‘There is no top-down prescribing of an open banking framework in the US but of course open banking is flourishing in the US market’ – Richard Prior, Kabbage’s Director of International Policy, reflects upon the open banking in the US. You can hear more about his thoughts in Mobey Day Toronto!
Is Kabbage competing or partnering with banks for the SME market?
True to the spirit and nature of innovation and opportunity, as a global financial services cash flow and data analytics platform Kabbage is both competing and partnering.
In the US market, it would be fair and accurate to say that Kabbage is indeed in healthy, direct competition with the incumbent banks. For context: Kabbage offers a fully automated frictionless process that begins with the customer completing a simple application and providing access to existing small business data sources. Kabbage looks at the data to instantly qualify customers for a line of credit. Capital is provided within minutes and 95% of customers have a 100% automated experience; from starting the application to having access to funds is a lightning-fast ten-minute process. With $2B of originations in 2018, Kabbage has provided access to capital for thousands of small business owners with lines of credit from $2k to $250k in a 6, 12 or 18-month product line.
Within Kabbage’s constellation of current and evolving partnerships, the company has also engaged in international bank partnerships with Santander UK and ING. As a SaaS provider, Kabbage’s innovative and proprietary technology brings ease of access to SME funding in a number of European countries.
How are you currently taking advantage of open banking?
Unlike the often-referenced example of the UK there is no top-down prescribing of an open banking framework in the US but of course open banking is flourishing in the US market. While the legal status of third party rights in accessing consumers’ financial data is unclear, the ongoing debates are well known, embracing Dodd-Frank 1033 and highly active dialogues invigorated by industry groups such as the Financial Data and Technology Association (FDATA) as well as the CFPB, ABA and veritable sea of other notable industry and regulatory acronyms.
Access to data is at the core of the Kabbage business model. The ability on the part of SMEs to give that permissioned access empowers the consumer to better manage finances and shape financial health. Given that the FICO score is a lagging indicator Kabbage uses numerous alternative data sources (including transactional data, shipping data, e-commerce and social media) to gain a holistic and live view of the business’ financial health. These persistent data connections are a clear manifestation of open banking/open data: an SME is safely sharing information with a third party. Illustrated clearly is also the tenet that open banking is an enabling technology that in itself does not contain a direct proposition but allows for third parties to introduce propositions to the market.
