Fintech Insider Podcast by 11:FS
01:29:32 · David M. Brear, Anil Stocker
[01:29:32] S10: So as the panel, and I'm sure many of the audience know today, 85% of small business lending is funded by UK big banks. However, the tide on that one is kind of changing, not one thing to do a pun around tide, but I'm sure the tide guys will appreciate that anyway. So, however, with the likes of the investment and the partnership that you guys have done with Barclays, this might start to see the tide changing, shall we say? [01:29:58] S3: Yeah. Absolutely. Look, I think there's so many great fintech companies out there doing different types of lending and I think what we've done is is really done a really great big partnership with Barclays, which we're announcing today to accountants. So Barclays will be selling our invoice finance solutions as part of their kind of core lending product to their 1,000,000 small businesses here in The UK and also there'll be funding on the platform. So it's the first time that a big bank will be relying on a third party credit model, our credit model that we've developed over the last five years. So, you know, it's a great referral and funding partnership and I think one of, you know, first of many to come. [01:30:34] S10: And and how did that come about? Because that's a... This is and obviously, you know, me and you have talked a lot before, but you know, Barclays changing and and being in that situation where they're they're... I I always think the amount of emotional intelligence that's required to believe you don't do everything yourself and everything being perfect and and partner, that's that's a big step.
01:30:34 · David M. Brear, Anil Stocker, Hannah Dawson
[01:30:34] S10: And and how did that come about? Because that's a... This is and obviously, you know, me and you have talked a lot before, but you know, Barclays changing and and being in that situation where they're they're... I I always think the amount of emotional intelligence that's required to believe you don't do everything yourself and everything being perfect and and partner, that's that's a big step. [01:30:55] S3: Yeah. I think banks are going through quite a bit of soul searching. So they're thinking about their product set. They're thinking about the customers that they serve. They're debating whether they should build themselves versus partner with fintechs and I and I think that, you know, Barclays have actually been, you know, they're they're ahead of the game and they're thinking far into the future and they they recognize what they are today, what they can do, and what they could achieve by partnering with fintechs. And I think you'll see a lot more as we've discussed today, a lot more collaboration between the likes of zero, the likes of fintechs, the likes of banks. And that coming together of those three main parties could be very powerful. [01:31:27] S10: Yeah. And, Hannah, do you guys are spending a lot of time helping small businesses manage, figure out where their cash flow situation is? Like how does that fit into the scenario around lending? [01:31:38] S16: Yes, so first step for us has been to try and make sure that small businesses actually have a plan. They really need to work with one. [01:31:45] S10: It's amazing how many don't, isn't it?
01:31:45 · David M. Brear, Hannah Dawson
[01:31:45] S10: It's amazing how many don't, isn't it? [01:31:48] S16: Yeah, it is. It's astonishing. And so we're working really hard and again, a little award winner today, So partner app of the year, really working with our accountants in the zero sphere to ensure that that is step one. You wouldn't advise your best mate who's about to start a business to not go into business without a plan, would you? So let's ensure that that's step one, but what we've been working on, we're kind of opening the kimono here a little bit, but the last year we've been working on a new platform to really try and drive easy decision making, but also to close the loop because it's really, really important that you just don't just go, hey, you're going to be screwed in three months. You know, let's give them a solution at the same time. So that's absolutely what the platform will do. [01:32:30] S10: And and that's a that's a big thing, you know, being in a situation where you're not just, you know, sorry for your loss at the scene of the crime. You know, the crash has taken place and we're here [01:32:38] S16: to Yes, make sorry. Bye. [01:32:39] S10: Yeah. So, you'd like not being the ambulance, trying to be the people preventing the problem happening in the first place.
01:32:39 · David M. Brear, Hannah Dawson, Becca McClure, Caroline Plumb
[01:32:39] S10: Yeah. So, you'd like not being the ambulance, trying to be the people preventing the problem happening in the first place. [01:32:45] S16: And I think that's the really important thing about the ecosystem that Xero has created is that when you're talking Carrie about joining ecosystems together, it's really important that, you know, we start as a product. We will be a platform with our own ecosystem and then working together with, you know, other providers that we can close that loop. It's so important to be that time and place because small business has not got the resource for the analysts, for the in house CFO, those sorts of things. They're, you know, running on a wing in a prayer often and just want to understand look this is where I'm going. You've told me these are the assumptions that I've got now I've got a solution for it. [01:33:22] S14: Yeah, and you've got the accountant in the middle of that that's trying to put these all these things together. I think what would be really helpful too for Xero is potentially I think for an accountant it can be quite daunting with all these new sources of funding coming up and it's helping the accountant navigate that. You've got brilliant tools like futurely that help them understand where they, you know, help them help the client understand where they might have issues, but then it's understanding what might be the best kind of sources of funding. Absolutely. [01:33:55] S2: It's a bit
01:33:55 · Caroline Plumb, Becca McClure, Keri Gohman, Sarah Kocianski, Hannah Dawson, David M. Brear, Will Farnell
[01:33:55] S2: It's a bit [01:33:55] S14: of a minefield and potentially you know you're discussing it earlier. It's still fraught with a bit of risk for us. We can do it, but it's fraught with risk. [01:34:04] S13: Yeah. That's a great point and a huge part of what we want to do is help accountants sort through the solutions and understand which ones make sense for each small business owner. I also just wanted to take this moment to say we've now all adopted my hand motion. [01:34:18] S0: Hand gesture is back. Yes. We love the hand back. [01:34:20] S13: It's ecosystem. It's bank feeds. [01:34:22] S0: So so I'd like to just take a little little step back. So it sounds like you guys are working through this problem and you're coming up with loads of solutions. But we've we've talked before on VidSec insider about how actually difficult is the reason you have to do this is because it's incredibly difficult to access credit or loans if you're a small business from a high street bank. Does anybody have any horror stories to tell? Oh, No. I [01:34:44] S16: actually do. We were bootstrapped until really recently. And so, you know, I'm quite happy to turn around and say that actually at one point we looked for a loan, you know, very traditional provider. Unfortunately, they don't understand SaaS metrics. They don't understand monthly recurring revenue. They understand, you know, if you're not making a profit yet. [01:35:03] S10: Go on, name them. Name No, [01:35:05] S16: I can't. [01:35:05] S6: No. Okay.
01:35:05 · Will Farnell, Hannah Dawson, Keri Gohman, Sarah Kocianski, Sian Kelly
[01:35:05] S6: No. Okay. [01:35:06] S16: Still with them. But it was really, really difficult. And, you know, it doesn't matter the growth that you're you're experiencing. They don't understand MRR. It's not it's not part of their you know makeup. So that was challenging. [01:35:21] S13: And also I would say the other thing that's really tough for business owners is there's no everything's a bit of a black box. So when you go to a bank, don't really know. I mean as if you're a consumer, there are certain ways that you know what your credit score might look like and other things but as a small business owner, there's no real education out there that tells you these are the things that you need to do and by the way you're improving or you're not over time. So... [01:35:44] S0: That's the thing [01:35:44] S16: as well as the credit scores are so out of date. Exactly. [01:35:48] S9: Exactly. And there's some [01:35:49] S16: You're new things kind nine months anyway and then you know, it's just astonishing. [01:35:53] S13: And we definitely want to help them navigate but it starts with education. It how it's about the work that we want to do even to help the banks and financial services understand different data sets. How they can be used? How to be predictive in new ways taking advantage of new technology and obviously you guys are starting to partner with Barclays and change the game there.