SME lender Capify eyes product rollout

Alternative lender Capify will look to rollout additional products and services as part of its client retention and growth strategy. 

Speaking at RFi Group’s Australian Business Banking Summit last week, Capify managing director John de Bree (pictured), said new product rollouts by alternative lenders would be a key future trend. 

“It’s costly to acquire new customers. To get a better return on investment, you need to offer your SME clients additional products and services,” he said. “It’s also about adding value and you can’t just do that by providing them with only a loan.” 

He acknowledged that there was a SME market gap for alternative lenders where 80 per cent of SMEs are likely to be approved for a loan by an alternative lender, compared with one in five from a bank. 

With only 1 per cent of the 2.1 million SME market cornered by businesses like Capify, he said this provided a “huge opportunity gap” for the sector. 

'Sweet spot'

In fact, according to de Bree, the alternative lending market today is valued at about $400 million and is expected to grow to $4 billion by 2020. 

He identified loans of less than $250,000 as “likely to be the first battleground” for alternative lenders and it is in this space that such lenders “will find their sweet spot”. 

However, he noted that SMEs did not just consider price when considering a loan from an alternative lender or a bank.  

Quoting industry research, consumers identified the speed of funds, simply of applications and convenience as among the top three criteria they seek from a lender. 

“Bank lenders have rates on their side but alternative lenders have speed and efficiency of process on their side," he said. “Therefore, you can’t just focus on providing core products. Lenders also need to make an effort to ensure small business loans are more seamless."

De Bree also believes that partnerships and collaboration will continue to remain a key trend for the alternative lending sector. The business has already announced a partnership with the listed financial services provider Thorn. 

Future partnerships

Under the alliance, Capify will be expanding its product offering and will soon provide access to products such as equipment finance and debt finance. The disruptor is open to further alliances in the sector. 

“For us, we possibly see future partnerships with broker aggregators as it gives us a wider reach," said de Bree. 

He also spoke about wider tends in the sector and believes that data and innovation will shape the future of the alternative lending industry but acknowledged that the current lack of analytics and insight is failing SMEs.

Echoing views already made by small business Ombudsman Kate Carnell, in an interview with AB+F, de Bree highlighted that SMEs still needed to secure a loan against a bricks and mortar asset like a house. 

He welcomed the Ombudsmen’s initiative to push for better data analysis and analytics in the sector adding that Capify uses a wide variety of data sources to assess the credit viability of a borrower. 

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