At the UK Business Banking Forum earlier this year, one of the key takeaways was that trust is integral to the customer relationship, particularly for the SME sector. The banks are seen as having the advantage in this space, but a fintech with the right mindset that instils trust could arise as a true competitor. Niels Turfboer, Managing Director for Spotcap, has this mindset. With a traditional banking career and entrepreneurial experience, he is driving this innovative lender forward in the UK and other European markets. Turfboer met with RFi Group’s Sarah Hollinshead at the forum to discuss the perfect blend of traditional and innovative lending in order to create the best offering for this much-underserved sector.
The best of the best is only acceptable for Turfboer, who has worked at some of the top financial institutions across Europe, including ABN AMRO, ING and MarketInvoice, as well gaining an MBA from 2 of the top 10 universities in the world; New York University and Instituto de Empresa. Now driving the launch of lending-as-a-service for Spotcap, the bar has certainly not been lowered, with the service announced through a partnership with Austria’s second-largest bank, Bawag P.S.K, in January this year. Turfboer also discusses the launch of this platform and Spotcap’s growth plans for the future.
What drew you specifically to Spotcap and their proposition?
In the early stages of fintech, there was a lot of talk about disruption and people saying “we are going to change everything”. Having seen a similar hype around 1998, I was not convinced. So, I thought about what was actually possible, and this is what attracted me to Spotcap. From the start, they wanted to add value to the end customer, rather than talk about disruption all the time.
The reality is with finance, there is a lot of things that we don’t actually want to do differently. Compliance, regulation and trust, they are essential, and a big focus for Spotcap, which I particularly liked.
Similarly, I liked their proposition of targeting small and medium-sized enterprises, who have had trouble accessing finance, in particular since the financial crisis. Having started and run my own business for three years, I knew that finding the right funding can be challenging.
What is the big problem that Spotcap are hoping to solve for their small business customers?
When we think about breaking down the S-M-Es, we target the mid and larger size businesses within the ‘S’ part. In other words, our sweet spot is a client with between £1 and £20 million turnovers. These businesses can often access finance, but don’t receive a tailored offering. Equally, when it comes to managing cash flow, the only options they have available, specifically in the UK, are either very expensive loans, or loans that require assets.
We sit in a strong niche and, due to our proprietary technology and experienced underwriters, are able to provide competitively priced short-term loans up to 15 months, without asking for any debentures, or personal or director’s guarantees.
So, do you see your pricing as the key unique factor for Spotcap, or is it the speed/customer experience?
I would say it is a combination. There are many companies out there who can turn around a decision fairly quickly but don’t offer much more. Here at Spotcap, we make a real effort to understand our clients’ businesses, their risk profile and affordability. With the help of our innovative technology and well-trained client services team, we are able to make a credit decision within one working day—at a competitive rate.
How has your experience been in being purely digital?
Whilst we are front-end and back-end digital, we know that sometimes clients prefer to speak to someone in person. Business owners really care about their company; therefore, trust and relationships are really important to them. As a result, we have a dedicated team on hand to support our clients throughout their journey with us.
Take Holland for example which is quite a conservative market. We can turn around a lot of cases in 2 hours, however, we sometimes hold off for 24 hours, and incorporate a call with the client, just so they feel confident that their loan is being assessed properly. Without customers having a fuller understanding of the new technologies out there, trust is much more important than things like speed.
In what ways is Spotcap working with the banks?
We work with banks in a variety of ways. Our first partnership was with New Zealand’s Heartland Bank where we raised €14 million in debt funding. In January this year, we announced our most recent partnership with Austrian’s Bawag P.S.K, marking the launch of our lending-as-a-service proposition. Bawag P.S.K. is Austria’s second-largest bank, with 2.5 million customers; and when they go online, they see the banks services, but we are the white label engine behind Bawag P.S.K.’s “ExpressFinanzierung” SME loan offering.
Our own direct lending is an important part of our business and we serve SMEs in the UK, Spain, the Netherlands, Australia and New Zealand. Over the years, we have developed a sophisticated platform and plan to leverage this to launch into new markets. This could be done either directly or by offering our highly customisable lending platform to financial institutions. We are very selective about the banks we partner with, focusing on the top tier banks only.
How would you describe the current state of FinTech in Europe?
I believe there is less hype around fintech than there was between 2008-2013. The sector has become more mature, which I believe is a good thing. I see a lot of potential in fintech, as it ultimately encourages innovation in the financial industry, which was overdue. Ultimately, the fintech sector enforces competition, and through partnerships, it will become harder to make the distinctions between fintechs and incumbents. This is already happening. The push for innovation around the backbone products of banking, such as current accounts and payments, is an interesting trend, as these areas typically generate lower revenues. I am curious how players in those fields will eventually add other services or start collaborating with other fintechs, essentially converting more and more into banks themselves.
Originally published on RFi Group, a community for growth-stage businesses and entrepreneurs on 9 March 2018.
Originally published March 9 2018 , updated February 25 2020