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NatWest Bank is responding to competition in the lending market with a platform that promises near-instant loan decisions for small to medium-sized enterprises (SMEs).
The Esme platform, as it is known, will be an additional lending platform in NatWest’s portfolio, offering unsecured loans to SMEs of up to £150,000.
As financial technology (fintech) startups threaten to increase their share in the lending sector, traditional banks are fighting back with their own digital platforms offering quick and easy loan applications.
Alison Rose, CEO for commercial and private banking at NatWest, said the platform would offer SMEs a quick decision and almost instant funding.
“We’ve already broadened choices for customers, but we wanted to go one step further and create our own alternative lending platform,” she said.
The platform was developed at the bank’s innovation unit alongside Ezbob, the fintech firm behind NatWest’s lending platform. Esme will help the bank retain market share as a new breed of peer-to-peer lenders attract SME business.
For example, peer-to-peer lending platforms, including Zopa, Funding Circle and MarketInvoice, enable independent lenders and borrowers to be matched up quickly. These platforms offer fast decisions on loans. NatWest is attempting to match this through its Esme platform, but it will be lending its own money rather than matching lenders and borrowers.
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A 2016 Economist Intelligence Unit (EIU) study, which surveyed more than 200 senior retail bank executives, showed bankers expect the banking environment to be shaped strongly by technology and non-traditional competitors by 2020.
According to 20% of respondents, tech firms could emerge as a threat to traditional banks. Nearly two-thirds (65%) said retail peer-to-peer lending would be available via banking platforms.