From homegrown success stories to blockchain ambitions, emerging fintech businesses around the world are reshaping and reinventing how businesses access working capital and cash flow finance. As a result, they are slowly consuming more and more of the traditional lenders’ pie, as their nimble and agile technologies reach new and ever more niche markets.
As a new generation of digital native business owners and executives rise up the ranks, it is only a matter of time before the more traditional players find themselves playing second fiddle to fintechs, should they fail to accelerate investment into technology to future-proof their platforms and retain customers.
This article profiles some of the pioneers in the space. While some are going it alone, others have found strength in partnering with existing banks, who bring cheaper access to debt funding and distribution networks to the table.
Some have also found an untapped middle ground, acting as the rails between the funders, buyers and suppliers in the ecosystem, creating a new breed of digital marketplace capable of serious disruption.
Heading up the the list is Tyro, the first homegrown, Australian owned and operated technology company to acquire a banking license in over 16 years. The business started out life specialising in point-of-sale payments for small businesses in the health, retail and hospitality sector.
In 2015 Tyro secured $100M in funding, allowing it to fast track product development on its unsecured business loan offering, Tyro Growth Funding.
Using transaction data from approved merchants’ EFTPOS history, Tyro’s Growth Funding product allows it to extend working capital of up to 10 percent of a business’s projected annual EFTPOS turnover, on an unsecured basis.
Funds are received in 60 seconds, and a borrower automatically repays the loan with a percentage of their daily takings. This helps keep their repayments fluid, bite-sized, and in line with their cash flow.
Because the funding can be accessed by approved merchants in a ‘just in time’ fashion, this type of business cash flow loan helps businesses seize opportunities when they arise, and not miss out due to sluggish application processes with traditional financial institutions. It is a great example of the type of targeted, niche innovation that enables fintech’s to compete with bigger, but slower to move banks.
Securing £2m in seed funding through a number of venture partners, UK based Previse wants to bring data, artificial intelligence and machine learning to the supply chain ecosystem of funders, buyers and suppliers.
The fintech’s claim to fame is its ability to leverage ‘hundreds of millions of data points’ to more accurately and quickly assess a large buyer’s propensity to pay a supplier. Through the Previse platform, this data is then shared with funders, who can then use the intelligence to calculate the discount that should be applied to a supplier’s invoice, in the case of early payment.
Rather than own the entire supply chain finance relationship, the company acts as a middle technology layer, partnering with banks to help them better assess credit risk, in a faster and more effective fashion.
Waddle is another local Australian fintech startup in the cash flow finance space who burst on to the scene in 2014.
By connecting into small business cloud accounting packages (Xero, MYOB AccountRight and QuickBooks Online integrations are currently available), Waddle’s clever technology is able to offer up a line of credit based on all outstanding invoices.
Businesses can then drawdown on the Waddle line of credit as and when they need it. As buyers finalise invoice payment, these are directed into a Waddle account held in the business’s name, paying down the outstanding balance on the credit line.
Waddle has since expanded its operations to New Zealand, and recently secured $50 million in debt funding.
Danish business Tradeshift has quickly established itself as one of the dominant fintech players in the supply chain space, connecting millions of businesses around the world to help them streamline procurement and invoicing tasks.
Taking a cue from Apple and Salesforce, it allows new business processes to be deployed by downloading and installing apps from its platform. Plans are now afoot for banks to tap into this marketplace, with global banking powerhouse Banco Santander soon to come on board as a supply chain finance partner, helping free up access to cash flow finance.
Rounding out our list of fintech startups challenging the incumbent brokerage market and helping shine a light on up and coming unsecured business loan lenders is Australian startup Valiant Finance.
Aggregating loan products from over 50 traditional and alternative finance providers across Australia, Valiant take the leg work out of figuring out which secured or unsecured business cash flow loan is best suited to your business.
By asking a simple set of questions, the platform is able to quickly profile and identify which loan types are right for you, at the right price point, and then connect you directly to the lenders for onboarding.
Fintech is moving fast and Octet is at the cutting edge. The Octet platform is one example of how we are helping businesses like yours unlock credit faster than ever before, to keep your business moving. To find out more, talk to our supply chain finance team today.