GONE ARE the days when non-banks are purely a fallback to lean on when others have said “no”.
Today, they form a crucial part of the finance ecosystem, driving competition with the majors and offering borrowers a genuine alternative.
They also serve as valuable partners to brokers, unlocking opportunities and helping service clients who would otherwise be out of reach.
So, what are non-banks getting right? And where could they do better?
The Adviser spoke with some of Australia’s leading brokers to find out.
What’s working?
A clear theme emerging from broker feedback was the role non-banks play in enabling brokers to service niche client segments.
Shelley McGinty, owner of boutique Brisbane brokerage Preston Point Capital, says non-banks have helped her find solutions in areas such as self-managed super fund (SMSF) lending, self-employed income, and credit-impaired borrowers.
“Their flexibility, speed, and willingness to look at the full picture, rather than just ticking boxes, often make them the best solution for self-employed clients, complex income structures, or scenarios where timing is critical,” McGinty says.
Will Hamer, managing director of Melbourne-based Hamer Asset Finance, says non-banks have stepped up in areas where traditional banks tend to fall short, especially when it comes to niche client needs or deals that sit just outside the box.
They’ve stepped up in areas where traditional banks tend to fall short – especially when it comes to niche client needs or deals that sit just outside the box”
- Will Hamer, Hamer Asset Finance
“Their turnaround times are often faster, and their credit teams tend to be more commercially minded and willing to take a common-sense view of a deal,” he says.
“In the asset finance space particularly, non-banks have carved out a strong position by offering flexibility and speed without compromising too much on pricing.”
Harry Dubois, founder and asset finance broker at Adelaide-based Sertified Finance, highlights the deeper understanding of niche asset classes – whether it’s transport vehicles, tertiary equipment, or other specialised assets.
“This allows for better rates while also giving the client a better loan process experience,” he says.
“In addition to the asset type, many non-bank lenders cater to various credit profiles allowing for a greater number of approvals for my clients.”
These qualities make non-banks well-suited to servicing small and medium-sized enterprises (SMEs) and growing businesses, according to Gus Gilkeson of Sydney-based brokerage Grow Capital.
“If a business is in a new industry, is complex, or in a high-growth phase with revenue fluctuations or tax challenges, it’s probably better suited to a non-bank lender as a starting point,” he explains.
Meanwhile, Isabella Constantinou, commercial broker at Simplicity Loans & Advisory, says increased competition in the lending landscape is ultimately benefiting clients.
“[Non-banks’] ability to assess deals on their merits and take a truly commercial view, rather than being bound by rigid policy, is a major advantage,” she says.
“They also tend to be faster to respond, more open to creative structuring, and generally more commercially minded in their approach.”
What needs work?
While the brokers generally praise the growing role of non-banks, they also highlight a few areas where these lenders could sharpen their offerings.
Process efficiency is a key area for improvement, according to Matt Turner, managing broker at Geelong-based GSC Finance Solutions, who says he feels very few non-banks have truly mastered the streamlined processes of major lenders.
“While we understand that they usually play in the grey and more human interaction is required, there could be much better processes put in place,” Turner says.
“It recently took a week to get a valuation ordered from an SMSF because the lender required the borrower to pay for it upfront, but they required a credit card to process payment so then there was a manual invoice that needed to be raised. It got done but it delayed the process.”
Constantinou adds some non-banks could be doing a better job leveraging technology, particularly around the application and approval processes.
“While many non-banks are nimble in their decision-making, their systems are often clunky or manual,” she explains.
“Another [area for improvement] is transparency. Because policies can be flexible and vary significantly across lenders, clearer communication around appetite and parameters would help brokers better match deals upfront.”
Funding costs are another area for improvement, according to Hamer.
“Some of the pricing still isn’t competitive enough compared to the majors, and that can be a sticking point. If non-banks had access to better funding lines or could get more aggressive on rate, they’d take even more market share,” he says.
“Also, a few could sharpen up on post-settlement service – things like payout processes or account management can still feel a bit clunky compared to the big banks.”
McGinty adds non-banks could do more to improve their market visibility, noting that she occasionally needs to walk clients through misconceptions, particularly the perception that non-bank loans are ‘lesser’ or ‘risky’.
“The more they invest in consumer education and positioning themselves as mainstream alternatives, the more confident clients will be from the outset,” she says.
“Also, a bit more consistency in policy clarity would make things even smoother for brokers on the front line.”
For Sam McDonald, a commercial finance broker at Atlas Broker, the best non-bank lenders tend to have exceptional broker support teams in place.
“The most effective non-bank lenders have responsive BDMs and credit teams who are open to workshopping deals. What sets them apart is a willingness to engage directly, pick up the phone, and provide clear updates throughout the process,” he says.
“More funders could benefit from adopting this collaborative, relationship-driven approach.”
What’s next?
An increasingly specialised and dynamic lending environment means non-banks are likely to remain essential partners to the third-party channel.
“Lenders need to have a reasonable level of understanding around what a business does and how it operates in order to gain comfort around lending,” Gilkeson says.
“Often there isn’t a lot of time to learn all of that about a specific industry between when an application is submitted and the funding is needed, there is a level of knowledge required.
“Specialised lenders generally have in-depth knowledge of an industry and market and can make decisions quickly.”
Constantinou also notes the importance of having options to fill the gaps where mainstream lenders often fall short – whether it’s in construction finance, cash flow lending, specialised asset classes, or bespoke private lending solutions.
“Having lenders that deeply understand the nuances of a particular sector allows brokers to provide better outcomes for clients and navigate deals that might otherwise fall over,” she says.
For Turner, it all comes back to finding solutions.
“You just never know what client is going to walk through the door, whether they have borrowing capacity issues, unique circumstances or purchasing in a SMSF, it is important to have options available to your clients,” he says.
“Not that we are seeking to be everything to everyone, and there are certainly times we could secure finance but don’t see it as a good idea, but if a good client needs a solutions-based lender, then it is important to have the option for them.”
