I am a co-founder and COO of TP24. Originally from the Netherlands, I moved to Switzerland after a graduate programme and have since lived and worked in Switzerland. Most of my career I have spent in corporate banking in either relationship management, product sales and leadership roles where I have been responsible for client segments ranging from SMEs to large multinationals.
There is no doubt that all banks want to support the SMEs in their markets, but legacy systems and regulatory requirements often make profitable lending to SMEs a challenge.
In general, one can say that the workload for a $100K loan is almost the same for a bank as for a $10M loan, so the relative operational and compliance cost for small business loans are very high. When you then overlay the fact that under Basel III the capital requirements for the bank for a book of small ticket loans is significantly higher, there is a tendency within banks to focus only on the top SME names with a good and long track record that fit a standard lending product. On the other hand, the banks are expected by the government to support the local SMEs (backbone of the economy), which is why we believe that our fully automated solution is interesting for banks to deploy too as they can deliver on the political ambition in both an on balance sheet and off balance sheet (indirect) structure.
At TP24 we have built a product called CreditLine that combines data-driven lending principles with more traditional financial instruments and techniques that in turn allow banks to take exposure on the SME segment in an automated and capital efficient manner by partnering with us. As such, CreditLine enables banks to start financing many more SMEs in their market profitably. As our systems and models progress, we aim to make our ‘tech’ available to banks too so that they can, through improved (data) visibility and reconciliation, improve the performance of existing or new loan portfolios.
To be fair, for us at TP24 the current market environment is a much better environment to be in than the stable, low-interest rate environment of the previous years. Our USP lies in structuring, managing and monitoring collateral and our products and services are therefore less vulnerable to the increased risk environment than those of most of our competitors. Next to this, banks traditionally tend to hit the brake pedal, reduce new lending and manage down risk exposures when risk increases, which sees a new wave of good credit quality borrowers look for alternative financing solutions. So, all in all, even though our clients, prospects and we ourselves operate in a higher risk environment, our focus on collateral and security positions us extremely well to outperform the market. And we remain a very attractive investment for institutional debt providers due to the overcollateralised nature of our product, which in turn allows us to keep attracting capital at competitive pricing.
Without a doubt the potential! We have built an incredible team across markets and functions that deliver relentlessly on our ambition to give SMEs easier access to financing so that business owners can focus on running and growing their companies. I am personally extremely excited about the value we can generate from the data we hold and the ability to use that data for things like enhanced pattern detection, data reliability scores, dynamic LTV and pricing, to create a truly unique best-in class lending experience for our clients.