Non-bank lenders now hold close to half of New Zealand’s personal consumer lending, attracting customers who want speed and flexibility.
Most of us, at some point in our lives, have benefited from a loan.
Maybe the family has grown and you need a bigger car. Or you’re moving into your first flat and need a fridge, or planning a wedding overseas, or facing a repair bill you didn’t see coming.
At these moments, you don’t necessarily head to the bank. Instead, you might use a non-bank or specialist lender, a growing part of the market with more than $7 billion of consumer lending on its books.
This busy end of the lending market has just undergone a major change, moving to sit with the banks under the oversight of the Financial Markets Authority (FMA), which now licenses and supervises consumer lenders.
The sector was previously overseen by the Commerce Commission, but this move aims to consolidate financial regulations and make lending rules work better for both borrowers and lenders.
“The lending regulations keep evolving,” says Hadyn Halls, CEO of Kiwi lending company Finance Now, which provides a range of consumer lending products.
“The non-bank lending space has consolidated, the smaller operators have come and gone. We’re still here because we’re serving a good purpose, and we pride ourselves on being a responsible lender.”
Fast and flexible: the rise of specialist lending
Non-bank lenders now hold close to half of New Zealand’s personal consumer lending, on the back of steady growth in previous years.
While the banks have concentrated on bigger loans, specialist lenders have been busy building their systems and using their speed and flexibility to appeal to customers who want quick responses and an easy process.
“The banks focus on their core products, especially mortgages, and their processes are built around that – which is fine and works well,” Halls explains.
“But for other kinds of borrowing, that structure isn’t fit for purpose. That’s where we come in, because our processes are built around this part of the market. We still have all the appropriate checks and balances, but we can be a bit more flexible.”
Finance Now was established 26 years ago and has been growing ever since. More than 530,000 New Zealanders have borrowed from it, and it now employs more than 240 people, based mainly in its Invercargill and Auckland offices.
The founders’ original point of difference was a rapid online application platform that was ground-breaking at the time – and the company still prides itself on a quick and efficient onboarding process.
That means if you’re kitting out a new house with whiteware, you might want to take advantage of a 24-month interest-free repayment period. You could potentially be approved in minutes and have your new fridge and washing machine on the way home with you, paying it back before the two years is up.
“We’ve been going through some funny economic times,” Halls says. “I guess in more confident times people will spend their savings and not be so worried about their job.
“Now we’re seeing that people want to keep a bit of a nest egg, rather than using that to buy a bed or a fridge. They can keep that in reserve and buy the item with a long-term interest-free loan that spreads their payments, and it means they still have that backup fund if they need it.”
Finance Now only ever wants to lend to people who can afford their repayments, says Halls.
“To be really blunt, there’s no point in putting people into a situation where they can’t pay. That doesn’t work for anybody – them or us.”
‘Positivity and confidence’ from shoppers
Halls is proud that the company remains 100% New Zealand-owned and operated, and believes that’s vital to its success. Customer service teams are local, there are account managers across the motu, and it lends to everyday Kiwis.
“When you’re interacting with a call centre, it’s nice to have a familiar voice – someone who knows where Taihape is!”
With so many transactions coming across its desks – from car finance to retail purchases to personal loans and business lending – the business has its finger on the pulse of the average consumer.
So are there signs that things really are improving for Kiwi households?
“Absolutely there are, and if you’d asked me three months ago I wouldn’t have been able to say that,” Halls says. “You are seeing more positivity now. There’s been a lift in our motor vehicle channel, and a bit more confidence in people’s desire to commit.”
While he acknowledges the upcoming election may put spending decisions on hold, Halls is optimistic that New Zealand’s economy has turned the corner.
“I think people have had enough waiting to see what happens. They just want to get on with it. There’s definitely more positivity and confidence.”
Finance Now is a 100% New Zealand owned finance company. Find out more at financenow.co.nz