Martin McCann is CEO at Trade Ledger, a platform for better business lending which supports invoice funding, supply chain financing and debtor financing. Trade Ledger provides a complete digital business lending operation (Lending-as-a-Service) delivered as a technology platform to bank and non-bank credit providers. Trade Ledger’s understanding of electronic invoicing and other business transaction technology has enabled a supply-chain transaction network that is at the core of its offering.
Fintech Disruptors: Tell us what inspired your business and what’s happened since Trade Ledger’s creation in 2016 – both for your company, and in the wider market.
Martin McCann: I spent ten years at one of the world’s largest software companies and had become aware the market was shifting. Previously, big companies had the resources, assets and market channels to create truly innovative software. However, towards the end of my time at that firm I realised the market dynamics had changed: now creativity in software is all about agility, imagination and velocity of change. As someone who had previously built up a software company, I saw an opportunity to re-imagine what a corporate banking service should look like. Our core offering serves the SME credit market, where it’s estimated there is a £1.3 trillion funding gap.
The reason for that is that SMEs have traditionally been considered higher risk – and yet it’s possible to secure credit against cashflows and receivables and reduce risk. Our platform helps to shorten the credit decision-making process from months to weeks by better analysing customer data: an area in which banks have historically under-invested for decades. In working with the banks to provide credit to SMEs, we’re also helping the SME sector to grow – something that’s a global socio-economic problem.
Fintech Disruptors: There’s a significantly underserved market out there you’re providing a solution for. What factors have helped your growth?
Martin McCann: Other than the agility, imagination and velocity I mentioned earlier, we also have the advantage of not being tied to the legacy issues many banks face – regulatory compliance, heavy existing IT infrastructure, and a poor understanding of their customer’s requirements. Instead of experimenting with new technologies across a big bank, we’ve built an entire infrastructure and applications for one vertical business. That means we can deploy our solution more rapidly and effectively than a bank could develop and manage its own product. Our average deployment time is four months, compared to around 18 months for a new product in a bank.
Fintech Disruptors: What’s your view on blockchain and its relevance for your business?
Martin McCann: First of all, I consider blockchain to be a toolkit rather than a solution in its own right. Distributed Ledger Technology [DLT, or blockchain] is a technique that can help you to solve customer problems – but it is not the answer by itself. I think with all technology transformations, the short-term benefits are always overestimated and the long-term benefits are underestimated. I think we’re looking at a 3-5 year timeline before we start to see banking driven by data and analytics, and Banking-as-a-Service, which is what we think the outcome will be.
When it comes to blockchain in particular, I find the industry’s obsession with this technology fascinating. Again, blockchain is just a tool: up until now, blockchain technology hasn’t found too many use cases in financial services. For instance, we’d only ever use a highly secure technology in our stack, one which we could be certain would offer our customers maximum security from day one. And to date, blockchain hasn’t provided that security. However, developments are moving fast in blockchain and I think we’ll see the beginning of some applications for trade finance in the next twelve months. Blockchain really is at the height of the hype cycle, it’s like a religion. Which is not to say it doesn’t have long-term benefits.
Fintech Disruptors: AI and automation are the themes of our report this year. Where do you see these techniques going over the next year?
Martin McCann: I want to make a distinction between data analytics, machine learning techniques and artificial intelligence (AI). Due to underinvestment in corporate banking over the last ten years, no bank currently has sufficient quality of data. So, the first step is for banks to undertake better analysis of the data they have on their customer portfolio for corporate banking. Only then would it be possible for them to build in a machine learning component which would accurately predict credit default. We’ve built that model – but many banks have yet to improve the quality of their data to the point where they can use our model.
AI is potentially the most disruptive and innovative technology, but it can be quite unpredictable. For instance, we’re experimenting with neural networks for credit modelling and decisioning. The problem here is how the deployment of AI will be received by a heavily regulated industry. You’ll start to see some interesting models from us which use AI for credit modelling over the next two years.
Fintech Disruptors: Our last question – what’s your view of the future, both for your business and the wider industry?
Martin McCann: In terms of the fintech market as a whole, I think that cryptocurrencies are perhaps the most interesting and disruptive technology out there. However, they are so far outside the norm of how the financial system currently operates that it’s difficult to grasp how they will translate into a stable economic and financial system. Within ten years, I think you’ll see cryptocurrencies become a real alternative to fiat currencies. That said, it’s hard to imagine what it will really look like.
In terms of our own business, we are growing far more quickly than we’d anticipated as we have hit the market at the right time. We want to help banks – established banks, and challenger banks – to transform and deliver innovative new credit products. We believe there’s a real opportunity for banks and others to commercialise their data and tap in to underserved markets in corporate banking. The challenge is to extend the bank’s existing relationship with its corporate clients – and that’s where you’re going to see competition heat up in the years to come.
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