How is Funding Cloud solving problems for customers?

Funding Options is underpinned by an innovative tech stack called Funding Cloud.

We have a talented engineering and data team building interesting and innovative solutions from large pools of data. 

Part of this involves integrating third party data sources such as credit data sources, companies house data, Open Banking and Cloud Accounting data. Additionally, we embellish customer and external data with our own meta / derived data to create a fuller data pack.

“We’re aware that business owners are busy and aren’t necessarily experts in finance,” explains Aleks. “Funding Cloud seeks to streamline the customer journey/experience when it comes to finding business finance.”

“Our aim is to service our customers in the best way possible, by surfacing the most relevant and competitive possible funding options for them in near real-time.”

CTO Aleks Kudić is a technology and product leader with over 15 years experience in building technology businesses.

Q: From a technological perspective, what makes Funding Cloud different to what’s already out there in the SME lending market?

Aleks: In terms of technology, our platform is cloud native: we use a modern tech stack in order to innovate faster and make changes to the platform. 

The majority of our competitors (SME funding and lending sites) offer an affiliate model, where customers fill in information and are passed across to the lender for them to dig deeper. 

The customer then has to wait to find out what offers are available to them. 

We’ve replaced the traditional journey so that customers can see finance offers in near real-time and don't need to go to the individual lenders’ websites to seek out finance options.

Since our launch in April, customers have received offers in under 30 seconds. In fact, our fastest offer to date is just under 21 seconds.

As Funding Cloud develops, we want to integrate more lenders, different lending products and more financial product types.

Q: What are the main problems business owners face when it comes to securing business finance? 

Aleks: In terms of getting finance, the issue is threefold: the amount available, how much it’ll cost and how long it’ll take to receive the funds. 

How much funding a business can get is important; it can dictate how much new business they can take on and whether or not they’re able to realise their growth plans.

Some of our customers don’t have a separate finance function: instead, the business owner comes directly to us and wants to know how quickly they can get the funding they need so they don’t have to delay their plans. 

In other words, they need to be able to access funding quickly. 

We’re also seeing an increase in climate change-aware customers who are looking to go green both personally and in terms of the way they operate their business. 

Many SMEs want to reduce their carbon footprint and are keen to know what finance products are available to help them meet these goals versus more traditional products.

Q: How does Funding Cloud solve these problems for current and future customers?

Aleks: Funding Cloud allows customers to see offers in minutes rather than in weeks. It enables business owners to see every option available to them and the associated costs, and receive pre-approved offers very quickly removing the need to “shop around”. 

It also benefits finance lenders as it reduces their costs, meaning they can pass on some of the savings to businesses as they’re able to offer more competitive products.

Structurally speaking, Funding Cloud offers a holistic view of the business finance marketplace, meaning lenders can see how competitive their products are.

Until now, lenders haven’t been able to do this easily. 

Q: How does automation technology and Open Banking help break down funding barriers for SMEs so they can access finance faster? 

Aleks: Funding Cloud is a next generation platform aimed at removing friction for customers by building deep integration with lenders and data providers. 

That’s where Open Banking comes in.

Open Banking is a value-added technology for us – the data is being used to make more intelligent lending decisions. When an SME customer links their business bank account, it unlocks the possibility of getting better offers from lenders. 

It also makes it quicker for lenders to make decisions, and customers to get approved. 

When lenders look at a customer profile (or data pack) they are assessing the “default risk”; the risk of lending money to the business and the business not paying it back.

Having bank account visibility gives lenders a very good indicator of a business’ costs, cash flow, etc. It provides them with a better way of assigning a default rate to a customer profile. 

Q: Where do you think technological developments in SME finance will be in the next 10 years?

Aleks: It’s an exciting time for finance because we’re on the verge of decentralization.

From a purely tech perspective – off the back of crypto technologies and all the innovations in the crypto world – I think we’ll see a lot of decentralized finance opportunities bubbling into the business finance space.

Embedded finance will become commonplace, with lots of other products being able to offer business finance as a part of their journey. The concept of looking for a loan will take a step back; finance will come so naturally – it’ll be part of any business transaction.

For example, if you’re buying an asset all the finance options for that asset will be available not just from the asset provider, but from places like Funding Options too.

From a business perspective, the mobility of crypto and decentralized platforms like blockchain will allow trustworthy credit scoring to be unlocked so lenders can underwrite loans much quicker and with greater certainty. 

In turn, this should drive down loan rates for business finance customers.

Q: What is the Funding Cloud Lead Score?

Aleks: Lead Scoring is an internal Funding Options machine learning algorithm that’s used across all the new leads that come into us. Lead Scoring allows us to show the best lending offers to customers and to satisfy the needs of their business.

How do we do this? 

Whenever a new business signs up to Funding Options we look at all the information submitted by the business owner, as well as the third party data sources, and give them a score based on the likelihood of credit being approved.

It’s important because it means we can quickly tell customers the offers (or lack thereof) available to them and what the likelihood of them receiving funding is. 

It’s helpful for young businesses as they may want to go down an equity finance route or instead of pursuing traditional lenders. 

Lead Scoring also gives lenders an indication of how likely it is that the customer will be credit-approved. This is important because it provides them with a snapshot of how competitive their offer needs to be if the customer is going to have a lot of choice.

Lenders use our Lead Scoring to inform their underwriting policies and credit scoring.

If you’re a business owner, you can learn more about Funding Cloud and see what you could be eligible for here. Business finance lenders can sign up to the platform here.