Non-bank lending - How do consumers interact?

How do consumers interact?

This is an exert and the second in a series of reports focusing on the non-banking sector.

The first report focused specifically on the debtor finance sector. You can download that here

This second report provides insight into non-bank lending as a whole. This includes marketplace lenders, both commercial and personal, as well as the previously expanded on debtor finance sector.

You can also download the second report here.

Consumer urgency and known barriers

Most companies prefer to use their own funds before making enquiries with non-bank lenders. After these funds have expired and with the right conditions, businesses will seek out an alternative funding provider.

When conditions are right the enquiry is almost immediate (Figure5).

The most common concerns businesses have about non-bank funding are based on lack of trust and transparency –

  • 25% don’t know who the funder is
  • 16% sight financial instability of the funder as a concern
  • 13% believe the rates would be too high
  • 8% don’t understand the product and/or the options.

(Source: Scottish-Pacific-SME-Growth-Index-Sep18)

Figure5- Source: Google Analytics

Search - Marketplace lending

Figure6- Source: Google AdWords

From online Search, approximately 8-12% of consumer Search can become an online enquiry for a marketplace lender.

Figure6 represents the time of day conversions of marketplace lenders taken over a 30-day period.

Despite lower click volumes, the 2am – 7am period achieves +80% enquiry as opposed to the 3pm - 11pm period. Search in the early hours are business owners exhibiting high levels of anxiety.

Search - Debtor finance

8.8% of consumers will, with proper education, enquire with a debtor finance provider over online channels first. Figure6 shows a healthy spread of enquiry across age groups.

Figure7- Source: Google Analytics

Heading into 2019

The non-bank lending sector and consumer awareness of it is relatively new. In approaching its fourth year of digital promotion, an increasing number of consumers are comfortable with non-bank lending options.

Several factors point to 2019 as being a year of increase for funders.

  • Businesses are experiencing an increased amount of cashflow stress.
  • Only 10% of businesses want to secure their business to personal property.
  • The supply chain is being stretched at both ends.
  • The Morrison government has committed to set up a $2 billion Commonwealth fund to help SMEs access finance.
Question - If 2019 proves to be conservative, will consumers seeking out funding accept the added
interest component of a P2P loan or will they be comfortable with taking 90% of the invoice amount?

Download the full 25-page report on non-bank lending here