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Banks turning to managed services for operations

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The Covid-19 pandemic has forced banks, brokers, and other financial institutions to transform digital “journeys” into critical services that mustwork today.

The global lockdown, social distancing and pressures on working remotely, all the while maintaining markets and levels of service at a time of heightened volatility and surging volumes, has challenged the industry like never before.

The good news is most financial institutions have so far succeeded. From trading desks to operations, business has continued. The effort has been intense.

“Goldman Sachs has had 95% to 98% of its workforce globally working from home,” said Larissa Dudley, the firm’s COO of engineering for Asia Pacific, speaking at a recent webinar hosted by DigFin, ASIFMA and SmartStream Technologies. “It would have been mind-blowing if you had told me that in January.”

Chief operating and technology officers already faced demands going into 2020 around regulation, client service, risk management, liquidity, and cost pressures. Covid-19 added urgent business survival to the mix.

Technology and experienced management have saved the day for the financial services industry. “Virtual teams came into their own,” said Simon Byles, global head of business development for managed services at SmartStream. These continue to evolve in terms of capability and coverage, with new “must-dos” prompting digital solutioninginitiatives to accelerate.

But the operating model looks ever more challenging. The industry will need time to sift through new regulatory and client needs in an economic environment that looks difficult for the coming 12 to 24 months.

Regulators were supportive during the crisis, insisting firms meet industry standards while allowing them toextension todeadlines for mandatory market initiatives; once things settle, however, they will want to examine all facets of how firms are operating, as well as catch up on postponed inspections.

The industry must continue to cut costs, while fighting for market share, pushing innovation, and managing changing needs among employees, who themselves are adjusting to a new reality: not everyone loves the new BAU (“business as unusual”, as Byles calls it).

The sharp emergency phase is perhaps over but now market participants face huge questions about the future. Among them:

  • Do we need to continue investing in technology and people across the organization to further ensure resilience in the face of any scenario?
  • Do all current in-houseactivitiesprovide uswith a competitive advantage in how weserve our clients or drive revenue?
  • Arewedifferentiating ourselvesthrough back-office activities?
  • Are their service providers we could partner with to enable a fast track to sustainable excellence, where they are invested in future-proofing back-office activities?

Byles says the current situation is forcing many to rewrite the scenarios for risk and operational continuity, with previously consideredextreme or unlikely events now part of core business-continuity plans. This new focus on resilience will need perpetualplanning, testing, and investment.

Virtual teams came into their own

Simon Byles, SmartStream

The same will go for leveraging technology such as artificial intelligence, machine learningand data analytics. “Those that have proven results will be the favourites in this race,” Byles said. “The risk of failing to deliver core operational activities will be even less palatable, keeping this cost efficient thereby encouraging all to assess their fastest track to sustainable excellence.” 

“Data analytics and A.I. are becoming ‘hygiene’,” said Olivier Dang, COO for the wholesale digital office at Nomura, speaking during the webinar. “It’s going to be hard to maintain market share and service client demands if you don’t have the tools for an electronic business.”

Byles suggests managed services and outsource partnerships will further grow in importance. “Financial-service key back office processes that are human-intensive and need to be delivered with sustainable excellence, but do not provide a true competitive advantage, can be strategically served by a managed service, with its clear focus, expertise and ongoing investment,” he said.

In this environment, firms will need to consider the provider of a managed service that is proven, both in terms of its technology and its serviceexecution; whether such vendors view managed services as a core competence, and have a proven track record in continually investingin their capabilities, including leading the way in A.I. and machine learning.

Source: https://www.digfingroup.com/managed-services/

Fintech

MoneyMe accelerates lending and revenue

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MoneyMe outperforms originations run rate with $108m originations, revenue of $15m and exceeds $230m in gross loan receivables with strong loan unit economics.

Clayton Howes, Managing Director and CEO of MME said, “We are incredibly pleased to report the growth and momentum the business is achieving, with increasing revenues and another set of records in originations and customer receivables. Our business is accelerating with the credit quality of our customers increasing and it is fantastic to see the strong take-up of our recently launched products by our customers and merchants. Another great quarter for the business as it delivers on its strategy to build returns through innovation, scale and technology.”

Record Originations & Gross Customer Receivables 

MoneyMe’s originations in Q3 FY21 of $108m, ($51m, Q3 FY20), reflects continued acceleration in originations growth of 57% on Q2 FY21, beating a previous record ($69m). Gross customer receivables of $233m, up 63% on pcp ($143m, Q3 FY20) with growth from the existing Personal Loan and Freestyle products as well as the momentum from the more recently added MoneyMe+ and ListReady products.

The accelerated growth contrasts to relative flat growth within the consumer credit market, reflecting the Group’s ability to attract customers from incumbent consumer credit providers with its Generation Now suite of offers.

Record Revenue & Increasing Returns 

Q3 FY21 revenue was $15m ($12m, Q2 FY21) with Q4 FY21 contracted revenue increasing to over $19m. Returns are robust with revenue yield at 29% (32%, 1H FY21) and the average receivable term increased to 35 months (32 months, Q2 FY21).

Increasing operating leverage and cost efficiencies

Funding costs to Q3 FY21 reduced to 6% (9%, 1H FY21) as the Group continues to leverage its bank warehouse facility. The Group is confident in its funding program to support the growth with an unrestricted cash balance of above $11m at 13 April 2021. The Group achieved a further reduction in its core operating costs margin6 to 9% in Q3 FY21 (12%, 1H FY21).

FY21 Gross customer receivables are expected to exceed $265m ($133m FY20).

Strong Credit & Book Quality 

The Group is continuing to deliver strong credit book quality with the average Equifax score increasing further to 644 in Q3 FY21 (638, Q2 FY21). COVID-19 hardship payment plan deferrals continue to be insignificant, reducing to 0.1% of gross receivables at Q3 FY21 (0.4% at 1H FY21). Q3 FY21 net charge-offs were stable at 4% (4%, Q2 FY21).

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Source: https://australianfintech.com.au/moneyme-accelerates-lending-and-revenue/

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How Bizcap helped to fund fitness

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‘Pivoting’ may have been the buzzword of COVID-19, but it’s exactly what Anthony from A1 Fitness Supplies in Victoria did – with the help of some cashflow capital from Bizcap.

COVID-19 threw the world into chaos – many of us were working from home, the tourism industry was on its knees, hospitality was at the mercy of square-metre rules, and the fitness sector was pivoting left, right and centre with gym closures and restrictions on class sizes.

For A1 Fitness Supplies, which provides commercial-grade equipment to gyms across Australia, COVID could have spelled disaster.

Rather than shrugging his shoulders in disappointment, owner Anthony Scarcella spotted a business opportunity – however, he needed to find some capital to make it happen.

Commercial-grade equipment at home

For people who are accustomed to working out at a gym, traditional domestic gym equipment just won’t cut it.

“Everybody training at the gym is used to training on at least light commercial, semi-commercial or full commercial units. They’re not going to go from squatting from a full-power cage in a gym to a full domestic unit, which is probably going to bend and flex due to what they’re used to lifting in the gym,” Anthony explains.

Consequently, Anthony decided to bring light commercial-grade equipment to domestic customers. The challenge was financing the purchase of stock.

That’s where Bruno Lima, his Bizcap customer Loan Specialist stepped in.

“I gave Bizcap a call and spoke to Bruno – he did a couple of calculations and came back with an offer the same day,” Anthony explains.

Since his first cashflow loan in May, Anthony has returned to Bizcap a further two times, securing a total of $75,000 to invest into his business.

“In total, we ordered 16 containers out of China and only half of them have managed to arrive. So there’s another eight still to arrive, and they will be spread out between February, March and April.”

Quick funding enables A1 to seize the opportunity

For Anthony, working with Bizcap was a great experience that enabled him to quickly access the funds he needed to take advantage of the opportunity that presented itself.

“I find [Bizcap] far easier to deal with than traditional banks, and the funds come in a lot quicker, which means I’m able to get my stock in a lot quicker, I’m able to service my customers as quick as I possibly can if COVID doesn’t interrupt or disrupt, and I’m able to get my turnover in.”

While gyms have reopened, people have still become accustomed to working out at home.

“It looks like we need to do another two orders of full containers, so that’s going to spread out to May, June, July. Our year’s already solid,” Anthony says.

Thanks to the investment Bizcap provided, Anthony was able to maximise the opportunity.

“We needed to act quickly, and Bizcap helped with that,” he says. “The paperwork is minimal – and, in business, time is money.

“As a result, we were able to triple our turnover.”

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Source: https://australianfintech.com.au/how-bizcap-helped-to-fund-fitness/

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HashChing acquires Mystro to further expand its offering to mortgage brokers

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Australia’s leading mortgage broker platform HashChing today announced it has acquired document automation and data collection company Mystro. The acquisition follows a successful period of growth for HashChing and will help to expand its service offering to mortgage brokers.

Whilst a booming property market is predicted to continue in 2021, there is also significant consolidation in the mortgage broking market with a broader shift to online/digital channels, due to the global pandemic. This is presenting a considerable challenge to mortgage brokers who need to compete with both direct bank and non-bank lenders as well as other brokers, all whilst having significantly fewer resources to spend on marketing and sales technology.

Over 1,500 mortgage brokers across Australia already utilise Mystro to streamline their document management, client data collection and loan applications. For the 2021 financial year, Mystro has processed $28 billion in loan applications. The strategic acquisition announced today will allow many more to take advantage of both technology platforms and help level the playing field for independent brokers.

CEO of HashChing Arun Maharaj said the company was committed to providing the best possible resources for brokers to be successful, and the acquisition was the natural next step in this process.

“As Australia’s leading mortgage broker and digital loans platform, we are thrilled with the opportunity that this acquisition will bring to mortgage brokers. It’s our mission to help brokers deliver great customer experiences, and we know from our conversations that they’re busier than ever before. The way they interact with customers has drastically changed over the past 12 months, and digital productivity is a big part of broker success. That’s one of the key reasons why HashChing has acquired Mystro – its laser focus on eliminating repetitive tasks and streamlining digital processes is a perfect fit with HashChing’s mission to give brokers a one-stop-shop tool for productivity and profit.”

“With the industry changing at a rapid pace, HashChing has been quick to implement strategies and provide the necessary resources for mortgage professionals to resume business as usual. At our core, we offer choice; choice to our borrowers to access better deals, and choice to our brokers to engage with clients through technology and to diversify their income in the most productive way for them. I’m very much looking forward to working with the team at Mystro to make this a successful operation for all involved,” said Mr Maharaj.

Dmitry Chourpo, Founder of Mystro, said, “We developed Mystro to eliminate manual, repetitive tasks and help our customers focus more of their time and energy on what really matters. Through this acquisition, Mystro will retain the industry-leading team and brand but will now also be able to utilise the resources of the HashChing team, who share our vision in supporting brokers and look forward to creating a seamless, innovative broker platform together.”

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Source: https://australianfintech.com.au/hashching-acquires-mystro-to-further-expand-its-offering-to-mortgage-brokers/

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Fintech offers brokers better commissions after BID

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Nodifi, one of the rising names in the asset finance space, are to offer a new bespoke product for brokers that can help them to navigate the new Best Interests Duty (BID) regulations that have been in force since the start of 2021.

It represents a concerted effort to bring brokers back to asset finance after many departed the space due to the new rules, which reduced commissions for brokers and dissuaded many from engaging with consumer-facing asset work.

“It allows brokers to set fixed rates for consumer asset finance,” said Alex Ventura of Nodifi of the new product. “The reason that they might want to do that is because of the new BID regulations: when they were introduced, it meant that brokers had to dial down rates to the base rates as that is in the best interest of the consumers. When they do that, they don’t earn a commission on it.”

“There has been a big grey area around consumer asset finance so to overcome that, we’ve introduced a new update to the platform that has set fixed rates so brokers don’t have to worry about it because the commission is already inclusive in what that has been dialled up to. That’s the main benefit.”

To read more, please click on the link below…

Source: Fintech offers brokers better commissions after BID

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Source: https://australianfintech.com.au/fintech-offers-brokers-better-commissions-after-bid/

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