UK fintech enters business lending market
(3 November 2017 – United Kingdom) UK-based digital invoice finance platform MarketInvoice has announced that it will provide business loans to its customers for the first time.
The fintech company enables businesses to sell their unpaid invoices to provide working capital.
The firm said it would expand into the business lending market, challenging other startups in the online lending space such as peer-to-peer lender LendingClub and Funding Circle. The latter raised £82 million (A$130 million) in funding from venture capital investors earlier this year.
MarketInvoice CEO and co-founder Anil Stocker said the firm will take advantage of an incoming European Union regulation called the Second Payment Services Directive (PSD2), which forces banks to open up data about their customers to third party companies.
"PSD2 is a regulatory change that is going to be a real catalyst for us because we're able to get access to SME (small to medium-sized enterprise) customer information," Stocker said in a phone interview Tuesday.
"We can use things like machine learning and artificial intelligence to build better credit scores with this data. I think the banks are starting to realize that this world they've had guarded around customer data for so long, now it's starting to open up."
MarketInvoice said the loans will be funded through the company's digital platform.
"For the loans, we have a marketplace model in the sense that investors put money into loans," Stocker said.
"They're divided into high net-worth individuals and institutional investors. About 50 percent of loans are institutional funded, while 40 percent are from high-net worth investors."
Businesses will be able to borrow from £10,000 to £100,000 over a 12-month term with no early repayment fees. The loans will be available to businesses with a minimum turnover of £70,000 and which have been trading for at least six months.
Stocker added that there would be "a lot more" firms entering the market with the introduction of the EU's new law.
As the EU pushes for banks to open up their customer data to third parties, Stocker believes his platform will be well poised to take advantage.
"In the backend, how we collect all that information, is we pull lots of data points. Banks have very few data points whereas we have a much richer picture," he said.
"The more loans that we do and the more transactions that we do basically make that model better and better."
MarketInvoice said it has beta-tested business loans for three months, and that this was met with positive feedback.
MarketInvoice 'definitely looking into' partnering with banks
Stocker added that, as the EU's new rules come into play, fintech firms and banks should be encouraged to collaborate and partner.
"We're definitely looking into partnering with banks but at the moment we're pretty happy with our model," Stocker said, when asked whether his firm was considering partnership.
MarketInvoice claims it has funded, to date, more than 17,000 invoices totaling £1.6 billion.