Funding Xchange shows how data analytics will transform business lending
Small companies with short trading histories and thin credit files make up a growing part of the economy that established banks are not set up to serve.
If bank executives want to learn how the core business of lending to companies may be transformed by data analytics, artificial intelligence and increasingly digital processes, they should pay close attention to the marketplace for lending to small and medium-sized enterprises (SMEs).
Katrin Herrling is founder and chief executive of Funding Xchange, a UK marketplace platform on which SME borrowers just need to provide a few details on their businesses, the amount of funding they need and what they want it for and, within three minutes, they will be shown all the financing options for which they are eligible from 45 lenders, along with the terms they will receive.
Other companies have tried to aggregate SME lenders that borrowers may not know about but might otherwise finance – Finpoint, for example – but not with this degree of automation.
“Access to data is transforming this market and making it much more transparent,” says Herrling.
“Our system connects to the application program interfaces (APIs) of the leading credit reference agencies, such as Experian. Within three to four seconds, it draws their data on a borrower and our system then runs it through the credit underwriting models of our lenders, including eligibility, affordability and risk pricing.