According to a new analysis of broker loan books, major banks granted market share in 2019 to non-bank, fintech and neobank challengers in commercial borrowing, as funding costs and increasing regulation thwarted their ability to meet steady demand.

Across the 2019 financial year, National Australia Bank-owned mortgage aggregator FAST’s annual business lending index report found the big four banks and their affiliates experienced a 10 percentage point fall in market share in business borrowing and equipment financing.

Lenders owned by the big four banks have seen a decline in market share from 77% to 67%, while non-major lenders have raised their share from 23% to 33%.

The total loan value of major bank borrowers decreased 12.5% from $4.07 billion in 2018 to $3.56 billion, while non-major lenders increased to $1.77 billion, which represents a 42.4% year-on-year improvement.

Overall, bank borrowers reported a 6% market share decrease, while non-bank players more than doubled their market share from 5% to 11%.

One contributing factor is incoming legislation as a result of Hayne’s Royal Commission, due to be implemented before the end of 2019 according to the Treasury’s timeline.

According to FAST, investments in data and technology, which make the loan application process smoother for both applicants and brokers, is another factor behind the surging loan-books of non-bank lenders.