MoneyMe (ASX:MME) and the success of tech-focused lending

As more and more ASX-listed fintechs join the increasingly crowded lending market, a key qualification has emerged for determining success — being tech-focused.

Lenders are moving operations online and away from the brick-and-mortar set-up of traditional banks and other credit institutions. By doing this, a company can slash its overhead costs and invest its savings back into its own growth.

One of the companies which have found success from this tech strategy is MoneyMe, a digital credit business which offers an ever-growing range of different loan products and credit cards to consumers.

By using technology to lower its operating costs, the company has been able to increase its revenue at a time when many other lenders are struggling.

It’s not a great time to be a bank

Not only is the lending market becoming more crowded, and as a result more competitive, but consumers are increasingly moving away from traditional methods of lending.

Data from the Reserve Bank of Australia shows in the last few years consumers have turned their back on personal loans in favour of other forms of credit.

The decline has been linked to the Federal Government’s Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry which found some consumers were being heavily taken advantage of.

The RBA also believed more people turned to mortgages offset and redraw accounts, which act as a line of credit, because these loans are attracting very low interest rates in line with the Reserve Bank’s own cash rate.

It’s likely the buy now, pay later market has also encroached on number of the personal loans and credit cards being issued in Australia, as evidenced by several of the big banks’ decision to launch their own zero interest personal credit options.

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Source: MoneyMe (ASX:MME) and the success of tech-focused lending – The Market Herald