It is no secret that even major banks and finance groups will have to start rethinking their business model sooner or later. The traditional financial ecosystem is bound to get shaken to its core in the next few years, as developers from all over the world are working hard to bring innovation to the world of finance. Santander Innoventures, who recently invested in Ripple, are keeping all of their options open for now.
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Kabbage – Small Business Lending Through Fast Decisions
Using a system that relies on traditional credit checks has become all but impossible, as this entire process is far too time-consuming these days. Startups, in particular, need to move fast if they want to remain in business for an extended period of time. This is part of the reason why Atlanta-based startup Kabbage is using other types of data.
To be more precise, Kabbage uses popular sources, such as PayPal and eBay, to determine whether or not small businesses will receive a loan or not. Both of these statistics will give a somewhat adequate view of how the business is running. However, it may also be less reliable as these statistics can be gamified quite easily. Furthermore, Kabbage seems to limit itself to a very niche crowd by taking this route.
That being said, there seems to be a fair amount of interest from major banks to explore the technology offered by Kabbage. A recent round of Series E funding – worth US$135m – included investments from Santander Innoventures, ING, Scotiabank and Reverence Capital Partners. All of these players are active in the financial world, and established players have started to realize new technology can no longer be avoided.
What is of particular interest is how three of the top fifty global banks have decided to become a shareholder in the Kabbage project. For the startup, this is very good news, as they can immediately start expanding their service on a global basis. Doing so will not only help small business around the world, but consumers will reap the benefits as well.
Unfortunately, there are no further details available regarding Kabbage’s technology. It seems safe to say that blockchain technology will not play a role in this company’s business model for now, even though that could be an option worth exploring in the future. The service prides itself on being transparent regarding fees, with no application fee involved in the process. For small businesses and even consumers, this is music to their ears.
Last but not last, the entire loan process through Kabbage takes place in an online environment, where customers can link their existing business accounts rather than providing all sorts of documentation. With an average application time of seven minutes, and offering the option to take as much funds as customers want, whenever they want, could make Kabbage a successful business in the next few years.
Bitcoin Loans Simplify The Process
In the lending world, the payment options for both receiving and paying back a loan are critical to the success or failure of a business. Bitcoin payments are more secure, more transparent, and nearly instant. Furthermore, bank transfers are more costly for all parties involved, whereas Bitcoin lets people send money all over the world at the fraction of a cost.
Whether or not Bitcoin will be suitable for a business like Kabbage, remains to be seen. Given Santander Innoventures’ recent investment in Ripple – to explore their ledger system – it looks like major financial players are keeping their options open. But one thing is for sure: Bitcoin and blockchain technology will play a part in the financial sector for many years to come.
Images courtesy of Kabbage, Shutterstock, Santander Innoventures