Think Business Finance – Innovation in alternative lending
When it comes to innovation, generally the businesses that move first and who aren’t afraid to explore new avenues are the ones that come out on top. With the advent of Open Banking in the UK, we caught up with Jamie Stewart, Co-Founder and Director at Think Business Finance, on why Think wants to be one of the first businesses to take advantage of Open Banking.
Tell us a little about yourself and your journey into SME lending.
My experience has predominantly been within the B2B web space. I started my career selling energy to businesses through comparison sites, playing a part in taking that business from half a million to £12 million turnover. We were able to do that because we nailed the analytics and the nuances of selling to businesses via third-party websites.
Think Business Finance came about after chatting to one of the other Think Directors about how the alternative lending market had risen from the ashes after the 2008 crash and the fractured online/offline experience. I came onboard to Think to lend my experience of joining up those two channels.
Back then the number of comparison sites that were offering different types of commercial lending was low. So, I used my existing experience to build similar relationships and it proved very successful because we were able to hit the ground running.
What makes Think Business Finance different? How do you help your customers and what opportunities are you taking advantage of?
A limitation of the commercial finance comparison market is that it is hard to do a genuine match and completion completely online. We match 85% of our applicants with a financial product because we empower and enhance our teams capability with technology
We provide people with an experienced team and a strong sales ethic. We understand that they’re not yet a Think customer, we turn them into one simply by offering the best possible comparison that’s personal to them and their specific situation.
Think is different because from our own frustrations with available technology, we decided to just build our own. Now our technology helps find an effective match between our customers and the right finance product 85% of the time.
Our platform uses algorithms that require 180 data points. Asking a person to fill out 180 data points would see the majority drop off simply because it’s too time consuming. We do that work for the customer which allows our experts to create a vivid picture of them and their business and help us find exactly the right finance product for them.
What are the main challenges small business face when accessing the finance that they need to grow?
People looking for loans are driven by a handful of different things. Is it time sensitive? Do they need a loan ASAP? Is it a short term solution or a long term plan? Is it a project? Are they reacting to something or proactively going after an opportunity?
If the person is reacting to something, it’s common for them to choose the wrong loan or go for a loan that is perceived to be right, but could actually cost them tens of thousands more than necessary.
At Think we break it down so that no matter the situation, the customer is getting the right loan for them. We give consultations and get feedback on what the customer needs from their loan, how they’re looking to repay, whether that’s flexible or balloon payments etc.
It’s a delicate balance.
We never want a customer to come back to us and say that we’ve supplied them with the wrong loan. We aim to provide people with the products that allow them to grow, which for us results in lifetime customers.
How does a business owner get access to alternative finance? Is it still quite manual ie having to provide lots of documents?
Yes, it’s exactly that. We all know how easy it is to get a personal loan on money supermarket for example, but alternative finance isn’t like that.
That’s why we’re working with OpenWrks. Innovations like Open Banking are getting us closer to the utopia of being able to get someone a highly personalised but instant, online quote.
Speed and advantage didn’t used to be part of the competitive spectrum, but now speed is a crucial element for any lender. For a customer, waiting 3 to 4 days for an answer feels like a lifetime.
Our customers make up 99% of the business market. The small businesses where the owners are dealing with the finances as well as taking out the bins, paying the staff and dealing with customers. These business owners have a consumer mentality and we need to continually improve our services to deliver that reality.
How do you see Open Banking helping more small businesses getting the finance they need?
At Think, our customers come to us for information, during our initial consultation we get to understand their situation and then we match them against our panel of lenders. Once we’ve done that we start to onboard them into our online platform.
It’s at this onboarding stage where we request documentation that we see hundreds of people stalling. A lot of people will simply drop off due to lack of time or some other blocker, for example, some businesses will have an accountant that only works Wednesdays. A combination of all of these types of things stop us from getting the documentation we need so we can provide the customer with a quote.
This is where I see Open Banking coming in. It allows us to minimise the time between enquiry to acceptance. We’ve already established our algorithms and logic, we’re already connected to companies house and by combining that with bank account data we can tighten up processes and create faster results for our customers.
As well as this operational improvement Open Banking will allow us to stay connected to each of our customers so as the business grows or changes we can provide updated quotes dynamically without the need for a credit check.
There is also huge opportunity for young businesses, that may have been trading for less than 2 years. They would fall out of normal ‘tier one’ lending products, so they might have to go with more expensive rates than they were originally looking for. But by having them in the system, we can then see when a business rolls into different criteria phases and prompt them to get a better deal.
I can’t wait for it to get going. It’s going to be a game changer for our customers.
Why have you chosen to partner with OpenWrks to deliver Open Banking into your business?
I have a long standing relationship with OpenWrks as we previously worked together on a bank referral scheme with Business Finance Compared. I have had conversations with a number of other companies that are offering Open Banking solutions and not one of them comes close on anything; on the technology, on the processes and on the relationships. OpenWrks has a full house.
Another important element that OpenWrks offers is the clarity of products. I’ve had other businesses promising me the world but when you get down to the detail they’re unclear on what they’re actually offering.
It seems to me that OpenWrks have got it nailed.