Natwest parent RBS’s recent history has not exactly been a period of positive PR when it comes to the bank’s use of technology, with a number of high profile ‘glitches’ hitting customers. The same could be said of its reputation when it comes to SME lending. Despite the banking group being the UK’s biggest lender to small and medium sized businesses it has faced criticism for mistreating borrowers as well as well as taking weeks or even months to return a decision to loan applicants.
The bank is now attempting to put those problems and scandals behind it and re-establish itself as a lender SMEs want to do business with. Part of the new approach is a ramping up of Natwest’s fintech Esme platform. Esme promises to make both loan application a quick, smooth process that can be completed in as little as 10 minutes. A decision on whether a loan is approved or not is also lightning fast and the boast is that it is possible for an SME to have loan funds in its bank account within 30 minutes of starting the application process.
In recent years, traditional banks have seen their SME lending fall significantly. That can be put down to a combination of tightening lending criteria following the financial crisis, new competition from specialist fintechs such as the recently listed P2P lender Funding Circle, the rise in popularity of ‘angel’ and other forms of private equity investment including crowd funding and more companies opting to grow organically using their own resources.
But RBS and Natwest are confident Esme will be lending as much as £1 billion a year to UK SMEs within just a few years. The platform’s loan book still stands at a relatively modest £70 million since its 2017 launch. But the bank is now ramping up its marketing after that initial ‘soft’ launch and £20 million of that £70 million has been lent over the past 4 months. It’s a trend Esme chief marketing officer Veronika Lovett expects to continue towards that £1 billion-a-year target.
Esme, which offers unsecured loans of between £10,000 and £150,000 thousand, repayable over between 1 and 5 years, has achieved the lightning fast approvals process it has placed at the centre of its offer by employing some of the latest technology available. Applicants upload or provide access to, through new ‘open banking’ rules, bank statements, VAT returns and Companies House records with the data feeding straight into the platform. It’s also possible to allow Esme to directly access the kind of cloud-based digital accounting platforms many SMEs now use.
The result is the platform is able to quickly gain access to the financial information it needs to make a quick, automated decision on a loan application. Loans come with a fixed annual APR of 9.51%. It’s not particularly cheap but RBS promises that figure is the ‘all-in’ cost of loans, which come with no additional charges nor any early-repayment fees.