Thought Leaders in Financial Technology: Gina Taylor Cotter, SVP & GM, Global Commercial Financing, American Express (Part 3)

Sramana Mitra: The data you draw off is limited to just your ecosystem.

Gina Taylor Cotter: That’s correct. If you want to talk about the merchant financing product that has been in the market since 2011, we do have an application process where were gather some of that additional information. The reason being that we will provide loans up to $2 million. We want to secure more information to validate the optimal loan amount that we should provide that business to help them do what they need to do.

In small business loans, we’re solving a very specific need. We want to be able to provide simple access to low dollar loans because we’ve identified in our research that businesses have a need for that. The process is too cumbersome with the bank or more expensive with some of the online competitors.

Sramana Mitra: Today, somebody who’s applying for your merchant loan, do they have the capability of tying the same systems into your system as a Kabbage or OnDeck would do then?

Gina Taylor Cotter: Yes and no. In the Kabbage example, you can connect to a number of services. Let’s put that aside. What I would say, is we have a conversation with that business owner around their need. If it is a high dollar loan, we’ll secure that information from that business. It could be an easy document upload process. If it’s a low dollar loan, we instantly approve. That’s the majority of cases.

In the case of merchant financing, we want to provide loans up to $2 million. We have the team and infrastructure to have the conversation. When a business is looking for larger loans, they’re not looking for an online-only solution. They want to have a dialogue. They want to understand what is required.

Sramana Mitra: In general, it’s the smaller dollar loans that are getting approved through automatic heuristically evaluated processes. When you get to the $2 million range, people want to have a conversation.

Gina Taylor Cotter: I would be shocked if they’re not having a conversation for a million dollar loan.

Sramana Mitra: That makes perfect sense. Let’s go to other trends that you are observing. My concluding statement on what you have described is, the industry has seen a tremendous amount of experimentation in the last 15 years.

Some of those experiments that happened, at one point, in the startup world, are starting to find their way into large companies like American Express and your peers. What other trends are you seeing that are still in the startup world that you anticipate are going to flow into implementations in the large companies?

Gina Taylor Cotter: As I think about financing for small businesses which is critical for businesses to enable growth, we are very focused on following the trend to make sure that we are the most relevant provider to meet the needs of small businesses. What I have been watching closely is there are fin techs dropping out. We’re watching some falling out. We’re watching some acquisitions happening.

I’m observing that PayPal and others are looking at acquisitions to bolster their offering. I’m watching that closely to see what they’re looking to supplement. That’s interesting. I’m also keeping a tab on what will happen and what kind of growth we’ll see with the B2B marketplaces in the space. I’m also trying to stay close and understand what is happening with the tech giants and leaders. They’re touching small businesses. How will they proceed? That’s one group of things that I’m watching.

The other that I’m watching is what happens to the application over time. Always on lending is important for businesses that are busy. Joe has a need this month. He might have a need nine months from now. How do we make sure there’s easy access to capital that is more seamlessly available? Joe doesn’t have to apply every single time. That’s something that I think is going to be very interesting.

We have a working capital solution that we launched in 2016 that enables small business to make payments to suppliers. We’re watching to see how businesses are using that product. During their business cycle, when is the most important time they need that access. We’re finding that having something that is always on is meaningful as they’re managing their businesses. That is an interesting trend in the industry and may be something we’ll want to explore ourselves.

This segment is part 3 in the series : Thought Leaders in Financial Technology: Gina Taylor Cotter, SVP & GM, Global Commercial Financing, American Express
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