An East-Asian financial technology company has arrived on UK shores, with a view to re-energizing the traditional small business lending space.
We have a frontrow seat at the Innovate Finance Global Summit today, where AMP Credit Technologies has just announced its entry into the UK market. The company is a leading provider of advanced technology to small business lenders – thus far operating in Hong Kong, Singapore and the Philippines. AMP combines innovative credit modeling with daily cash flow data in order to empower a variety of lenders (both of the traditional and alternative variety) to write short-term, unsecured loans to small businesses.
I had a chance to sit down with CEO Thomas DeLuca at the Guildhall today. Since launching in 2010, his company has been making use of its own capital in order to make loans to SMEs within the aforementioned Asian countries. But AMP’s plan of action in the UK centres on the facilitation of SME lending – via the outsourcing of the company’s “alternative lending” technology platform.
Mr. DeLuca’s most likely clients, rather than representatives of the alternative finance sector, are in fact the banks and other established financial institutions.
The AMP boss explained:
“At AMP, we believe that the best way to address the small business credit gap is actually to empower banks and business service providers, which have the advantages of lower cost of capital, regulatory protections, extensive distribution and trusted customer relationships, to employ our alternative lending technologies for the benefit of their small business customers in a manner that is simple, clear and fully transparent to the borrowers. We differentiate from other providers by promoting equitable, transparent and trusted small business lending through banks and business service providers using a systemic approach, rather than seeking to disintermediate them.”
The company’s expansion plans have been fuelled by the SME funding opportunity in the UK. According to government statistics, 99% (5.2m) of all businesses in the country in 2014 were SMEs – representing 60% of employment and 47% of turnover in the UK economy.
And yet as AltFi readers will by now know only too well, traditional avenues of credit for SMEs have been closing up in recent years. Only recently we published our latest update on the state of the Funding for Lending Scheme – which unfortunately painted a fairly dire picture of traditional lenders’ small business-oriented activities. The alternative business funding scene, on the other hand, has been ballooning in terms of transactional volumes on a quarterly basis. Will AMP’s services help traditional lenders to stop the bleeding?
AMP’s alternative lending technology platform allows for automated loan origination, daily loan servicing and real-time portfolio risk management. In other words, the company both speeds up and streamlines decision-making and monitoring processes – encapsulating the subject matter of one of the main-stage sessions at the AltFi Europe Summit 2015, which took place two weeks ago today.
A diverse and growing group of financial technology solutions are beginning to align themselves with the alternative finance space. Last week, for example, we reported an instance of fraud-detection software AU10TIX in action – as it netted a would-be crook attempting to draw down a loan from the Zopa platform.
The UK’s marketplace lenders have taken huge strides towards proving the commercial viability of lending to SMEs. Their work has already persuaded the likes of Goldmans Sachs and Society Generale to mull over a partnership with online trade financier Aztec Money. Should more financial institutions choose to follow suit, we now know that AMP Credit Technologies will be waiting with open arms.
AltFi is returning to Amsterdam for its second annual Summit in the city. The inaugural event last year was a roaring success, with key figures from across Continental Europe's alternative finance and digital banking sectors highlighted. These included Jeroen Broekema, managing director of Funding Circle Netherlands, and Mieke van Engelen, head of innovative partnerships at ABN AMRO's standalone lending platform, New10.