Melbourne-based fintech MoneyPlace has signed a five year strategic partnership with Auswide Bank, with the bank committing to provide up to $60 million towards the fintech’s consumer lending operations.

Australian peer-to-peer (P2P) lender MoneyPlace has signed a five year strategic partnership with Auswide Bank, with the bank committing to provide up to $60 million towards the fintech’s consumer lending operations.

The deal also sees Auswide Bank grow and diversify its financing activities nationally, as well as acquiring a 20 per cent equity stake in the fintech.

MoneyPlace chief executive, Stuart Stoyan, said the announcement provided a “validation of the MoneyPlace business model” by providing borrowers and investors the “comfort” and “confidence” to explore P2P lending.

“If you are a large banking organisation that is 30 to 40 years old … you have a spaghetti of processes and systems which mean that customers have an ugly system for personal lending,” he said.

“We have tried to make it feel as little like banking as possible.”

Stoyan said the partnership also represents a “critical milestone” for P2P lending globally by establishing a precedent for how banks can work with alternative lenders to provide “fairer, better rates” to customers.

“[This] is an example of the type of collaboration we believe enables traditional lenders to tap into the innovative business models that alternative lenders like MoneyPlace bring to the market,” Stoyan said.

“What we have in Auswide Bank a partner that is very willing to be quite non-conventional in the way they are thinking of working with MoneyPlace [and] there are a number of things that we have not announced that we are working on for 2016 … it gets to a deeper entrenched relationship [that will] benefit both parties.”

Auswide Bank’s Managing Director, Martin Barrett, said the bank is keen to enter the emerging P2P space to assist its growth in the consumer finance market as well as focus on improving its competitive positioning against the Big Four banks.

“By taking a 20 per cent equity stake, as well as using the MoneyPlace platform to invest funds for consumer finance, both organisations benefit and most importantly those customers requiring consumer finance benefit,” Barrett said.

Building on the momentum

MoneyPlace recently launched after receiving its retail and wholesale Australian financial services licence (AFSL) and provides loans of $5000 to $35,000 through its peer-to-peer lending platform.

Barrett called the partnership a “wonderful opportunity” for both organisations to grow and be at the forefront of P2P lending in Australia.

“We believe we are the first bank in Australia to take this dual equity and funding position … it represents the ability for us to accelerate our consumer finance ambitions nationally,” Barrett said.

According to Stoyan, a key priority for MoneyPlace in the coming months will be distribution, as the P2P lender continues to explore non-traditional partnerships as well as working with non-financial services businesses.

 “Partnering with a fintech is no longer a dirty word. We know this space, we know what’s broken with consumer lending and we know how to fix it,” Stoyan said.