Santander and Kabbage team for SME funding innovation
Sigga Sigurdardottir, Santander
Santander and Kabbage are piloting an online tool to give UK small and medium sized enterprises (SMEs) access to same day funding.
Announced today (4 April) at Money 20/20 in Copenhagen, SMEs can get access to new working capital of between £500 and £100,000 via an online process.
At a media briefing, Sigga Sigurdardottir, chief customer and innovation officer, Santander UK; Robert Frohwein, co-founder and CEO, Kabbage; and Kathryn Petralia, co-founder and COO, Kabbage, explained how the process works.
The solution is “exclusively” online and works 24/7. Santander uses the Kabbage platform to provide a line of credit. Approval times can vary – from 20 minutes up to 13 hours, but both firms emphasise that traditional methods would take between two and 12 weeks.
Interest on the loans can range from 8%-20% depending on the customer’s line of business and level of risk.
Sigurdardottir describes the service as “unique”. The pilot will occur over the next two months to a group of Santander customers. After that pilot period, both companies will look to “refine” the performance. Sigurdardottir says no timescale on a definite go-live is available yet.
She says there are 5.4 million SMEs in the UK, and both firms will be looking to tap into this market.
In a demo to the media, Geof Alexander, product manager, Kabbage, showed how the applicant need only fill out a few website pages. From the customer perspective it looked very simple and easy to use.
At the back end, there are no manual checks according to Frohwein. The platform processes algorithms, carries out fraud checks, and uses social media to decide if the loan should be approved.
Kabbage also references multiple external sources including credit ratings, payments providers, online marketplaces and the SMEs bank account history, both from Santander and other bank accounts held by the SME.
Alexander points out that in terms of social media, some companies use Facebook like a CRM tool to interact with customers. And how well these firms interact can play a part in the approval process. For example, are they responding well to complaints or are they being active and responsible.
Petralia says that based on the online solution’s use in the US, 95% of customers’ applications were successfully approved.
Once the pilot is complete, it will be interesting to see how UK-based SMEs react to this new service.
