Superior technology gives non-banks an edge

In a highly competitive finance market, fintechs such as non-bank lenders Moula and OnDeck have invested heavily in the best technology to provide brokers and their SME customers with fast, efficient loan decisions and processing

A GROWING NUMBER of companies in the finance industry, especially those focusing on lending to small businesses – such as OnDeck and Moula – are relying on superior technology to provide better products and services. Nick Reily, the head of partnerships at OnDeck Australia, says technology has tremendous potential in the financial services sector. “As a small-business lender, OnDeck is harnessing the best tech tools available to deliver innovative products, better service, and faster turnaround times for our brokers and customers,” he says. “Like many fintechs, OnDeck is not burdened by the legacy systems of mainstream banks. This allows us to take full advantage of innovations in the IT space.”

Technology enables fintechs to scale operations rapidly and create intuitive digital platforms, making it easier for borrowers to apply for loans and interact with the lending institution. Sfeir says this improved digital-first user experience has set Moula apart from traditional lenders. “We've expanded our offering from SMEs to larger businesses. This scalability wouldn't have been achievable without the efficiencies and automation that technology offers.”

Sfeir says advanced data analytics allow lenders to tailor loan offers to individual customer profiles, providing more relevant and attractive options, while online portals and real-time updates empower borrowers to track loan applications, reducing uncertainty and frustration. Reily says OnDeck has surveyed Australian small businesses, repeatedly finding that one of the key factors business owners are looking for is a rapid response time to funding applications. This allows an enterprise to take advantage of point-in-time opportunities such as discounts on trading stock, or to invest in new plant and equipment without the delay of a lengthy application process and a protracted response time from the lender. “The use of technology and data has underpinned OnDeck’s popular Lightning Loan product for funding up to $175,000,” says Reily. “It requires just six months of bank statements to be uploaded to the OnDeck portal, and we can have an assessment to the broker or small business within 30 minutes, with funds available to approved customers in as little as two hours.” Reily says feedback from brokers and small businesses confirms this level of speed is a game-changer, allowing a business to act on its plans immediately.

I found the process quick and easy

What do SMEs like about borrowing from a fintech lender?

Sfeir says technology enhances the customer experience by offering streamlined processes, faster loan approvals, and personalised services. He says AI-driven tools such as chatbots are beginning to make an impact with opportunities, including 24/7 support and improved accessibility. Moula’s development of products to cater to the working capital requirements of SMEs is driven by its development and technology teams, with constant input and feedback from Moula BDMs. Other tech features that benefit customers include online loan applications, which simplify the process for borrowers, and chatbots

Both artificial intelligence and automation have always played a key role in OnDeck’s lending model, says Reily. “Unlike traditional lenders, we try to remove the biases that human decision-making suffers from. By using a model-based approach, we can get rid of the recency and confirmation bias that can affect a business owner’s ability to access funding. We demonstrated this in 2021, with the launch of the KOALA Score™ – our innovative risk-predicting credit model.” Reily says the KOALA Score™ harnesses a sophisticated blend of big data, predictive analytics, and statistical techniques in combination with data from multiple credit reporting agencies, including illion and Equifax, to support more tailored risk assessment for small-business lending.

“As a small-business lender, OnDeck is harnessing the best tech tools available to deliver innovative products, better service, and faster turnaround times for our brokers and customers”

Nick Reily, OnDeck

In Partnership with

“Moula has effectively leveraged accounting data APIs and automation to dramatically reduce loan settlement times, often within 24 hours, whereas traditional banks may take several weeks. This speed and efficiency can be a game-changer for small businesses needing quick access to capital.” Sfeir says the ability to collect, process, and analyse vast amounts of data is a key advantage, with technology allowing fintechs to make more informed lending decisions. “In Moula's case, [this means] the introduction of HECTOR, the Intelligent Decisioning Engine, using business data to assess credit risk swiftly, enabling better-informed lending decisions.” Providing a seamless and user-friendly experience is paramount in today's competitive landscape, says Sfeir.

Reily says unlocking value in data will be a key focus for the future as organisations lean on data and technology to gain an edge. “I expect to see a lot more automation of transactional processes, which will free up teams for redeployment to value-add tasks.” With the advancement of self-service reporting and analytics, Reily says the finance sector needs to innovate continuously or risk becoming irrelevant. “However, while digital solutions enable better outcomes for borrowers, brokers, and businesses, we cannot overlook the importance of human contact. “OnDeck may be data-led, but we are customer-centric, and our investment in our skilled team of BDMs reflects this. We encourage brokers and their customers to reach out to a BDM at any time.” Sfeir says the lending industry will continue to evolve with technology-driven advancements. “Enhanced AI-driven credit assessments and expanded digital payment options will likely shape the industry's future, making it more efficient and secure.” Enhanced AI and machine learning will become even more sophisticated, says Sfeir, enabling lenders to make highly accurate credit decisions and further personalise loan offerings. Greater integration with open-banking APIs will give lenders real-time access to a borrower's financial data, facilitating quicker and more informed lending decisions. Sfeir says regulatory technology will play a bigger role in compliance, reducing the administrative burden on lenders and enhancing transparency. “Technology is at the core of Moula's success, allowing us to provide better products and services, improve the broker and customer experience, and ensure data security. “As technology continues to advance, the lending industry will witness further innovations that will reshape the way it operates.”

“Moula has effectively leveraged accounting data APIs and automation to dramatically reduce loan settlement times, often within 24 hours, whereas traditional banks may take several weeks”

Sam Sfeir, Moula

Moreover, as a leading online lender, “we have an in-house team of IT specialists who build bespoke solutions designed specifically for Australian small businesses,” says Reily. “This gives our customers and broker partners confidence that our systems are fast, efficient, and easy to use – and our secure online portal is seamless for our customers.” At Moula, head of sales Sam Sfeir says technology plays an increasingly pivotal role for companies such as Moula. “As a fintech, the use of cutting-edge technology is not just advantageous – it’s vital,” says Sfeir. Fintech companies can streamline their operations through advanced tech tools.

Industry experts

Christopher Lee

MFAA head credit adviser, Finsure Finance and Insurance

Stewart Saunders

Heritage Bank

Nick Reily

OnDeck Australia

Sam Sfeir

Moula

Industry experts

With over 15 years’ experience in financial services, Sam leads the sales function at Moula. Sam has worked in business development for various financial and professional services firms in Australia and the UK. Throughout the majority of his career, Sam has worked primarily in third-party distribution. He is passionate about leading a team of finance specialists to empower business owners and our partners to access transparent and responsible lending solutions.

Moula

Sam Sfeir

Nick Reily is head of partnerships at OnDeck Australia. His role involves building and managing a high-performing and high-functioning partnerships team to help OnDeck’s small business customers and partners have a better finance experience. Before joining the finance industry, Reily played three different professional sports over three consecutive years, including skippering the Australian Sevens rugby team at the 2005 Rugby World Cup Sevens in Hong Kong and at the 2006 Melbourne Commonwealth Games.

OnDeck Australia

Nick Reily

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Heritage Bank

Stewart Saunders

MFAA head credit adviser, Finsure Finance and Insurance

Christopher Lee

Nick Reily

OnDeck Australia

Sam Sfeir

Moula

Industry experts

Moula

Sam Sfeir

OnDeck Australia

Nick Reily

Heritage Bank

Stewart Saunders

MFAA head credit adviser, Finsure Finance and Insurance

Christopher Lee

How tech tools assist brokers and customers

Sam Sfeir

Moula

Nick Reily

OnDeck Australia

Stewart Saunders

Heritage Bank

Christopher Lee

MFAA head credit adviser, Finsure Finance and Insurance

Mark HarChristopher Leeon

Heritage Bank

Stewart Saunders

OnDeck Australia

Nick Reily

Moula

Sam Sfeir

Future tech enhancements

Published 30 Oct 2023

OnDeck Australia is a leading online lender that focuses on Australia’s small business community. As OnDeck only provides small business loans, it is an expert in an area that has been underserved by the banking sector for too long. Importantly, OnDeck offers a skilled and experienced team, each of whom have been hand-selected for their understanding of the needs of small enterprises.

Find out more

Since 2013, Moula has been creating the future of business finance. In the past, getting a business loan meant going through weeks of paperwork, hassle and hurdles. With our intelligent decisioning engine you can get your clients funded in record time. We are passionate about using technology to simplify small business finance – and about backing good businesses. Moula is a better way to help your clients grow their businesses.

I needed the money urgently. i was impressed with the turnaround time

It was all done online

i didn't have to put property up as security

i didn't have to provide loads of documents

i got a response the next day

Source: ASBFEO Borrowing from Fintech Lenders 2018 report – the Australian Small Business and Family Enterprise Ombudsman and theBankDoctor.org

2020

2021

2022

2023

-15

Sources: APRA, RBA Small Business Finance Advisory Panel, July 2023

Large

SME

Business credit growth – six month-ended annualized, by credit size

*Not seasonally adjusted

automated underwriting systems – these use AI and data analytics to assess credit risk quickly and accurately. For brokers, this means faster approvals and more efficient loan processing API integrations – seamless integration with accounting and financial data sources, such as Xero, makes it easier for brokers to access and submit client financial information. This not only simplifies the application process but also reduces the risk of errors online platforms – tech-driven lending platforms often act as marketplaces where brokers can compare multiple lending options, helping them find the best fit for their clients’ needs and streamlining the search for suitable loans.

Sfeir says several tech platforms have significantly affected brokers in the lending industry, “transforming the way we operate.” These include:

AI and automation

“It lets us quickly and accurately assess the health and creditworthiness of a business.” The KOALA Score™ proved especially relevant during the pandemic, when past results were no guide of future business performance, says Reily. The model was designed in-house, and Reily says it’s believed to be unique in the Australian market, giving small businesses faster access to the funding they need, coupled with an uptick in funding limits. With The KOALA Score™ in place, OnDeck was able to introduce Lightning Loans, for finance up to $175,000, based on six months of recent bank statements and no upfront asset security. “Harnessing the power of automation through technology and data means our team can focus on our Lightning Loans, while also providing small businesses with larger loans between $175,000 and $250,000, which can be completed in as little as one business day,” Reily says. Sfeir says automation is crucial for Moula and its brokers, providing quicker approvals and meaning customers get a smoother application process. “Automation reduces manual processes, minimising errors and speeding up loan approval times. This efficiency benefits both brokers and customers by providing faster access to capital.” AI-driven algorithms can analyse extensive data sets to make more accurate lending decisions, reducing risk for lenders and offering better terms for borrowers, says Sfeir.

Sfeir says in the current digital landscape, safeguarding customer information is paramount. “Our structured approach aligns with industry best practice and the existing cyberthreat environment.” “We partner with cybersecurity experts, participate in information-sharing platforms, and have integrated threat intelligence into our security strategy, ensuring the protection of our customers’ information during this period of escalating cyberthreats.” Reily says OnDeck takes the security of customers’ information very seriously. “We maintain commercially reasonable security measures to protect the personally identifiable information we collect and store from loss, misuse, destruction, or unauthorised access.” When customers or brokers enter sensitive personal information (such as a credit card number) in OnDeck’s secure portal, the transmission of that information is encrypted. “When OnDeck is able to see a customer’s banking information online rather than in paper form, it is on a read-only basis,” Reily says. “We do not have access to change, edit, or modify bank account information in any way. OnDeck employees cannot view customers’ banking username and passwords, and we securely store them in separate encrypted areas.” Reily says OnDeck has made a significant investment in customer education, using newsletters, blogs, and other regular communications to keep small businesses up to date on the latest cybersecurity threats and provide insights into low-cost measures they can take, such as maintaining good password hygiene, to stay safe online.

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