Olena Gryniuk talks to Jens Woloszczak, Founder & CEO at Spotcap, about their Lending-as-a-Service, history and plans for the future.
Spotcap is a Berlin-based fintech operating as a direct lender and a Lending-as-a-Service provider. Founded in 2014, the company has originated more than EUR 500 million in credit lines to SMEs in the United Kingdom, Netherlands, Spain, Australia and New Zealand. Now its Lending-as-a-Service branch enables financial institutions to fully digitise their SME lending and provide same-day financing to their customers.
Olena Gryniuk: Could you share some of your achievements since you launched in 2014 as a loan supplier and Lending-as-a-Service provider? What are your 2020+ plans?
Jens Woloszczak: Since our launch as a direct lender, we’ve offered more than EUR 500mn in credit lines with low single-digit default rates and have an NPS score of over 70%. Our default rates have been below market averages as a result of our leading risk assessment approach.
We launched our Lending-as-a-Service branch in 2018 and since then have established multiple partnerships with leading banks across Europe and the ANZ region.
For 2020 and beyond, we plan to enter new markets, particularly in Europe, through our Lending-as-a-Service model.
OG: Can you tell us more about your bank partnerships, how have they evolved and what is your role in them? Do you offer white-label or co-branded solutions?
JW: Half a dozen institutions from five countries have already selected Spotcap as a partner in their digital transformation during the last 18 months, with the intention to offer a best-in-class digital loan product to both existing and new SME customers. Some examples include our partnerships with BAWAG Group in Austria and Zip Co in the ANZ region with more announcements to come shortly.
Our role differs in each partnership, as it’s tailored to the institution’s specific needs, but mostly we provide a white-label technology solution, as well as expertise as a direct SME lender.
OG: Your Lending-as-a-Service platform LendSuite seems to cover all aspects of a digital lending journey. Could you please explain which components it has, and what is unique about them?
JW: Spotcap LendSuite is our proprietary Lending-as-a-Service platform made up of numerous modules that facilitate onboarding, data processing, decisioning and servicing — all of which allows us and our partners to make credit decisions within 24h. A summary of each:
- Onboarding: Our onboarding technology includes multiple white-label web properties that allow customers to apply online in a few minutes. Customers need to submit some basic details, and our application forms fetch the rest through API connections with authorised third parties. Our KYC/AML checks confirm their identity and legitimacy, abiding with both local and international regulatory standards. To finish their application, customers can connect their bank account, upload PDF versions of their documents, or connect their accounting provider.
- Data Processing: As customers upload their documents, our technology automatically recognises and processes them, extracts the relevant information and supplies it to other parts of the lending platform. Through machine learning, our algorithm can learn to recognise multiple types of documents, such as P&L and bank statements, and can be applied across multiple languages and geographies.
- Decisioning:Our underwriting models generate a credit score for each customer immediately after they apply. A dedicated underwriting dashboard displays important insights, such as trends in income and expenditure, available balance over time, and how regular administrative payments are. For simple cases, our technology can fully automate the decisioning process and deliver a response to the customer, while analysts can use the dashboard to assess more complex cases in less than one working day.
- Servicing: Banks can introduce multiple cost reductions by optimizing their workflows with automation. For example, we developed a highly scalable system that works as a secondary layer on top of Salesforce. Based on information from customer interactions, the bank’s funnel structure and service level agreement, the system automatically generates, prioritizes and pushes tasks to multiple departments.
OG: At which stage of the process are humans involved (if any)? What percentage of credit decisions are made fully automatically versus the ones where underwriters are involved?
JW: This depends on the institution’s strategic priorities. If the bank’s aim is to focus on a fast response for smaller tickets, for example up to EUR 50,000, our platform is able to fully automate the end-to-end origination process and deliver a decision to the customer in under one minute. Larger tickets usually involve manual reviews by experienced underwriters.
OG: What are the primary data that you base your decisions on?
JW: We use multiple data sources such as credit bureau data, financial data, bank account data as well as information from regional databases (such as fraud). Over the past years, we have found that the category with the highest predictive power for unsecured loans is transactional data from the applicant’s business bank account.
Our risk assessment models use transactional data to calculate a default probability score, signaling how likely an applicant is to default on a potential loan. In addition, they produce a recommended credit amount for applicants who stand below the bank’s risk threshold.
While we have included these features in our end-to-end platform, we also offer Business Bank Account Insights ML, which is a more flexible option. Through an API call or a dedicated portal, banks can upload transactional data in CSV files and receive the same insights in a PDF report. This allows them to pre-score leads and filter out rejections in a more streamlined process, without having to reconstruct their entire system.
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