By Oliver Smith on Tuesday 16 November 2021
Covid has triggered a wave of technological upgrades, but improvements aren’t universal.
Technological advances among business lenders are a mixed bag, with alternative data being embraced but open banking failing to live up to expectations.
That was the overwhelming message of several speakers at the AltFi Lending Forum earlier this month speaking on a panel entitled After The Pandemic: SME Lending.
Ravi Anand, managing director of ThinCats, described how the lender had transitioned its tech stack to nCino’s cloud banking platform to launch CBILS (Coronavirus Business Interruption Loan Scheme) and have subsequently rolled it out across the board.
“Before [Covid], we were thinking about doing stuff ourselves on the tech stack, but it's actually quite clear to us now that most of it is available as a utility,” he said.
“Now we’re outsourcing that piece of the technology so that we can focus on the value, which is interpreting the data, understanding what's going on and automating things like the frontend and credit assessment.”
Jennifer Geary, nCino’s general manager of EMEA, added that her lending clients were asking for support in dealing with new data sources.
“They’re saying tell me something I don't know in terms of credit, and help me blend the sources of data that I'm used to, with new sources of data such as environmental, social and governance,” she said.
But while fresh data is clearly a cornerstone of modern lending, the discussion of open banking was rather less positive, echoing that of other panels during the day.
On the larger end of SME lending, OakNorth’s COO Stephen Sheridan said “the time taken to get the client’s data and ingest it is not a major part of our underwriting or portfolio monitoring effort.”
Sheridan described it as around five per cent of OakNorth’s workload when onboarding a new client.
“So it's useful, but not the main tool.”
On the smaller end of things, Katrin Herrling said: “the promise when open banking was released was actually much bigger than what it has delivered.
Instead, she pointed to commercial credit data sharing (CCDS) are a rather more impactful development, describing it as a “dark horse that has actually come behind open banking, much simpler, much lower impact on customers, with really rich and insightful data available.”
The core challenge of open banking data shared by all the lenders on our panel remains the categorisation of this largely unstructured data.
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