Josy Soussan, Funding Circle’s senior communications and PR manager for the Netherlands, spoke with Ron Lemmens of New Business Radio during its Baaz Business programme. Soussan touched on how Funding Circle, which provides an online financing platform for entrepreneurs and SMEs, does its business and the alternative finance market around the globe and in the Netherlands.
Soussan credits the growth of the alternative finance market to two factors: banks and fintech offerings. With the former, loans to SMEs account for a small part of financing and moreover, he notes, banks have been backing out of SME lending since the financial crisis. Therefore, he says, “Small businesses in the Netherlands aren’t adequately covered when it comes to financing opportunities”. The growth of the alternative finance market also comes down to fintechs like Funding Circle offering simple solutions with better financing experiences for entrepreneurs.
SME finance is a critical part of the Dutch economy, Soussan states when explaining the importance of offering SMEs adequate funding opportunities. Presently, entrepreneurs can get approved for loans in 24 versus the weeks it traditionally took when going to a bank.This waiting time is in stark contrast to other areas of peoples’ lives, where they can book hotel rooms from across the world from their smartphones and carry out many other tasks easily and digitally.
“How come this sector hasn’t seen the same technological shift?” Soussan asks, stating one of the reasons why Funding Circle began almost 10 years ago in the UK.
Soussan explains that Funding Circle uses tech along with human knowledge of different lending sectors to fuel its businesses. Technology is used to crunch thousands of data points for credit risk modelling and human knowledge of the lending business are both used to determine peoples’ ability to repay loans.
In terms of market size, the UK and US have more mature alternative lending markets than the Netherlands, whose alt lending scene is relatively young, but steadily growing. “You can learn from bigger markets”, says Soussan. For example, alternative lenders can use data from foreign markets to bolster their risk models.
Listen to the full New Business Radio recording here.