“You always keep an eye on what your competitors are doing. But we spend a lot more time engaging with our customers to find out what they want. Our overall focus is to create services and products that are relevant to them and creating the right digital experience is no exception to this.”
Insightive.tv: Can you begin with an overview of your general contracting process — how do SMEs sign up with LDF?
Kat: We have a number of different origination channels. We have an online engine that allows customers to choose an end-to-end digital journey or they can give us a call directly. Our model prioritises our ease of transaction, whichever way they wish to work with us.
Looking for finance can be a bit of an event, particularly for small businesses. We do not want it to be like that. We aim to make the process quick, intuitive, and easy, using technology as an enabler.
Our traditional means of onboarding customers involves the use of account managers — someone who really gets to understand the needs of the client and the dynamics of their business. The ongoing needs of these clients are then serviced effectively by their dedicated Relationship Manager, typically either by phone or email.
Whilst we have invested significantly in our online digital service, we have found that the current demographic of business owners means that the majority of clients prefer the reassurance and guidance that a personal interaction with their account manager provides. We have therefore employed technology and digital services to further enhance this process.
As the demographic of business owners changes however, with more millennials moving into decision-making roles for example, we predict that there will be a larger demand for online, self-service options and as such, we are already starting to prepare for this.
Insightive.tv: At any point in your process are customers required to fill out physical forms, or provide physical proof of I.D.?
Kat: The process can be completely digital. We either complete forms on the customer’s behalf or they can do this themselves using our online service. We work hard to make sure our digital forms are intelligent and dynamic — the strength of the business determines how much information we ask the customer to provide online. Identification requirements can often be satisfied using online services. We have document upload functions, so customers don’t have to put anything in the post. In respect to signing documentation and contracts and currently about 85% of everything we do now is fulfilled using e-signature technology.
People can actually go on holiday now and still sign finance agreements. We use Adobe software to actually enable that to happen.
Insightive.tv: From your perspective, what are the key outcomes of digitisation — is it convenient for the end user or efficiency?
Kat: To us they go hand in hand. Providing customers with a great user experience is of paramount importance but to do this we need to ensure the services we offer are meeting customers’ evolving needs directly. More efficient processes often turn out to be more convenient, particularly where the speed of the transaction is concerned. Developments in recent years means a customer can apply for a loan with us in the morning and have their money by the end of the day. This is what people tell us that they need when they are running their business, particularly small businesses.
Insightive.tv: How much does competitive pressure impact your thinking?
Kat: You always keep an eye on what your competitors are doing. But we spend a lot more time engaging with our customer to find out what they want. Our overall focus is to create services and products that are relevant to them and creating the right digital experience is no exception to this.
In respect of completion, smaller finance companies, like us, are often more nimble and capable of change so when new initiatives are released into the market, adoption is relatively simple. I think it will be interesting to see how larger banks react to advances being made by the smaller “alternative” finance houses who are pushing the envelope in respect of innovation and service standards.
Insightive.tv: What are the biggest challenges you have faced in digitising the customer journey?
Kat: The lack of business information available as data. At the moment most information comes to you comes in hard copy. It is then very difficult to make any intelligent automated decisions, whether that is around product availability, credit appetite, Know Your Customer (KYC) indicators or pricing.
There is some data available for limited companies, but it may not be recent enough to be really useful. When you look at a sole trader or a partnership, however, where they don’t need to publish any information on their business, it becomes increasingly challenging to create useful business logic that automates this process.
Insightive.tv: How big of a factor are compliance considerations?
Kat: Compliance is part of our DNA at LDF, and something we write into any product during the design phase so we haven’t found this to be a significant challenge. It is absolutely about knowing the requirements, understanding the principles of the regulation and delivering the outcomes to the customers in the best possible way.
I think the larger challenge is making sure that all of our systems are protected against any possibility of financial crime. Preventing financial crime (particular cyber-crime) is something that requires constant evolution to improve detection. We have found that there is currently only certain efficiencies that technology can bring to this, and ultimately we rely on our people to provide most of our protection.
As an industry however, there are improvements that can be made to address this issue. I believe that more collaboration is needed between financial services companies.
Additionally, access to a more comprehensive service that enables finance companies to share financial crime suspicion or activities within the commercial market would also be beneficial. (There are a few services available at the moment, but none of the options are as advanced as we would like).
Insightive.tv: In the near future, are there current processes that you are looking to improve or transform using technology?
Kat: We are looking at increasing the amount of self-serve options available to our customer base. For example, creating an online portal where customers can look at their contracts, check balances, and request settlement figures. Giving them a way to get in touch with us if they don’t want to pick up the phone, or if it is late at night. Again our focus here is providing customers with increased flexibility in how they choose to interact with us.
We shall also be developing the scope of our automated credit decisioning, however we still envisage a significant proportion being considered by one of our underwriting team. One of the main challenges with automation is that if you get it wrong, it is not just one person making a bad decision; potentially that decision is replicated multiple times.
Our focus is to screen out those people who we absolutely cannot assist fast track obvious customers and flag potential customers with a recommendation. This means we are able to fully utilise technology to maximise the efficiency of the human intervention.
Kat Applewhite is Operations Director at LDF — overseeing the Management Information, Projects, Facilities, Compliance, Administration and Marketing teams. Compliance and AML policies, governance and controls fall directly within her responsibility. Before joining LDF 11 years ago, Kat worked for Bank of America We spoke with Kat to gain insight into how digital contracting and technological change has influenced the way LDF interacts with their customers.
LDF is the largest independent SME finance provider in the UK. Founded in 1986, the company has expanded its product and service portfolio every year. In 2016 LDF obtained a £51 million facility to increases asset finance for SMEs from the British Business Bank, announced a relationship with global independent feedback engine Feefo and became the first financial service provider to join the government backed Commonwealth Trade Initiative.
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