Getty Images/Image Source

NatWest fintech investments bear fruit as SME loans platform goes live

Online lending platform enables small businesses to apply for loans of up to £150,000 in 10 minutes

NatWest has launched a fintech (financial technology) lending platform aimed at small to medium-sized enterprises (SMEs) that cuts the time it takes to apply for a loan to 10 minutes. The project will help the bank fight off competition from peer-to-peer lenders.

The platform, known as Esme Loans, offers SMEs loans of up to £150,000 and makes it easier to apply for them by using the latest technology, including application programming interfaces (APIs).  The entire process is online and paperless, with customers able to apply in less than 10 minutes.

NatWest kicked off a pilot early last year and is now planning to grow the initiative. The bank hopes Esme will help it retain market share as a new breed of peer-to-peer lenders vie for SME business.

For example, peer-to-peer lending platforms such as Zopa, Funding Circle and MarketInvoice enable independent lenders and borrowers to be matched up quickly to offer fast decisions on loans.

NatWest is attempting to provide a similar service through its Esme platform, but will be lending its own money rather than matching up lenders and borrowers.

Richard Kerton, head of Esme Loans, said most small business owners think applying for a loan is difficult and time-consuming, so the bank wants to remove complexity from the process. “Customers, particularly SMEs, were looking for an online solution for lending that is more convenient and slicker,” he said.

Banks are recognising that they have to think like startups to win customers in the digital age, and NatWest is doing just that, said Kerton. The bank put together a group of people with entrepreneurial spirit to create the platform, he said. Esme is now a standalone company fully owned by NatWest.

Read more about peer-to-peer lenders

  • Technology specialists are providing peer-to-peer lending platforms online so lenders and borrowers can be matched up quickly, and the model has received backing from the government.
  • Cloud-based UK peer-to-peer lending platform MarketInvoice is moving to a Microsoft Azure-based platform-as-a-service to cope with increasing demand.
  • Peer-to-peer lending accounted for more than £1.2bn of UK loans in 2014, with confidence growing in IT-enabled access to credit.

Simplifying the application process is key to the platform’s success, said Kerton. “We only ask for the basic, bog-standard details about a business, such as names and addresses, as well as four pieces of financial information,” he said. “We also ask them to send financial documents, such as bank statements and HM Revenue & Customs tax documents, all of which can be done online.”

The platform uses APIs to connect to different data sources, which makes the process a lot slicker for customers, he added.

The pilot project helped the bank to fine-tune the technology before going live, said Kerton. “We learned from the pilot about the technology and now we are ready to scale it up.”

The platform’s pilot phase resulted in about 3,800 loans worth more than £200m.

Read more on IT for financial services

Data Center
Data Management