Special Report: As SME lenders compete for market share, AppsVillage is leveraging its customer base and unique tech capability to drive growth.

In the current economic climate, providing effective lending strategies for small businesses is as crucial as ever.

Data from the World Bank shows that globally, small to medium enterprises (SMEs) comprise around 90 per cent of all businesses, and account for around 50 per cent of total employment.

Recently, there’s been an increased round of competition in the SME lending space, as new entrants look to take advantage of the demand for capital to assist small businesses in smoothing out their day-to-day operations.

One company competing in the space is ASX-listed AppsVillage (ASX:APV), the fast-growing software-as-a-service (SaaS) platform that allows business clients to set up an app in minutes.

In recent months, AppsVillage has adopted a successful partnership strategy with a number of SME lenders in the US and Australia, leveraging its existing client base to build out a multi-channel product offering.

Speaking with Stockhead, CEO Max Bluvland said that while loan demand was increasing, it would take more than just a simple lending service to stand out and win market share.

“We have a sophisticated customer-acquisition approach; we’ve grown our customer base across a number of digital channels, and we have an advanced understanding of online marketing. For a lot of competitors, the customer acquisition approach is still very low-tech,” he said.

“The second aspect is the vetting of potential customer for credit worthiness. A lot of brokers still need to employ underwriters, whereas we have the tech to access details from our customer base and conduct an automatic analysis of whether they’re qualified for a loan or not.”

With a global customer base, AppsVillage is scaling up its multi-channel offering by giving customers on the platform access to lenders across both the US and Australian markets.

And as the economic slowdown caused by the COVID-19 crisis continues to send shockwaves through markets, policy measures to help small businesses maintain liquidity will be crucial in the months ahead.

To illustrate the sector’s importance, SMEs collectively employ the largest number of workers in Australia and the US. And last week, the Australian government announced a $15bn funding facility to support SME and non-bank lenders in the local market – a move applauded by Bluvland.

“SMEs are the backbone of the Australian economy, and the current market conditions are taking their toll. In this environment, cashflow can be the difference between survival and foreclosure,” he said.

“So, I think it’s particularly important that the government recognises the increasingly vital role non-bank lenders have in supporting borrowers in the Australian market.”

On the local front, Bluvland recently partnered with Sydney-based SME lending platform Lumi to help establish its footprint in the Australian market.

Speaking with Stockhead, Lumi CEO Yanir Yakutiel said while SME lending was growing fast, the quality of a lender’s tech offering was the key factor behind their long-term success.

“Software is everything; you need good tech to create operational efficiencies and make it possible to underwrite loans in a cost-effective manner,” he said.

Yakutiel said the tech battle in SME lending was all about keeping pace with changing consumer preferences.

“Going to a branch and getting a loan application processed over a period of weeks isn’t something people do anymore,” he said.

“The key is to extract as much information from the applicant as possible, with the least friction and pain-points from their side.

“And if you get it right, the simpler the interface is to use on the front-end usually means the harder it was to develop on the back-end.

“At the end of the day, the customer isn’t thinking about the tech behind the platform – they want an outcome. Having good tech is an enabler that allows us to offer a differentiated product.”

For Bluvland, AppsVillage’s tech-focused lending service is part of the company’s goal to become a “one-stop shop” meeting all the needs of its fast-growing client base.

“We want to attract more customers away from traditional funding options to a low-touch, digitally native platform. That’s really where we think we can add value,” he said.

This story was developed in collaboration with AppsVillage, a Stockhead advertiser at the time of publishing.
This story does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.