Banking is a tough sector for the lucky country.
According to the IMF, Australia has the most concentrated banking sector in the industrial world, dominated by the “big four”: ANZ, Commonwealth Bank, NAB and Westpac.
Analysts estimate that of every $100 spent in Australia, $2 ends up as profit at the big four.
For all their dominance, however, capital requirements have meant that the big four have fought shy of SME lending the past several years. And into this gap in the market many small lenders have flocked, creating an often-confusing scene.
“As a small business if your bank rejects you, you just don’t know where to go,” says Cotton.
Borrowers answer a five-minute online questionnaire, detailing their needs and creditworthiness.
Valiant then crunches the data and pairs borrowers with lenders from their 40-member panel.
Borrowers are mostly small businesses. For them, Valiant provides a process that is quick and, above all, free, with the company taking its commission from lenders. Their website boasts a gallery of favourable borrower testimonials.
The company, which is less than 12 months old, has grown rapidly.
“We knew the lending space was heating up,” Cotton explained. “We knew that the major banks were slow to move on things like this and as a result we could see all these new entrants in the business lending space.”
According to Cotton, much of the company’s rapid success owes to its incentives being aligned with both client and lender. “We are incentivised to get a great result for the client and taking this approach has been really powerful for us.”
“Since starting we’ve experienced a much higher than expected return rate. We only get compensated on a funded deal from the lender.”
From here, the company hopes to grow by using its technology to bring new brokers into the fold. “For mortgage brokers—given their client base—there is huge potential to tap into commercial lending that they can’t ordinarily get to because their hands are full servicing mortgage clients.”
“We wanted to use the platform as a way to give them access to commercial options with a neat and tidy tool that looks great to clients.”