Is Fintech taking banking back to the good old days?
John Davies was interviewed by Credit Collections & Risk. Read the article.
Are new technologies really disrupting the commercial financial industry, or are they simply helping us to return to the simple, accessible system that banks used to operate?
'FinTech' ? it's a word we hear often, born from the innovation of the tech industry as it takes over the usually incumbent financial sector challenging old, traditional practices with new, smart solutions. As the sector grows, we are seeing more and more startups promising to disrupt the financial practices of the commercial sector to give SMEs more choice.
It was on this premise that The Just Loans Group was founded in 2012, a responsible alternate lender, with a variety of Fintech solutions integrated into our back office and customer journey to bridge the funding gap that has restricted the progress of many UK businesses over the last few years.
It's a well-known fact that British SMEs have problems accessing the finance they need to grow and develop their businesses. It can take weeks to get a bank appointment to apply for a loan and many more weeks to get an answer. We have looked to change that and review initial finance applications in under ten minutes which gives unsuccessful applicants the chance to move on quickly and look for alternatives or focus on improving their credit worthiness to support future applications.
We have invested heavily in developing our own PropensityPlus? scoring system which uses technology to gain insight into the propensity for both the Directors and business to be successful in the future. FinTech drives a comprehensive underwriting module that uses a wide variety of current and historical data points, many of which are not used by traditional banks or other lenders. The 'Plus' comes from highly experienced underwriters insightful questioning designed to give them a good understanding of the business, the Directors and their objectives.
The irony is that this is how business banking used to be ? timely, supportive and knowledgeable. There wouldn't be weeks of waiting to find out that your application was unsuccessful and you could speak to somebody from the bank that was genuinely interested in your business and had the time to give you direction. However, through time, traditional banks have felt the burden of challenges with their legacy systems and embraced centralisation. This has left gaps for FinTech startups to fill.
According to a recent PwC report banks are worried about around a quarter of their business being picked up by a FinTech proposition but rather than replacing the banks offering, we see it as an opportunity to find new smart ways to work together to provide SMEs with an alternative solution to their cash flow problems. We are not alone in this, according to the same PwC report, 32% of the financial services industry say they are 'engaging in joint partnerships with FinTech companies', emphasising the increasing collaboration between the two.
It is clear we are on the cusp of huge change in banking and I believe the alternative lenders sector has the potential to drive major success through technology, working with traditional providers to offer an improved service for customers. This opportunity means it is vital for us to accelerate our growth in line with the rapid pace at which is the sector is evolving.