The Coronavirus has impacted startups and the tech sector significantly. Recently, even digital lending has seen the effects of the pandemic. Take Credimi, one of Continental Europe’s largest digital lenders, which has hit a total of 450 million euros lent to Italian small and medium enterprises in the first nine months of the year – an increase of 39% compared with the same period last year. Since its start in 2017, Credimi has lent 1.2 bn Euro, and the current crisis has accelerated what was already a very fast growth.
Ignazio Rocco, Founder & CEO of Credimi, talks to Fintech News about what brought such increase, the trends of the sector and forecasts for the near future.
FintechNews (FN): What do small business need right now, as they need to face the economic impacts of the pandemic?
Ignazio Rocco (IR): In Italy, we saw a number of companies in urgent need of funds as traditional lending struggle to help. Companies in strain for the economic crisis caused by the pandemic cannot wait too long to get the resources they need, as they risk shutting down.
We grasped an opportunity to help our small and medium enterprises, which are the core of Italy’s economy, and in 3 weeks we set up a new product that made us one of the main digital suppliers of loans backed by State-guarantees since the Italian Government approved the Liquidity Decree which was meant to facilitate lending for companies. Overall, Credimi collected and supplied more than 200 million euros of 5-year loans backed by State-guarantees. We also made our loans an investable asset class, through several securitization programs for wealthy and institutional investors: one for all, Italianonsiferma, was carried out with the Generali group, which entailed in a 100 million-euro securitization (distributed in just 3 months starting from April).
(FN): Italy has historically been one of the countries less keen on digital lending and Fintech in general, has this changed?
(IR): Though many did not notice, Italy is now by far the largest market for digital lending to SMEs throughout the Euro Area. Adding up Credimi and the remaining players, more than 2 Bn Euro have been lent to several thousands of SMEs, much more than France, Germany or Spain. The pandemic has only accelerated the development of the sector, and growth continues to be torrid.
(FN): Which have been the factors behind this growth ?
(IR): At Credimi, differently than other fintech lenders, we offer credit solutions that entail both, a superior experience (speed, simplicity,real time customer support) and also a price which is head to head with banks. Our all-in APR of about 5% compares with the 35-40% APRs that are often found at fintech players of the first wave, that needed to cover massive marketing expenses and sales commissions to intermediaries. We have been focusing our invetments on analytics, technology and product leadership, and we have developed proprietary customer acquisition skills. Thus, 90% of our business is made of direct acquisition, our level of automation is very high (we own 9 million lines of code, and this year we processed 20.000 applications with a decisioning team of 6 people + 7 support). This cost advantage is returned to clients, but it also leaves us with a contribution margin after marketing of 50%.
(FN): What are your forecasts for the near future?
(IR): In the coming months, we expect to continue to grow at this pace, to further strengthen our network of connections with third-party systems such as banks and digital service providers (e-commerce, CRM, marketing), and to launch new, increasingly flexible product to better meet the needs of Italian companies, even the smallest ones. Some of these products will innovate the very concept of financing for SMEs. We look forward to being able to tell more about all this.
(FN): What do you see as the most interesting trends in the fintech world right now?
(IR): What we see is that the sector is working on specific digital solutions for credit that will be embedded in SMEs purchases and investments. We, too, are working towards this direction. This is doable thanks to improvement in technology. At Credimi we worked to improve technology in order to be faster to respond to companies’ needs and that has paid off.
