Days after Australian alternative lending platform Prospa delayed its Initial Public Offering (IPO) indefinitely, one of its bank partners, Westpac, announced it was ending its relationship with the FinTech.
Reports in The Australian Financial Review (AFR) on Monday (June 11) said Westpac is ending its referral program that sees small business owners rejected for a bank loan linked to the Prospa platform.
In a statement given to the publication, a spokesperson for Westpac said the bank “did not continue our contract with Prospa because we are working on developing our own products that will satisfy more of our customers’ needs.” Reports noted that the decision signals heightened competition between banks and alternative lenders in the small business lending market as traditional lenders ramp up efforts to digitize and retain customers.
Westpac and Prospa first partnered in 2015 for their referral program. The bank did not reveal how many business borrowers it referred to Prospa under their agreement.
The financial institution did not mention news of Prospa’s IPO delay, announced just minutes before the company was scheduled to float on the Australian Securities Exchange, following criticism from regulators over its interest rates. The Australian Securities and Investment Commission is investigating Prospa as part of its overarching probe of the small business financial services market.
However, Westpac is not the only traditional lender to nix a partnership with a FinTech.
Reports in AFR pointed to the Commonwealth Bank of Australia’s (CBA) decision to end its referral arrangement with another marketplace lending platform, OnDeck, instead focusing on its own small business loan product offering.
“We regularly review our strategic partnerships and have made a decision to end our agreement with OnDeck,” a spokesperson for CBA said. “We have a range of competitive lending options that are suitable for our small business customers.”