Banking on startups

How online-as-a-service financial solutions are helping SMEs get a head start.

For small and medium enterprises, limited cash flows can stunt their growth and progress significantly. But a new wave of online financial services are helping entrepreneurs manage their finances better and find a way around previously unattainable credit. These range from completely online, branchless banking services, to startups that digitize lending to make it more seamless. As a whole, the move to online decreases costs so customers can save on fees, democratizes banking as services can be used virtually anywhere, and enhances user experience through the automation of processing and data analytics.

One example is Kreditech, a Germany-based online banking platform that uses big data to calculate credit suitability for any business. The bank analyses massive amounts of global data, including social networks, e-commerce records, and more, to assess credit suitability. Their algorithms factor 20,000 data points, enabling them to generate a credit score without using any external credit bureau information. This means that anyone with a smartphone or laptop can gain access to online banking services and loan credibility without prior credit history.

But for businesses looking for investment, credit from conventional loans may not be as flexible as support from investors. That’s when Lendingfront’s automated services could provide a solution. CEO and co-founder Jorge Sun has worked as Vice President at Chase bank, a Director at American Express, and Credit Officer at another fin tech startup OnDeck, amongst other financial institutions, giving him a wealth of experiences in small business finance and credit. The startup was one of the winners of the BBVA Open Talent competition last year.

Lendingfront provides a way for continuous integrated monitoring of the business life cycle, which they believe creates better risk management, more efficient relationship management, faster decision making and less manual processing. Their software automatically captures and structures social, credit bureau, fraud and cash flow data, and present information in an easy-to-understand way. It automates underwriting policies so decision making is more accurate, and users can manage their loans via a comprehensive performance dashboard.

For startups that are looking for immediate solutions, Billfront will pay pending invoices so they can continue investing into growth and development. Right now, app developers can wait up to 70 days to receive their revenues form app stores, but the fin tech company pays out these pending revenues, along with invoices from advertising networks, giving startups faster access to cash. This way, developers can ensure they maintain visibility throughout the initial stages of launch.

As banking increasingly moves online, the convenience and accuracy of digital tools is finding a home in fin tech platforms. For entrepreneurs, this means faster and more seamless access to loans so they can accelerate the growth of their startups. For investors, platform such as Lendingfront makes decision making and venture management more thorough and risk-averse.

Find out more about BBVA’s Open Talent here.