The trials and tribulations of a fintech CEO

10 June 2024 / Insight posted in Article

Arguably more than any other sector, the finance technology sector is evolving at pace, none more so than the alternative lending space. Agility is the name of the game. Those fintech companies leading the field are the ones who can proactively pivot overnight. By pivot, we mean not just their business model but also their revenue streams, customer base and product offering.

Ryan Day, Head of Tech at Moore Kingston Smith, speaks to Chirag Shah, CEO of Nucleus Commercial Holdings Limited, about what issues are impacting his business and the wider fintech sector. This is the first in a series of interviews with technology business leaders, exploring the challenges, trends and opportunities they are experiencing in an ever-changing industry.

Interview

RD: Nucleus’ core business is alternative lending, so how is the incorporation of technology affecting making decisions in the alternative lending space?

CS: Back in 2016, the whole onboarding process exceeded one week and the application, due diligence on the loan etc took days. Using a team of in-house developers, we launched a product called Pulse which enables SMEs to apply for a loan in just minutes using their mobile phones or computers. No paperwork or documents needed. Users securely connect their bank account or accounting software to the Pulse platform and share their financial data with us in real-time via APIs. As a result of these improvements, we have been able to provide faster, easier and more accessible funding to thousands of SMEs in the UK, helping them grow their businesses and overcome their cash flow challenges.

RD: How did you pivot so quickly to harnessing AI and machine learning into your business model?

CS: AI and machine learning were not on the agenda pre-pandemic and now this whole space is the core of every discussion, offering unprecedented opportunities for the SME market. If the pandemic had never happened, AI and machine learning would have come along at some point but not with the urgency. Because it’s taken off so quickly, it really would be impossible to estimate the role it will play in five years. One day, it will be possible to make a lending decision instantly, as there will be access to all financial data via open banking and accounting.

RD: Was Nucleus able to take advantage of the generous R&D tax credit regime run by HMRC?

CS: Interestingly, the UK R&D tax credit regime is one of the most generous in the world. You hear of tech companies recouping millions in R&D expenditure. However, our focus was on the niche talent required to meet our objectives. We needed a team of 60 highly skilled IT developers, which we were able to swiftly assemble thanks to the increased demand on this particular skillset in recent years. The resources were there, so we could pick the best immediately.

RD: Has the so-called war on talent affected your business?

CS: We were ahead of the curve in terms of talent as we’d been actively recruiting

from the richest pool to build the best team in the shortest time. To attract and retain the top talent in such a competitive marketplace, apart from remuneration, you have to capture their inspiration. Working in this area is exciting because it’s so cutting-edge, which is why we appeal to the finest tech minds in the job market.

RD: Lenders themselves are facing scrutiny on their environmental credentials. Virtually every large bank has made a commitment for their balance sheet to be net zero by 2050. Is this happening in the SME market that Nucleus serves?

CS: It is certainly growing in importance as business owners continue to be concerned about their own environmental impact. However, there is no clear environmental reporting framework for SMEs yet, although it will arrive soon, as it already has for larger companies. SMEs are doing their best to be mindful of their carbon footprint and supply chain transparency while trying to raise funding, manage cash flow, understand why gross profit margin is shrinking and report on financial performance.

At Nucleus, we are enabling business owners to understand their core financial performance using our tools like Pulse. In turn, they will have more time and financial elasticity to properly consider environmental and other reporting under the ESG umbrella.

In summary

With interest rates likely to fall throughout 2024, fintech business owners might find their finances less pinched, giving them space to explore new opportunities. If you are a growing fintech business, get in touch with our team of technology advisers to find out how we can support you on your journey.

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