Almost 1,400 delegates joined the community to discuss data, digital offerings, the needs of SMEs, the impact of COVID and even crypto-backed mortgages.
The discussion at the inaugural FTT Lending 3.0 presented a variety of views on the sector. Several sessions looked at the impact COVID has had on our society and the economy – specifically the bank versus non-bank lending market. Personalization, tailored data sources and injecting empathy into the lending process also came up frequently during the day. We even had a Peloton giveaway from our Festival Sponsor Ezbob for our community members who are looking to shed some of those pandemic pounds.
If you weren’t able to join us or just want to relive FTT Lending 3.0 – all Main Stage and Interactive Sessions are now available on demand on our event website.
Our day opened with a scene setting keynote – Building a better world for lenders and borrowers - from Marqeta Europe MD, Ian Johnston where he spoke about how a real shift in lending has taken place over a relatively short period of time:
“Lending 3.0 capitalises on the use of digital technology, a plethora of lending with a more inclusive and responsible lending mentality as well as the Visa and Mastercard network of card acceptance. Doing all of those things, vendors are able to make decisions at the point of purchase and have control around how the funds are used to make sure they are in line with how the original loan was invented.”
The morning continued with an Industry Discussion examining the state of the SME sector.
Katrin Herrling, CEO & Co-Founder, Funding Xchange outlined the profound change the non-bank market has experienced over the past year:
“I think there is, in parts of government, a lack of understanding of the role that the non-bank finance market plays. During the crises, the focus on pushing money out through banks is actually undermining some of the work that has been done over the last 10 years in terms of building a diverse, flourishing, non-bank finance sector.”
Speaking from a bank perspective, our fireside chat with Starling Bank CEO, Anne Boden, also spoke about the structural changes the industry is seeing, currently, which she predicts will take a while to correct:
“The government dictated a rate of 2.5 % [for COVID loans] and for many non-bank lenders and peer to peer lenders that rate is just too low to make any money, therefore they have been out of the market for a period of time. This is a real change of the market and has shocked some organizations. Some of these very small businesses have got used to paying 2.5% for loans, will they ever go back to more?”
Although it is hard to have a conversation today without mentioning the global pandemic, our dedicated panel on the impact of COVID was illuminating. Conrad Ford, Chief Product & Strategy Officer, Allica Bank, introduced us to the term ‘Zombie Businesses’ or businesses that are only surviving because of the current UK government loan environment.
Ford also pointed out that so-called ‘Death of the High Street’ in regard to a post-COVID reality are more nuanced and complicated that previously discussed:
“One thing I hear a lot of the death of the high street. It is much more nuanced that that and historic credit models will not help you figure it out. But the businesses that are well run, that are on the front foot, the lenders that are on the front foot will have tremendous opportunities coming out of this because the data disadvantages they had against incumbents disappeared over night.”
Mid-day, we ran our signature Big Question Debate – where we invite senior leaders in the industry to step onto our stage and answer ‘the Big Question’. Our community then votes on who gave the best answer. The question this year was – Will Lending bring the disruption we were promised 10 years ago?
Everyone gave incredible and insightful answers to our Big Question. But with 39% of the vote our clear winner was: Petr Baron, CEO TBIF (TBI Bank) . The rest of the debaters were as follows:
- Lucy Hasson, COO, Esme Loans with 25% of the vote
- Alison Harwood, Head of London Branch, Varegold Bank with 18% of the vote
- Stéphane Blanchoz, Head of SME Alternative Financing, BNP Paribas Asset Management with 10% of the vote
- Daniel Drummer, CFO, auxmoney with 8% of the vote
While much of the discussion at Lending 3.0 focused on small to medium sized business and point of sale financing – we also looked at lending and how traditional notions of credit worthiness are now stale and outdated. Martin Magnone, CEO, Tymit described this during the Society Discussion - People powered by Personalisation session:
“Of course, we are in the midst of a pandemic. The ability to adjust any decisions you have made today is very critical.”
Staying with the personal Lending 3.0 wades into the emotional and complicated world of mortgages with the Society Discussion – Mortgages powered by Digital. Alex Beavis, Head of Mortgage Products, Skipton Building Society talked about inserting empathy into that processes:
“The way you would talk to a first-time buyer is very different to the way you would talk to a portfolio landlord. At the very highest level that is very simple example of empathy. What I don’t agree with is that in order to be emphatic, it has to be human interaction. We can embed empathy and that human touch within our human process … That sweet spot between the purely human, quite expensive journey that has lots of manual intervention and human touch points vs a purely digital ‘computer says yes’ – I think the dichotomy is a false one. The people that are doing this right are somewhere in the middle.”
While data was part of almost every session at Lending 3.0 the need for good quality data and flexible, timely decision making experienced a deep dive at the Society Discussion - Decisions powered by Data.
“You need a flexible system a system that can not only gather the right data but can change the policy, change the risk appetite, change the risk profile,” says Yaron Shoshani, Chief Technology Officer, Ezbob. “When you have the right system in place, when you have the right data sources in place as a business you can present something that is much more personalized.”
While lending and loans can offer much needed capital and investments for many companies and personal life goals – financial wellness often takes a back seat to questions about levels of debt and financial literacy.
Steve Peacock, Chief Risk Officer, Think Money Group eloquently spoke about experiences with debt during the Society Discussion - Lending and financial health will always be at odds:
“All too often I have seen in my career – you are only as good as the influencer of the people you have had around you. From my experience, I have learned a lot from my parents who were quite savvy and conservative … At the extreme end I have seen families, generation after generation, accept that it is OK to default on a loan and not understand the consequences of that and when that results in legal action.”
Our day ended with a look at creating asset classes out of lending products such as buy to let mortgages as well as creating leading products out of crypto assets. Antoni Trenchev, Co-Founder, Nexo talked us through offering the world’s first crypto-backed mortgage with bitcoin celebrity Brooke Pierce:
“Either way with bitcoin rallying the way it is cherry picking from both worlds. The profit with Bitcoin going from $3,000 to $50,000 in less than a year and a half, all the while having an amazing property in central Amsterdam which is an inflation hedge and a revenue stream – if it can be rented out in a COVID free world.”
We will be showcasing a number of our FTT Lending 3.0 session in the coming weeks.