Fintech – Who’s getting it right?

By Jamie Stewart on 16th October 2018

 

Fintech is definitely the buzz word of the day in the commercial finance sector, and it is a label seemingly attached to any and all financial technology, however loosely suited.

Because of this, there is often an air of cynicism when firms promote their services with such titles as ‘fintech platform’ or ‘fintech solution’. Even though this can dilute or confuse what fintech really is, it doesn’t take too long to scratch the surface and find some truly innovative, distinctive and effective solutions. These new and exciting ventures are really driving the development of our industry, creating and designing an intricate set of tools, from their tech start-ups in shared work spaces dotted around the country. It’s these young, T-shirt wearing hipsters whose creative visions and approaches are shaping the future, and bringing an archaic financial model kicking and screaming into the 21st century.

 

The new school

Without a doubt, it is the lenders that have led this charge. The ‘gold rush’ of VCs and institutions looking to jump on the fintech runaway train allowed that technology to blossom and created the pioneers and founding fathers we all know today. However, it seems the relentless pursuit of market capture results in resources and attention being diverted elsewhere – which, in our market, has inevitably led to a slow-down in technological progression. A subsequent second wave of lenders, aggregators and tech firms that have tackled the frustrations of a young market are providing a much higher calibre of genuine fintech solutions that further reduce friction and ultimately enables them – and us – to lend and arrange more finance, much quicker and more effectively. At Think, we value true next generation fintech lenders with genuine end-toend tech solutions that (in some cases) require no human input whatsoever along the customer journey – and we are pleased to see that some Patrons are already offering this service.

 

Open Banking

Fintech comes in all shapes and sizes as we know, and there are some pioneering and effective pieces of kit, both in and entering the market. Specifically, I mean the ones that offer solutions that are enabling much more robust decision-making capabilities for lenders – which, in turn, mitigates risk for them and ensures borrowers have access to the right types of facilities. One clear leader in this field is OpenWrks, conceived and executed by the guys at Business Finance Technology Group, which has had its foot placed firmly in the market for a number of years, being the team behind businessfinancecompared.com and Handle.

 

OpenWrks was the deserved recipient of the Open Up Challenge grant, which gained them funding and access to the Open Banking Standard API sandbox, and enabled them to create a tool that allows brokers and lenders to read and download their clients’ bank statements directly from their clients’ online bank account. Think has partnered with OpenWrks to launch and pilot to great success, reducing our clients’ application time by over 70%. OpenWrks founder Olly Betts commented: “It’s exciting to see Think leveraging Open Banking and digital journeys to create a step change in how they help small business owners get funded. Not only can they make applying for finance less of an administrative burden, but it also means lenders can make faster and more accurate and tailored lending decisions. “This is a watershed moment for brokers in the small business finance market and one that I believe will lead to more small businesses getting the money they need to grow.” In line with the trend, we built the ThinkApp Aggregator Platform with that vision of streamlining the funding journey in mind. Once a client’s information has been received by the platform, our algorithms searches the whole of the market based on each client’s requirements and the information pulled from third-party data feeds – such as credit bureaus and Open Banking – produces a shortlist of lenders. From here, brokers can submit funding requests to lenders at the click of a button, matching that to the progressive lenders on our panel that can offer live rates, instantly. Another extremely effective tool for both lenders and brokers and one that has – through the help of our panel lenders – allowed us to drill down and match further our clients to the right lenders is DueDil.

 

DueDil is a company information platform that pulls together data from thousands of sources, including company websites, financial filings, news reports, registry data, trademarks and court judgements.

This information then becomes searchable by company and presented on an easyto- use dashboard. This helps us and our lenders to avoid risks by identifying the right companies to lend to – and how much to lend. This tool – working alongside the OpenWrks Open Banking data – really optimises the process of filtering through hundreds of lenders, and ensures our own ThinkApp software can genuinely match within the closest parameters possible.

 

The utopia

The ultimate aim is simple, end-to-end, live decisioning, pricing and drawdown – and I feel, for the first time since the initial gold rush, that we are truly getting there. This promised land could have an immeasurable effect on the productiveness of the industry, the broker market and the overall economy, and create a sector that has finally caught up with financial technology. In a world of instant money transactions – be it through online or mobile banking or services such as PayPal, TransferWise or Revolut – it’s about time debt and borrowing dusted off the cobwebs.