For the first time, small and medium sized enterprises (SMEs) in the UK would have access to a new working capital solution from a mainstream bank which provides approval for funding between £500 and £100,000 within a matter of minutes and access to the funds within a day - a process that currently takes between two and 12 weeks. The solution from Santander, to be made available exclusively online, would leverage the powerful Kabbage Platform to accelerate automated SME lending, and enable customers to draw down a line of credit as often as once a day.
Nathan Bostock, Chief Executive Officer, Santander UK said: "With SMEs comprising 99% of the UK private sector, having fast and secure access to funds would ensure they can continue to make an important contribution to the UK economy. Our collaboration with Kabbage aims to provide UK businesses with the ability to draw down funds as and when required, whether this be covering a short-term funding need or enabling them to seize growth opportunities as they arise."
The working capital loan would be one of a number of options Santander offers SMEs to help them manage cash flow including overdrafts, Invoice Finance, Asset Finance, equipment finance, and Fixed Term Loans. This provides another option for small businesses, helping them find the solution that is most appropriate to their needs.
To automate and accelerate decisions, the Kabbage platform uses a risk scoring methodology determined by Santander UK’s credit experts, together with a body of knowledge gathered through Kabbage’s experiences in other territories. Kabbage also references multiple external sources including credit ratings, social media, payments providers, online marketplaces and the SME’s bank account history, both from Santander and other bank accounts held by the SME.
It is proposed to soft launch the online working capital service over the next two months to a group of Santander customers. The pilot period will be used to gather data driven feedback on both the customer experience, and further refine the performance of the credit scoring algorithms determining lending decisions.
Sigga Sigurdardottir, Chief Customer & Innovation Officer, Santander UK said: "The strengths of the Kabbage platform lies in terms of real-time risk modelling and its extensive capabilities to cross reference data against multiple sources. When added to our own customer base, trusted reputation, UK payments infrastructure and understanding of the requirements of UK businesses, this creates a powerful proposition."
Kathryn Petralia, Chief Operating Officer, Kabbage, said: "We are excited by our collaboration with Santander, who has demonstrated a strong appetite to go further than a standard conversation around innovation in the financial technology landscape. Today’s announcement underscores the institution’s desire to present a technology and data-driven solution, quickly, to its customers. It’s great to work at pace and push the boundaries in order to build a better service for UK businesses."
The new service follows an investment in Kabbage in October 2015 by Santander InnoVentures, the corporate venture capital business of Santander Group. Santander InnoVentures mission is to invest in emerging fintech businesses which offer innovative technologies that can contribute to improving services to Santander customers.
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Notes to Editors
Santander UK is a financial services provider in the UK that offers a wide range of personal and commercial financial products and services. It has brought real competition to the UK, through its 1|2|3 products for retail customers and relationship banking model for UK SMEs. As at 31 December 2015, Santander UK was one of the most switched to banks. The bank serves more than 14 million active customers with c. 20,000 employees and operates through 857 branches and 70 regional Corporate Business Centres. Santander UK is subject to the full supervision of the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) in the UK. Santander UK plc customers are protected by the Financial Services Compensation Scheme (FSCS) in the UK.
Banco Santander (SAN.MC, STD.N, BNC.LN) is a leading retail and commercial bank, based in Spain, with a meaningful market share in 10 core countries in Europe and the Americas. Santander is the largest bank in the euro zone by market capitalization and among the top banks on a global basis. Founded in 1857, Santander had EUR 1.51 trillion in managed funds, 13,000 branches and 194,000 employees at the close of 2015. In 2015, Santander made attributable profit of EUR 5,966 million, a 3% increase with respect to the previous year.
About Kabbage Inc.
Kabbage Inc., headquartered in Atlanta, has pioneered the first financial services data and technology platform to provide fully automated funding to small businesses in minutes. Kabbage leverages data generated through business activity such as accounting data, online sales, shipping and dozens of other sources to understand performance and deliver fast, flexible funding in real time. Kabbage is funded and backed by Reverence Capital Partners, SoftBank Capital, Thomvest Ventures, Mohr Davidow Ventures, BlueRun Ventures, the UPS Strategic Enterprise Fund, ING, Santander InnoVentures, Scotiabank, TCW/Craton and additional investors, including Ron Conway’s SV Angel, David Bonderman, founder of TPG Capital, and Warren Stephens, CEO of Stephen Inc. All Kabbage and Karrot U.S.-based loans are made by Celtic Bank, a Utah-Chartered Industrial Bank, member FDIC. For more information, please visit http://www.kabbage.com and follow the company on Facebook and Twitter.
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About Santander InnoVentures
Santander InnoVentures is a FinTech venture capital fund fully-owned by Grupo Santander. The fund is stage-agnostic and invests both capital and resources in companies globally. It focuses on start-ups that can increase the value proposition to Santander Customers across the Group’s 10 major geographies, while creating value for the companies it invests in.
The Fintech 2.0 Paper is a call to action for both banks and fintechs to consider the multi-billion dollar opportunities available through partnership. Download it here.
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