Nucleus Commercial Finance is the fintech lender revolutionising the way businesses access finance, believing the future of SME lending is powered by tailored solutions, technology and partnership. The lender has harnessed AI-powered automated underwriting through its award-winning, proprietary technology, while practically applying Open Banking to improve the speed and accuracy of its decision making. This resulted in the business playing a vital role in the recent Coronavirus Business Interruption Loan Scheme (CBILS).
Chirag Shah is CEO and founding partner of Nucleus Commercial Finance, founding the company in 2011 as one of the early alternative SME lenders. Chirag has nearly twenty years of experience working in financial services, previously managing portfolios at numerous asset managers, including life insurance-focused Acheron Capital and the Investment Committee.
What has been the traditional company response to financial technology innovations nationally?
Nucleus aims to bring the best of both worlds, combining the stability of banking finance with the flexibility and speed of a fintech.
Fintechs’ clear advantage is the ability to use technology to create a more seamless and easier customer journey, enabling loans to be delivered at pace. However, business leaders also want robust solutions that suit their individual needs. That is why our multi-product offering is at the foundation of our business and is what sets us apart from others in the space. This means we not only offer fast business loans but more complex and structured financing, helping UK SMEs find the loan that fits their needs and allows them to thrive and fulfil their true potential.
How has this changed over the past few years?
The main change has been the sheer number of SME fintech lenders that have cropped up since we launched. It’s one of the most exciting areas of innovation in fintech right now and we are seeing a complete transformation of the industry. Traditional lenders are under pressure due to the innovative solutions fintechs are offering and they now realise their approach is no longer suitable for a digital age. Lenders that fail to embrace technology will lose or may die out in this new world.
Is there anything that has created a culture of change inside the company?
We have a deep focus on brokers and SMEs which is the driving force behind our innovations. We have a high-touch approach to engagement as we want to understand the challenges brokers and SMEs are facing. We take feedback on board and subsequently develop the solutions they require. This is why we are a solutions-focused company.
An example of this in action was the launch of our Business Growth Loans. A concern that kept cropping up, again and again, was what would happen after CBILS ended? For many businesses, this lifeline was the only thing keeping them afloat while they couldn’t operate fully or at all during lockdowns. This led us to launch an industry first: offering the first non-governmental Covid support loan for SMEs. This ensured businesses were not left out in the cold and that they could continue getting the financing they needed to stay alive until they could become revenue-generating again. We actually had to increase the funding limit from £25k to £50k to meet this demand, which we believe demonstrates we were filling a real business need and the benefit of a customer-orientated approach.
What FinTech ideas have been implemented?
While the pandemic has certainly been the busiest period in our company’s history, we saw it as the time to accelerate our innovation efforts rather than pull back. When the pandemic hit, UK SMEs needed access to fast financing more than ever, and technology is certainly the best way to achieve this.
We launched a bespoke AI-powered automated underwriting solution, which completely digitalises the loan application process. On top of this, we’ve also harnessed the power of Open Banking to allow our customers to seamlessly and securely link their business bank accounts to our platform. This removes the need to send reams of bank statements, allowing us to quickly get an appraisal of their business’s finances, without the administrative hassle.
What benefits have these brought?
This technology has had a major positive impact for both brokers and SMEs as they can receive the best, fairest lending decisions. 90% of applications on our platform are decisioned within one hour and funds are received within 24 hours.
This is a complete game-changer for SMEs as the pandemic has demonstrated that the speed it takes for an SME to access finance can be a make-or-break situation. The next step is to roll out one-click lending, enabling an even more rapid and frictionless customer journey.
Do you see any other industry challenges on the horizon?
The winding down of the government support schemes, including business loans but also the end of furlough will be a major crunch point for businesses. While the vaccine rollout is in full swing and businesses are starting to reopen closer to full capacity, the pandemic is still here, and economic uncertainty remains. SMEs still need finance to keep up and running until things normalise, and then after that to invest in the future of the business. The key question is what funding options will be available for SMEs post-government support schemes? Many lenders will struggle to provide significant funding once these schemes come to an end. Those lenders with strong technology, such as AI and automated underwriting, and the ability to create innovative and flexible solutions will be the ones that play a crucial role in 2021 and beyond, to support UK SMEs.
Can these challenges be aided by Fintech?
Yes, ultimately lenders that have not harnessed technology will struggle to offer continued support. In an environment where capital is tighter without support from the government, lenders that utilise technology and have the ability to create innovative and flexible solutions will be the ones that will play a crucial role in the future.
If working in this space over the last year and a half has shown anything it is how vital fintech lenders are to supporting SMEs. CBILS has accelerated the process of fintechs moving into the mainstream. Many businesses now consider us as the go-to option due to the overall customer experience and the custom solutions fintechs provide. We now have great foundations to continue innovating and completely transform the industry.