums, closing on Monday at 8.4c.
Mr Ward says they are reviving the social media aspect and launching an ETF.
Mr Fergie says while peer-to-peer lending, microbanking and others have the potential to take market share from bigger, slower banks, they have to be well funded with a great product to make it.
He cited Change Financial (ASX:CCA), a microbank trying to make it in the US, as one example of a fintech that has decimated shareholder value over the last year, falling from a 52-week high of $1.38 to 8.8c on Monday.
Here’s a list of ASX fintechs and their share price performance over the past year:
Swipe or scroll to reveal full table. Click headings to sort