Exploring alternative business finance issues with Nucleus Commercial Finance
29 August 2017
Fintech and bank partnerships… the future?
In the last year, announcements of disruptive alternative lenders partnering with the very institutions that they set out to beat have come thick and fast. Chirag Shah, CEO of Nucleus Commercial Finance believes that we are only going to see more of them.
It is an arrangement of mutual benefit. The FinTechs have accomplished a lot in terms of efficiently processing and aggregating data and information, where as for the banks this is their biggest area of weakness. It takes too long and often, businesses are not in a position to wait – particularly as it is very often a ‘no’ anyway. On the other hand, banks have historically been great on the risk and due diligence side of lending, as well as the relationship side and this is support and experience which business owners still need and rely on.
What is the future for alliances like these and what plans do Nucleus have for future partnerships?
What is the role of technology in due diligence?
Technology has undeniably shaken up the way that we do diligence, but at what cost?
The advancements are impressive and there is no doubt that using technology to aggregate data is making finding finance more efficient for businesses. Ultimately the improvements to customer experience, convenience and speed of delivery in finance, have been vital to keep SMEs thriving.
At Nucleus Commercial Finance, they are investing heavily in technology to ensure that their customers get a fast and efficient service but the role of technology is carefully managed. It is always a tool for their experienced team rather than the decision maker.
“If you use technology to make decisions then you risk alternative lending being as rigid as the banks, it is too black and white. If customers do not meet criteria outlined in an algorithm then they will be rejected.” – Chirag Shah, CEO
Considering recent revelations from leading lenders in the peer-to-peer sector, perhaps there has been an over reliance on technology in risk – that could explain some of the unfortunate issues that have plagued the industry this Summer.
What is the role of alternative funding in infrastructure?
There is no doubt that spending on infrastructure is increasing and needs to continue to do so if we want to sustain economic growth in the UK. Projects like HS2, Crossrail or Hinkley Point are vital but in a post Brexit world, who will fund them?
Over £1bn of the money for Crossrail came from the EU, so it is fair to assume that financing these large projects beyond 2020 could be challenging. The Government needs to put plans in place now to support growth but if they cannot find the funding, there is another solution.
The alternative lending landscape is ready to step up and support these projects. Nucleus recently financed a £70m project that kick-started the construction work at Hinkley Point. Even though there were contracts in place, the banks could not finance it. Without Nucleus’ facility, the entire project would have stalled.
As a sector, is there a chance for alternative lenders to really excel here? Can they support businesses whilst also driving growth in our economy?
What is the apprenticeship levy?
The Apprenticeship Levy brought with it changes that most Further Education providers were not prepared for. The changes, which were very well intentioned and meant to unite employers and apprentices once more in more effective work place learning, were implemented in May.
Since 2016 our expert Education Finance team has been exploring the issues surrounding the introduction of the scheme and the teething problems providers are already experiencing since it launched. In particular, managing the administrative burden placed on their already squeezed finance and back-office staff.
Chirag Shah outlines what the changes mean for providers and explains how Nucleus can help ease the strain with their specialist consultations and product.
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