How October supports Italian SMEs

In July, the French fintech October launched instant lending for SMEs. Thanks to a predictive analysis of credit risk it allows a fully automatic assessment of loan applications of between 30 and 250 thousand euros covered by a state guarantee. It is a continuously growing company and that is why we interviewed Sergio Zocchi, CEO of October Italia, asking him about its goals and projects and also about how the lockdown period was managed.

What are your business objectives for the end of 2020?

We expect the demand for credit from SMEs in the coming months to grow significantly as a result of the economic crisis linked to Covid-19. Thanks to the support of state guarantees introduced not only in Italy but also in France and the Netherlands, countries in which our platform is operative. We are convinced the only way to ensure business continuity, and facilitate the recovery of investments made, is to enable them to overcome the crisis. Our aim is to respond to the liquidity needs that SMEs face today in a quick and easy way. The new instant lending solution we introduced in July goes precisely in this direction. By fully automating the demand analysis process today, we are able to provide an instant response to this credit demand.

How did you cope internally with the lockdown period?

October, thanks to its 100% digital platform, continued to be operative and to evaluate all incoming requests which, as always, were analyzed on the basis of credit risk merit, taking into account the possible impact the Covid emergency has on some sectors. Despite the emergency context due to the pandemic, our lender community of more than 20,000 people continued to be very active and was attentive to the change in the socio-economic framework imposed by the lockdown, welcoming the many initiatives we proposed to support businesses.

Have you launched any special initiatives dedicated to the Italian entrepreneurial ecosystem?

At this difficult time for Italian companies, we have implemented many initiatives aimed at facilitating their access to credit and filling the need for liquidity to help them overcome the emergency as quickly as possible. At the end of March, and independently from the support measures put in place by individual governments, we announced in all European countries, in which we are active, the automatic suspension for 3 months of capital repayments on active repayment plans waiving October fees as a further sign of our commitment. In addition to this, in order to protect our lenders, we have offered companies the possibility of refinancing their loans through public or private guarantees. Finally, July saw the launch of our new instant lending solution which, thanks to predictive credit risk analysis, allows us to fully automatically assess loan requests and provide an immediate loan proposal for credit requests between 30 and 250 thousand euros covered by the state guarantee.

Did you see any new trends during the covid19 emergency? Which ones?

Before the pandemic, SMEs turned to our platform to finance tangible or intangible investment projects for growth, but today companies need immediate liquidity to ensure business continuity. Plagued by declining sales and procurement difficulties, more and more companies are asking us for resources to finance the resumption of production activities, to meet current administrative expenses and to purchase warehouse stocks. What has changed is not only the destination of funds but also the sensitivity of companies to the timing of disbursement of funds, which today represents the main drive in the choice of a financial partner of reference.

From your point of view, since your arrival in Italy has the attitude of companies towards alternative forms of financing such as the one proposed by you changed? How?

Due to the contraction of bank credit, in recent years companies have progressively approachted alternative financing instruments such as direct lending, mini-bonds or advance invoices. The pandemic and the lockdown have also accelerated the dynamics of innovation that were already taking hold, including the use by businesses of digital solutions to diversify their sources of financing.

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Smartika, the first Italian operator in P2P lending, keeps innovating

Smartika was the first Italian operator in P2P lending and has been innovating since 2012. We asked CEO Rosy Alaia to tell us the latest news.

What does Smartika do and who does it address?

Smartika is a Payment Institution regulated and supervised by the Bank of Italy. We are therefore a financial operator authorized to provide payment services to Lenders and Applicants. Founded in 2012, it operates in crowdfunding lending. Smartika was the first operator in Italy in P2P lending. After the entry into force of the implementing decree of the European Directive 2007/64 (Payment Service Directive), the Bank of Italy has more precisely defined the regulatory framework within which P2P lending platforms can operate in the form of Payment Institutions. In fact, the activity of the platform manager is authorized if it can be classified as the provision of payment services while, from the point of view of the borrower of funds, the collection of funds is authorized when applicants and providers can affect the contractual clauses in a personalized negotiation. The users of the Smartika platform in particular are exclusively private entities. Since 2018 Smartika is a company subject to the management and coordination of Banca Sella Holding S.p.A.

A few issues on Smartika that describe your business and target for the end of 2020

There are currently more than 5,800 active lenders on the Smartika platform and since 2008 more than 5,700 loans have been disbursed for a total of approximately 31 million EUR. We aim to reach a total disbursement of EUR 32 million by 2020. A boost to the P2P lending market among private individuals was given by the 2018 Budget Law, which introduced the final withholding tax at a rate of 26% on investment income in ‘social lending’ obtained by individuals on a par with other financial income. However, it is important to remember that the withholding tax can only be applied by registered financial intermediaries and payment institutions (articles 106 and 114 of the TUB). During 2019 we completely overhauled the platform, both from a front-end and a core banking point of view, which led us to the complete digitisation of the processes.

How much did covid19 impact your business?

In general, while governments in different countries were taking major action in response to Covid-19, companies were adapting quickly to the evolving needs of their employees, customers and suppliers to meet both operational and business challenges. Smartika’s processes are full digital, so we have had no particular operational impact in managing our business. Financial operators in this phase played a fundamental role in guaranteeing liquidity to the real economy but were faced with a series of critical operational issues. The areas particularly impacted were funding, customer management, human resources, credit risk, technological infrastructure and regulation.
Smartika is a P2P lending platform which, as a Payment Institution, is not subject to some of the critical issues mentioned above, such as funding, which derives from the offers of private lenders who intend to finance the requesting customers through the platform, and credit risk to which Smartika is not exposed, since it is not a lending institution.

Have you identified any different trends in your market during the lockdown period?

As is well known, the spread of COVID-19 has led, among other things, to the freezing of economic activity, which has produced tensions in financial markets and downward estimates compared to expected world growth rates. As anticipated, Smartika is not directly impacted by credit risk. From the point of view of behaviour, we have noted a change in the purpose of the financing with an obvious abandoning of travel and holiday purposes (recorded until January 2020) and an increase in requests for the purchase of means of transport, furniture and household appliances from the month of March. From the lenders’ point of view, we have noticed a greater caution in investments from the month of March.

Have you launched a P2P lending platform in open banking mode and if so, what are its peculiarities compared to those existing on the market?

The new platform, the first to be developed entirely in the cloud and based on innovative technologies in open banking mode, has allowed us to offer our lenders the opportunity to indicate their preference in relation to the category of projects to be financed: “Restructuring and energy saving”, “Family expenses” or “University and training”. Smartika wants to be more and more attentive to the needs of its customers. That’s why we have taken this opportunity to renew the customer’s experience by making the best use of what is available today in terms of technological innovation, to allow flexibility and continuous improvement in the use of the platform all necessary for making a difference on the market.

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Recrowd, the real estate crowdfunding according to Gianluca De Simone

Recrowd is an innovative startup that was founded in October 2018 to offer savers an alternative way for investing their savings by digitizing and simplifying the investment process through lending crowdfunding and using an easy-to-understand asset such as real estate. Through this platform we offer people the opportunity to invest in real estate even if they do not have large capital, lending their money at a rate defined in advance. On the other hand, we offer companies operating in the real estate sector a fast and secure solution to raise funds and easily manage all the bureaucracy related to the individual real estate project.

Recrowd works mainly with companies operating in Italy and offers them 4 types of projects to present to investors on the platform. “These types differ in risk, minimum capital, duration and return. In order to make the most of investors’ capital and to adapt as much as possible to their risk profiles – explains Gianluca De Simone, CEO of Recrowd – we are also the first real estate crowdfunding platform to have included personalized negotiations that allows the negotiation of the rate at which money is lent between the company that proposes the project and the investor user registered on the platform”.

To finance the activities of the first 4 months Recrowd launched an equity crowdfunding campaign in March 2019 with which it raised 418 thousand euros selling 12% of the company shares. “This allowed us to put together an under-30 team of 6 people who interface with the company’s contacts every day in order to better structure all the processes related to the crowdfunding campaigns that will then be presented on our platform – explains De Simone – We have placed ourselves in a fast growing market with the right timing. Investors on our platform are growing monthly and we are increasingly aware of, and confident, in the possibilities that crowdfunding offers in this sector. We are still at the beginning but conditions are more than good”.

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ReLender: interview with Francesco Marella

ReLender is the first crowdlending platform for financing conversion projects. It covers all industrial, real estate, ecological and digital transformation projects. The reconversion crowdfunding formula is a specific adaptation of digital fundraising systems to reconversions and combines civic crowdfunding and crowdfunding lending.

In the first case, the financed projects bring a direct benefit to the local community, generating a positive social, economic or environmental impact. The second is more traditional and financial in nature: it rewards investments (made in the form of loans) in support of the initiative that is the subject of the fundraising campaign. For companies, ReLender is an innovative tool for effective financial support to companies, for lenders, it is a new form of democratization of investment, accessible to all and which can also be accessed with sums starting from € 50.

The entrepreneurial group to which ReLender belongs has been involved in the construction of real estate for over 3 generations. Francesco Marella, the founder, explains “we wanted to experience first hand the real estate crowdfunding with two different realities to finance real estate projects with solid guarantees and offer an attractive return to the hundreds of investors who have chosen to support us. Thanks to these experiences, we decided to expand the paradigm from the platform sector to create a set of highly diversified products that share the same objective of financing, conversion, and that generate positive outcomes for the project stakeholders”.

ReLender is an Italian platform but the technology and design are Spanish and also the payment system chosen. It operates in Milan and Madrid, it is available only in Italian, but the Spanish and English versions will debut soon.
To present ReLender, an event will be organized in September in Milan and then in Rome. The team of this fintech will take part in the most important events in the sector such as the Bank Forum, the IT Forum and the Payments Fair.

Some of the team members had already participated in the Fintech District community in their previous work experiences exploiting the possibility of creating synergies with the actors of the ecosystem. “That’s why we joined the team, convinced that it represents an incredible opportunity to facilitate collaboration between companies and start-ups. – explains Marella – We have also chosen to create our headquarters in the structure of via Sassetti 32 in Milan to have the opportunity to take advantage of networking opportunities and make ReLender grow thanks to the driving force of a network with great skills such as Fintech District”

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