Marketlend Academy: Increasing borrower interaction to make better investment opportunities
Despite being a fintech, we know the importance of face-to-face interaction with real people. In the lending business, that sometimes means visiting an SME in person and getting to know their business from the inside out.
Below Marketlend CEO Leo Tyndall describes the importance of borrower interaction, and why it’s such an important part of Marketlend’s approach with large exposures. You can also read the video transcript below.
The changes that we did at the beginning of the year was to actually make sure that we have a lot more interaction with the borrower post settlement. Some of those changes included that for exposures over $250,000, we actually have an independent accountant who actually goes to their premises, kicks the tires, reviews their balance sheet, looks at all the other factors that could be of risk for the underlying investor.
One of the things that we’ve seen through our portfolio over four years now has been that some of the risk elements that are not as easy to see from just documents and the like, is exactly if there’s personal issues or if there’s something that we should be concerned about. For a classic example, one of our borrowers unfortunately passed away. That caused a stress on the book. Had we sent out the external accountant he would have given an idea that there wasn’t possibly enough succession in that position. Fortunately for us the insurer paid out and we were able to cover our exposure for all the investors, but it was something that … we would’ve been able to have a much better idea had we had someone go out, sit with them. It also from a borrower experience actually helps significantly as well. They get to know them, in a way it helps them understand their own risk.
So we implemented that at the beginning of the year and that’s been very successful. And that accountant is a chartered accountant. He goes out there, he does do a review, he does the report internally for us. We are not at the stage where we will be producing that report externally, but down the track we may be looking at a summarised report for that.
But the important part there is whilst we’re a fintech, we still are someone who actually does touch and go and see the investor and have a relationship with them. And I think one of the things that, if you would say over the four years what we’ve seen significant changes in, has been sure, when you’re lending the small amounts of $25,000-$30,000 you may get away with doing it all online and not actually meeting the client, but when you’re starting to invest significant money with them it’s very important to actually get to know your client. And from also an anti-money laundering point of view it helps us significantly as well.