Getting access to financing is one of the most common problems that many businesses face, especially SMEs. Historically the lending process has been a complicated matter. Time consuming, manual, as well as favoring big corporations. But by digitizing the process we’ve managed to change that. And we’ve managed to make financing both available and affordable, for more businesses.
What is Financing as a Service
We are Froda. A Swedish fintech aiming to revolutionize the banking experience for small businesses by giving them access to financing with terms that make it easy and affordable for them to invest in their ideas. We do that by offering a financial product that is digital, data-driven, and designed to fit small businesses and their needs. Froda is a regulated credit institution under the supervision of the Swedish Financial Supervisory Authority and we are backed by several well-known investors and talents from e.g., Avanza, Spotify, Google and Klarna. The regulatory license allows us to lower our funding costs, which enables us to offer the security and value of a traditional bank, with the quickness and simplicity of a tech company. To date, we have helped more than 15 000 SMEs get access to affordable financing through our business loans.
With Financing as a Service we’re taking the next step towards our mission to make business financing more accessible. Financing as a Service works as an embedded lending solution, where we are making it possible for payment companies, neo banks, ERPs and business service providers to integrate our lending platform into their business ecosystem through a simple API integration. Allowing them to offer smart and competitive financing to their customers directly through their own customer portal. The modern platform also ensures an effortless onboarding experience both for our partners and their customers. And our passportable regulatory license allows for short time-to-market within the EEA.
The lending platform
We have developed our process and platform with the end user in mind to ensure a world class user experience, making lending both fast and simple. We have worked continuously since 2015 to improve and fine-tune the platform in order to create a fully digital and data-driven solution, designed to fit the customers and their needs. By leveraging data from multiple sources when assessing customers, our platform produces more accurate offers that carry a higher acceptance rate when the customers apply. The technical foundation of the platform and the powerful data sourcing also allow us to speed up the lending process. Credit assessments, KYC processes, payouts and repayments are all automated. Meaning that the customers get to apply whenever they want to, wherever they want to. And when they apply, they get a fair and objective assessment of their application, the loan decision within a day and the financing paid out at instant.
- Assessments: Instant and automated credit assessment, making use of a combination of credit bureaus and open banking. Possibility to leverage partner data to increase the offer accuracy even more, as well as easy adoption to local data providers if needed.
- KYC: Access to official data through identification service implementation, in combination with partner-specific data, ensures seamless KYC processes.
- Payouts: Automated and real-time payouts. Meaning that customers get access to capital right away when they’ve signed their agreements.
- Repayments: Automatic and hassle-free repayments adjusted for the customers specific needs. Either through revenue based repayments, or by direct debit.
How does Financing as a Service impact your business?
Expanding your offering is a proven way of adding value to your business and improving the relationship with your customers – both short and long term. The added revenue stream that Financing as a Service brings is going to grow your business today, and it’s going to give you more satisfied and loyal customers in the process. By offering financing to your customers you’re going to solve a major need for many of them, which will lead to them staying customers for longer, and therefore reducing your churn. And the best part? The added value to your business doesn’t carry any added admin or increased risk. As Financing as a Service runs through our lending platform, we’ll take care of all the funding and financial administration.
While an added revenue stream, increased customer loyalty and reduced churn are all beneficial to your business today. The larger impact that Financing as a Service brings will be seen in the future. By bringing financing to your customers you’re not only going to make it possible for them to invest in their ideas. As you’re freeing your customers from having to spend their time chasing financing by doing so, you’re also enabling them to spend that time growing their businesses instead. Because if their businesses grow, it means that they’re going to become even more valuable to your core business, and it means that they will continue to turn to you to finance future investments as well, yielding you a compounded revenue effect going forward.
What’s in it for us?
So why are we allowing third party partners access to our platform instead of trying to acquire the customers ourselves? The answer is quite simple actually. We founded Froda with a clear idea – giving more businesses access to affordable financing so that they can invest in their ideas. With Financing as a Service we’re doing just that. Through our partners we’re able to reach more businesses and we’re able to reach businesses that we might not have been able to reach ourselves. There are several beneficial factors of offering our business loans through our partners, in terms of marketing and the lending process. As you already have an established relationship and direct communications channels with your customers, you have insights on how to target the offering to them in the most efficient way. By offering our financing through our partners’ existing ecosystem we’re also simplifying both the lending experience and the lending process. Financing is now just a couple of clicks away, making it more accessible and easier than ever before for SMEs to invest and grow their businesses.
All in all, Financing as a Service is a partnership that is beneficial for all parties involved. Your customers get access to affordable financing from a partner they trust. You get to improve your offering and customer experience with an innovative solution to a need that many of them have. And we? We get to focus on what we do best. Continuously improving our lending platform and making sure that you and your customers have access to the best financing solution on the market.