By Alex Miles, Head of Growth at Capital on Tap
- What are the key trends you’re seeing in lending?
We are seeing a lot of businesses jump on the UK government’s lending schemes, particularly bounce back loans. These schemes are providing much needed cash to SMEs in the UK and will be a key part of our country’s recovery from the current pandemic. We are estimating more than 60% of our customers have gotten a government-supported loan from ourselves or their business bank.
- The 2008 financial crisis was the catalyst for alternative lenders. Do you think the current pandemic will be a similar agent for innovation and change and what might it look like?
I think every major crisis brings about change. Banks and lenders that support consumers and SMEs will need to start prioritising customer’s “financial health scores”. I think we will also see the increased prominence of alternative savings and financial management apps and websites (the CreditKarma’s of the world) that will then recommend lenders to their customers and become the “hub“ for consumer and SME finances. Right now, we’ve only seen the tip of the iceberg in that space. I could also see “pandemic preparedness rating” become a thing as well.
- What are the biggest challenges for lenders in the next 12 months?
No one knows what the new normal will look like. We have to understand many of our customer’s “new normal” may still make it enormously difficult to run their business profitably. We have to be ready to work with them and give them the tools to thrive.
- What do lenders need to prioritise to deliver a better customer experience?
Self-service. A lot of banks and lenders were overwhelmed by calls and queries during the pandemic, which was when their customers needed them the most. We saw a lot of desperate customers that needed relief from payments waiting for days to get in contact with their bank. That just isn’t acceptable.
- You have already started to make the transition to lending 3.0. Why did you want to build a card programme?
Cards have overtaken cash as the primary method of spending in the UK. We believe that trend will continue over the next 10 years and think that being a card-enabled lender puts us in the best place to ride that wave. Further, we think giving customers unique insights into their card spend can help them better manage their business and their finances.
- What’s your vision for your card programme and how it will help you solve your challenges and deliver a better customer experience?
Our goal is to be the best credit card for small businesses, period. We need to build more features to help our customers manage their card spend, when to be proactive in their spend, and how they can use our funding facilities to grow their business rather than looking at it as a debt burden. We have a long way to go but we think there is a bright future in providing this type of service to SMEs.
We’re also looking at expanding to new regions, having just launched in Spain using modern card issuing platform Marqeta to customise our card programme and meet the needs of the Spanish market. Utilising Marqeta’s modern payments platform to make processing quick and easy, SMEs can focus on running their businesses, instead of jumping through hoops to secure the funding they need. We expect to issue millions of Euros to Spain’s 3 million sole traders and small businesses within 2020 and beyond, supporting their plans to reopen, grow and prosper.