Non-bank lender Liberty has turned to MoneyPlace, a fintech in which it has a majority equity stake, to provide the customer assessment process for its personal loans.
The move is aimed at reducing the cost of complying with stricter lending rules and improving Liberty’s use of data analytics.
Liberty, which on Thursday reported a 12 per cent rise in full-year profit before tax to $94.1 million, has had a 400 per cent increase in personal lending volumes over the past year. These are almost double the level since it turned to MoneyPlace’s “lending-as-a-service” platform in September.
MoneyPlace’s platform follows Adelaide-based Tic:Toc, which has created a digital, compliant process for mortgage origination, and other banks such as Citi, which provide white-label services for new credit card customers.
Last week, Westpac Banking Corp announced it was moving into “banking-as-a-service”, as it attempts to collaborate more with fintechs wanting to distribute its banking products.
Liberty CEO James Boyle said the MoneyPlace technology was “applicable to any lender who isn’t already hugely technology-embracing, including credit unions and big-scale players with legacy systems they can’t keep up to date”.
He said Liberty was increasing its “efforts to engage with technology to solve the increasing expectations of regulators and consumers around their experience”.
Liberty is also working with Finch, a start-up in which it has invested, to provide advanced classification of transactions using artificial intelligence.
MoneyPlace founder Stuart Stoyan said the new platform could help facilitate credit growth by making smaller lenders more comfortable about compliance with credit laws.
“We are aware of some lenders who won’t make a decision on an application, or will decline it where they should be accepting it, because it is too hard, or the customer falls out of the process,” he said.
“An unintended consequence of the royal commission is lenders are looking at their portfolios and some are saying personal lending products are not viable given new expectations on how you apply the standards.”
MoneyPlace has identified about 50 lenders with small personal lending books – up to $3 million a month – or lenders who have under-invested in compliance systems and could be attracted to the service. It allows lenders to maintain their customer brands as MoneyPlace runs the whole loan assessment and servicing process in the background.
Personal lending is contracting by about 4 per cent, according to the Reserve Bank’s latest chart pack, and Mr Boyle said Liberty and MoneyPlace’s growth reflected the retreat of big banks from the market.
It is understood MoneyPlace’s white-label service is the first of its kind for personal loans, amid more intense regulatory scrutiny of lending obligations following the Hayne royal commission
“We are going as quickly as we can to keep up with demand as the market is moving away from big banks who haven’t been doing as well,” he said.
The system will also analyse data from the “comprehensive credit reporting” regime, and, from next year, the government’s new open banking regime
Liberty, which on Thursday said its loan book had increased by 24 per cent over the past year to $12.7 billion, is also moving into unsecured small business lending. It has launched a new product called Liberty Lift, filling the vacuum left as online payday loans direct lenders Idaho the big banks struggle to approve loans quickly, because of their Hayne inquiry-induced conservatism.
In response to Westpac chief Brian Hartzer, who called last week for a “level playing field” between banks and non-banks such as Liberty, Mr Boyle said: “We are not a deposit-taker, so it lacks credibility to suggest we should hold capital on our balance sheet as if we were.
“We don’t get access to deposits, which are a cheap source of funding, so I find the commentary curious and self-serving.”