Fintechs are “good for brokers and business” and lenders must “adapt or follow them or lose share to them”, according to the CEO of a specialist lender.
Speaking on The Adviser's Insight video, Peter Langham, CEO of ASX-listed debtor and trade finance business Scottish Pacific, said that fintechs are “great for industry” but suggested that businesses could be disrupted if they do not adapt to them.
Mr Langham said: “Fintechs are great for our industry and for SMEs and they are gaining a lot of column inches for start-up businesses. [T]hey are bringing new products to the market, which means people like ourselves will either have to adapt or follow them, or we could lose share to them. But, they are creating a lot of noise out there and awareness, which is great for everybody.”
The Scottish Pacific CEO said that he thought some of the things fintechs were doing were “very good” and revealed that Scottish Pacific is “partnering with a couple of them at the moment to see how they operate” (however he could not comment further on this).
Mr Langham concluded: “So, we think they’re good for SMEs, they’re good for brokers [and] they’re good for business.”
Touching on the third-party channel, Mr Langham said that brokers were “essential” to Scottish Pacific, with around 40 per cent of its business coming through brokers.
“The number of brokers introducing business to us is increasing month-on-month and year-on-year,” he said, but added that he believed brokers should “not be so reliant on resi mortgages and look at alternatives” to “really get some traction with their clients [and] to be helping more of them”.
He explained: “Brokers need to understand working capital and all the funding options that are out there. The banks are very good at what they do, they’re not just funding businesses themselves but they fund people like the fintechs and ourselves, so they are assisting SMEs. But they can’t help everybody and there’s an awful lot of finance companies out there that can help when others say no. So, its really important that brokers understand what options are out there so that people can borrow money when they really need to.”
[Related: SMEs look to non-banks for funding]