By Colin Kruger
Fintech Waddle is now looking to partner with traditional banks, rather than disrupt them, following the success of a deal with the Royal Bank of Scotland (RBS) that will see its cloud-based small business lending service offered to the bank's customers across the UK and Ireland.
Waddle co-founder Simon Creighton said the startup, which allows small businesses to take a quick secured loan against their accounts receivables, started to attract the attention of banks such as RBS early last year.
Waddle co-founder Simon Creighton said the company was last year approached by a number of banks that were interested in using its product.Credit: Wolter Peeters
"Most of the big banks already do this product, they just do it on decades old systems that are in dire need of improvement," he told The Sydney Morning Herald and The Age after RBS confirmed it will be using the Waddle platform across its UK business after a successful six-month pilot program.
He confirmed that it is already in talks with local banks, although he would not say if it includes one of Australia's big four.
“We’ve had interest across Australia and New Zealand from banks and non-banks," said Mr Creighton.
Unlike Prospa's unsecured small business loans, Waddle's secured loans offer rates and returns more in line with traditional bank products.
What is new for potential customers is the quick approval time for loans compared to the traditional bureaucratic bank process, and a vastly more efficient process for the banks.
Typically, banks need one full-time staff member to manage 10 clients, Waddle claims its platform operates on one staff member per hundred clients due to its integration with small business accounting systems which removes the administrative overhead associated with traditional finance facilities.
"We've taken that requirement away basically by turning it into a cloud accounting system and automating the bulk of it," he said.
Waddle won't be the first fintech to partner with a local bank. Another privately-owned small business lender, Banjo, has developed an online unsecured financing solution with Bendigo and Adelaide Bank.
Waddle still plans to offer its own services to customers in Australia where it has lent $330 million since it started business in 2015 and expects to double its revenue in the coming year.
"We may adopt a similar model as the UK, but we're always planning to remain an underwriter in Australia," said Mr Creighton.
"We see that as being the main competitive advantage really, that we consume our own product. Nothing drives innovation faster than consuming your own product and putting your own money through the door."
Waddle raised $4 million in March in a Series A funding round with tech venture capital firm Allectus Capital and said it has no immediate plans for an initial public offering.