With the trend of marketplace lending well and truly on the rise here, what are the big banks thinking and how will they adapt to a growing market in personal loans?

We call it a two-pronged approach – they want to collaborate with start-ups and their investors, a strategy which sees them jumping on the bandwagon to support the digital trends following personal loans, car finance and SME lending, until they decide how they want to make their move.

In EY’s 2016 Global Consumer Banking Survey, 55,000 people were surveyed globally. Forty per cent said they were becoming less dependent on a bank as their primary financial services provider and were increasingly excited about what alternative finance companies could provide.

Banks certainly understand, and are concerned about the threat posed by the digital era, but it’s how they collaborate that will in the end reveal how much concern they have.

Will they play ball and continue to reshape their current digital offering? Or will the benefits of marketplace lending offered to customers and shareholders be too detrimental to the bottom line to compete?

By the looks of it, the mutual banks and credit unions are the most on the ball even though they have seen the proportion of their total lending book made up by personal loans slide over the past 20 years from 52 per cent to just 8 per cent now. Mutual banks and credit unions are now teaming up with new companies to tap back into this market as a new growing asset class.

This sort of collaboration shows how digital disruption can benefit incumbents and create value.

The charge in Australia has been led in consumer finance by SocietyOne, in small business lending by Prosper and OnDeck and in banking and payments by Tyro, Afterpay and zipMoney.

What is clear about these new players is their ability to raise the capital, use their technological advantages and attract significant customer interest to prove that the opportunities afforded by disruption are now translating into serious, leading businesses.

If the last 18 months have told us anything, the start-ups of yesterday are now the scale-ups of today.

And tomorrow could tell an altogether different story based on what has happened elsewhere and, more critically, how our customers attest we are beginning to make a real difference.

Anna Harper is the chief financial officer of peer-to-peer lender SocietyOne.

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