The most innovative start-ups in the financial sector use technologies such as artificial intelligence and machine learning to improve the lives of SMEs. In this way, they help them obtain financing and improve their productivity.
The time is gold. For many SMEs, waiting weeks or even months before receiving approval for a loan or spending hours managing their payments means investing precious time that they would prefer to dedicate to moving their business forward. The good news is that in recent years the fintech are putting all the meat in the barbecue to help Spanish SMEs in their financial needs, which can save them time … and money.
Fintechs are companies that rely on technology to provide a new financial service or improve existing ones. It is a phenomenon in full swing in Spain, where there are about 400 registered companies, which makes us the country with more fintech per inhabitant, according to the AEFI (Spanish Association of Fintech and Insurtech).
These companies are subject to the same regulation as other operators depending on their scope of action. Therefore, in order to carry out their activity they need to obtain permission from the competent authorities, such as the CNMV and the Bank of Spain.
Utility for the SME
Fintech use technologies such as machine learning and artificial intelligence to automate tasks and optimize processes. In this way, they facilitate the procedures for companies to obtain financing and help improve their productivity in different areas, from accounting and billing, to means of payment and currency management in their international operations.
The truth is that SMEs have not always been a priority for them. But in recent years the tables are changing. “Small companies and the self-employed have been forgotten by the Fintech world for many years, and only recently are solutions adapted to them emerging, whether they are new interfaces and new banking proposals, new credit categories, as well as a wide range of utilities, from tools for projecting cash flows to foreign trade solutions or optimizing foreign currency flows “, explains Manuel Silva, managing partner and head of Investments at Santander InnoVentures.
The key lies in the latest technological advances. Thanks to them, fintech can serve even the smallest companies and still get benefits, according to a study by the BI Intelligence consultancy. Specifically, efforts are focusing on three market niches: the granting of loans, business accounts and payroll and treasury management services.
Another area in which fintech has much to contribute to the world of SMEs is collective financing. “Crowdlending is one of the services that contribute the most to the SME, through this way, companies and freelancers obtain alternative financing without having to contract additional products, in an agile and transparent way”, affirm from the AEFI.
In this context, traditional banking has opted for a symbiotic relationship. An example of this is Santander, which leads the list of the most active European entities in investments in Fintech through its InnoVentures fund. Founded in 2014, the fund was endowed with 200 million dollars and has a double strategic and financial objective to cooperate with the companies in which it invests, beyond the financial profitability that a more traditional investor would expect.
Since its inception it has invested in more than 20 start up. 70% of them are already working in some way with the bank. “Banco Santander’s interest in fintech lies in collaboration: the Group sees them as accelerators of the digital strategy in order to provide more and better solutions to our customers, improve communication channels, achieve cost reductions associated with improvements in the bank’s infrastructure, etc. “, explains Silva. And, at the same time, collaboration favors start-ups, which have access to the bank’s extensive specialized knowledge and its global network of clients.
For its part, Bankia organizes an annual start-up incubation and acceleration program (Bankia Fintech by Innsomnia), in which it seeks to attract the talent of a score of fintech that can provide solutions and value to the bank’s customers.
The climate of understanding and search for synergies between traditional banking and fintech reaches even the world of crowdlending. In fact, many banks use these platforms to co-invest with individuals when financing loans to SMEs. In Spain, these are private banking or investment entities, but in markets such as the United States and the United Kingdom, even commercial banks join the pool of investors. Would not she be competing with herself then? “In the end, their objective is to find the best way to make their liabilities profitable and that may not always be through their network of offices,” says Lucas de Mendoza, Loanbook Operations Director.
In the spotlight
The interest of banks and other actors in the financial sector for the fintech universe is propitiating all types of corporate operations. Thus, last June InnoCells, the digital business unit of Banco Sabadell, took out the checkbook and acquired its first fintech: Instant Credit. Two months later the WiZink bank bought the Spanish Aplazame, while a week ago Enxendra Technologies acquired Besepa.
Sometimes the transactions are closed with millions. As a sample button, Izettle, a Swedish fintech of means of payment that was participated by Santander in its beginnings. Last September Paypal took it for 2.2 billion dollars. An amount that exceeds the market value of several Ibex companies.
The solution to manage receipts
Have you ever stopped calculating the time you lose by directing receipts? Gonzalo Valverde and Alberto Molpeceres worked in a payment gateway and realized that the time that SMEs used to perform this type of management was very high, so they decided to launch Besepa, a ‘fintech’ specialized in helping companies to manage your recurring payments and direct your receipts.
The service is provided through a ‘software’ in the cloud and employers pay for each receipt they manage. The tool allows not only automate payments and collections, but also analyzes and statistics and manages incidents. “In many SMEs perform these tasks is to devote 4 to 6 hours every 15 days.With our service just use 10 minutes and that only to validate that the charges have gone well,” explains Molpeceres.
The company was created at the end of 2014. It has more than 400 active clients in Spain and manages payments of 15 million monthly. Two weeks ago Besepa was acquired by Enxendra Technologies, a Galician company with digital signature and electronic invoicing. Currently, the integration of both companies is proceeding.
Allies of exporting SMEs
In 2009, two Spanish entrepreneurs, Juan Lobato and Salvador García, met at a café on Ebury Street (London). The European directive PSD2 had liberalized the payment services, so they decided to launch a ‘fintech’ focused on this matter. The company, which they named Ebury, focuses on accompanying companies in all their financial needs linked to foreign activity, from international payments and collections to currency risk management.
The ‘fintech’ landed in the Spanish market in 2011 and today is present in 17 countries. The volume of transactions carried out on this platform exceeds 8,500 million euros globally.
In Spain they have almost 4,000 client companies, most of them SMEs. “One of our added values is that we facilitate exporting (or importing) to a wide range of countries with very competitive costs, since we do not have to maintain a commercial network like that of banks and our technology allows us to reduce the cost structure” , says Duarte Líbano, CEO of Ebury for Spain and Portugal: “In addition, we provide a service to the unbeatable SME, the type of service that only large companies previously received.”
‘Crowdlending’ to finance the currency
The volume of small loans to SMEs amounts to 180,000 million euros per year, according to data from the Bank of Spain. A very juicy market that the British James Buckland did not want to miss. In 2012 he came to Spain from the City of London, planning to spend two sabbaticals. Finally, he decided to stay and launched Loanbook, a platform of ‘crowdlending’ with which SMEs receive funding from a multitude of small investors. “The ‘crowdlending’ is linked to the collaborative economy because it democratizes investment” says Lucas de Mendoza, COO of the ‘fintech’. The platform, attached to ACCIÓ, allows a private individual to have a diversified portfolio of 200 or 300 SMEs.
The procedure is simple: the SME requests a loan and around a week later you can have the money in your account. “The study is free and we usually approve 20% of the requests that come to us online, 30% or 40%, when it arrives in other ways,” he says.
Interest can range between 4% and 7% a year, somewhat higher than in a traditional bank. In return, the SME obtains agility and speed in the processing of the loan and diversifies the pool of circulating providers.
The card reader that connects to the mobile
“My wife imported sunglasses and sold them at fairs and markets, many buyers did not have any money and, since I did not have a card reader, I kept losing sales, I thought there should be a way to get rid of expensive card readers. and that the mobile phone could even be transformed into a card reader, and that’s when the idea of iZettle was born, “recalls Jacob de Geer, founder and CEO of the Swedish company.
In 2011, iZettle launched a mini card reader that, connected to a ‘smartphone’ or a tablet, allowed accepting payments from any location. Today it provides all kinds of tools so that SMEs can “charge, sell better and grow”, according to De Geer. They also offer cash registers, sales reports, e-commerce platform, customer management, billing and payment financing. “Our main mission is to help SMEs to progress in a world of giants,” says De Geer.
Currently, iZettle has more than half a million active users per month spread across twelve countries. The Swedish ‘start up’, which was owned by Santander in its infancy, was bought by PayPal last September for 2.2 billion dollars.
Online credits in record time
“Capital is the oxygen of companies,” says Sam Taussig, head of Global Policy at Kabbage. The US ‘start up’ allows SMEs to have access to an online credit in a matter of minutes. The company was born in 2009 and two years later began to grant loans.
The secret to respond so quickly to the requests lies in their technology. “We analyze the evolution of business in real time, once the SMEs are connected to the appropriate information channels, our platform can give approval in an average of 10 minutes, instead of months or weeks as is the case with traditional channels” , Explain. Once the application is approved, the SME takes the money when it is needed. You do not need to pay to keep the line open and there is no obligation to use the funds either.
The scope of action of the company is limited to the US, where it has managed credits worth more than 6,000 million dollars to 165,000 small businesses. Beyond this market, it licenses its technology for global banks such as ING and Santander. The Cantabrian bank also participates in the capital of Kabbage through its Santander InnoVentures fund.