Australia’s largest marketplace lender has explained why it will not partner with brokers as its competitors are increasingly turning to the third-party channel.
At a media roundtable in Sydney yesterday, SocietyOne co-founder Greg Symons and CEO Jason Yetton outlined an ambitious growth strategy that will see the online lender take a 2-3 per cent share of the $100 billion consumer finance market (excluding mortgages) by 2021. The company, which provides personal loans up to $50,000, is also looking to grow its customer base to 100,000 over the next four years.
In December, SocietyOne reached $200 million in total lending since its foundation in August 2012, of which $129 million was advanced in 2016 alone.
Fellow marketplace lenders like ASX-listed DirectMoney have actively targeted brokers in their growth plans, partnering with aggregators and growing volumes through the third-party channel. But SocietyOne co-founder Greg Symons was clear that brokers will not be involved in the business he helped create.
“We have no relationships with brokers at all,” Mr Symons said. “The problem is actually two-fold,” he said.
“One thing that is not systemic but brokers, some brokers, have a tendency to work an application a bit harder than maybe a customer would. Issue number one. That’s caution.
“The other one is the fact that our unit economics don’t work very well with an intermediary in the middle. We are disintermediated. We are fair value up-front of sourcing and underwriting the loan, and from a management point of view.
“If you actually have to pay the broker commissions that they are naturally used to and accustomed to, the unit economics are very tight. So we have just steered away from it, and hence why we are such a direct-oriented business.”
SocietyOne’s vision is to become Australia’s most trusted, “people-powered” market lending place. The group has over 280 funders including Australian banks, credit unions, high net worth individuals and SMSFs.
Former Westpac banker Jason Yetton, who joined SocietyOne as CEO last year, said the company has seen a steady increase in investment from SMSFs in recent months. However, the group does not use intermediaries or pay commissions.
“Whether it’s brokers on the origination side, we are equally pure on the investment side,” Mr Yetton said.
“We are not set up with intermediaries and commission structures. It is really catering to the self-directed market looking for a better return, rather than the distributor market.”
James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.
He has a sound pedigree to cover the business of mortgages and the converging financial services sector having reported for leading finance titles InvestorDaily, InvestorWeekly, Accountants Daily, ifa, Mortgage Business, Residential Property Manager, Real Estate Business, SMSF Adviser, Smart Property Investment, and The Adviser.
He has also been published in The Daily Telegraph and contributed online to FST Media and Mergermarket, part of the Financial Times Group.
James holds a BA (Hons) in English Literature and an MA in Journalism.
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