Fintech business finance is not just about data and technology

As a leading alternative finance lender in the fintech space ThinCats has built a regional network of experts based across the UK. Why? Isn’t the whole point about fintech to digitise and automate?

The funding expectations of today’s entrepreneurs have changed markedly in recent years. The rise of Fintech companies has provided unparalleled levels of accessibility and speed, largely facilitated by innovative technology and data modelling.

We think there is more to lending than algorithms and software though.

Of course, using our data and technology skills is still fundamental to what we do, continually developing our PRISM data models which we built specifically for mid-market SMEs. It means we can assess credit risk in a very focused way by interpreting vast amounts of data to make what we believe are more informed credit decisions. It gives us an information edge over lenders using less bespoke credit models.

However, we also understand the level of service businesses and their advisers want from their lending partners. We recognise that whilst every funding solution we provide is fully bespoke, we need to provide quick and accurate assessments around whether we can fund the deal, the likely price and under what terms. Whilst our data and technology skills play an important part in this assessment, we find that it’s only through having experienced credit and finance people “on the ground” and close to potential borrowers and their advisers that we can offer the highest levels of service.

In effect, we are aiming to replicate part of the role that used to be carried out by local bank managers before the banks started culling their branch networks. In fact, many of our regional finance experts have joined us from banks and continue to be immersed in their local business communities. By also having experienced credit experts in region, we have excellent knowledge of local industries which are often concentrated in specific sectors.

Better than bots: Regional business development

Corporate finance advisers, accountants, private equity houses and commercial finance brokers provide critical advice to businesses in terms of structuring potential deals and working with lending partners such as ThinCats. To serve these intermediaries we have regional business development directors in all the UK’s major business centres, real people, not automated bots. These teams perform four important roles:

• Educating intermediaries on the types of funding that we provide
• Providing early indication of our credit appetite and indicative pricing for new deals
• Taking advisers and borrowers through the funding approval and drawdown process
• Continuing the relationship after initial funding as a long-term partner

The regional Business Development team becomes a one-stop-shop for business clients and their advisers, enabling transactions to move quickly and with greater transparency.

Beyond the data: Regional credit teams

To support our intermediary relationship teams, we also have 3 regional credit teams based in Manchester (North of England & Scotland), Ashby de la Zouch (Midlands, Wales & South West England) and London (East Anglia, London & South East England).

Rob Thompson leads our credit team in the North

By having our business development and regional credit teams working closely together they can discuss the merits of potential deals and provide a quick initial assessment. If we think we can fund a deal, the regional Business Development Director and regional Head of Credit will meet the prospective borrower as soon as possible to find out more about their plans for the business and the purpose of the required funding.

As many of our loans are cashflow backed we need to see exactly how a business generates its profit, and be aware of potential risks to future profitability.  Having a good understanding of how a business will hit its forecast EBITDA targets and manage its cash flow is critical and is where the local and sector experience of our regional credit teams comes to the fore.

The other great advantage of meeting and discussing funding needs directly with prospective borrowers and their advisers is that we can often suggest alternative funding structures that may be better suited to a business’s longer-term plans. This depth of understanding just isn’t possible in many traditional lending models where centralised credit teams may have little or no direct contact with prospective borrowers.  

By investing time to properly understand prospective borrowers through our regional teams and by enhancing this with insight from our data-driven credit models, we identify many businesses that we are keen to fund that may be overlooked by traditional lenders.

It’s what makes us different – using technology and data to enhance relationships rather than replace them.