Thought Leaders in Financial Technology: Nectarine Credit CEO Alex Armitage (Part 2)

Sramana Mitra: You started with the dozen beta customers who ordered the product in advance. You built the product. They came on board as paying customers. They brought on 400 to 600 prospects. 

Alex Armitage: That’s a simplification of it, but that’s essentially how we’re moving forward. It’s a huge problem. Thousands of companies are sending out physical paper applications and are asking for credit verification over email. Dozens of emails are sent back and forth. Sometimes that process takes months. Our system takes minutes.

Sramana Mitra: Help me understand a little bit about how you built this product. You started off by saying you have 10,000 banks. How do you select which banks to bring on? Is it through the customer base and the banks they work with?

Alex Armitage: You have your usual suspects. If you target 50 banks, there’s a pretty good chance that if you can get a majority of those banks, you’ll get the majority of the business out there. We targeted a lot of these banks. We have a lot of third-party data companies that we work with. What’s interesting about the whole process is that it’s very fragmented and disjointed.

At the same time, there’s just a couple of very big players at the top that had to market themselves for a long time. We partner with a lot of these companies. Those companies are behemoths and the gold standard in the credit decision and report process. Partnering with them is also key. 

Sramana Mitra: That’s exactly what I was thinking. We’ve seen a bunch of companies and businesses that have been predicated on this premise that you’re working with – speeding up the credit approval process. We’ve seen this whole category like OnDeck and Kabbage who do small business credit. They use as their input signals like eBay and Amazon transactions.

Intuit is doing a QuickBooks financing product that uses proprietary QuickBooks data. American Express has a similar product. You said to me that Equifax and comparable behemoths are your primary source of validation, that would say one thing to me. Why I probed the 10,000 banks is that it takes time to integrate all these banks.

Alex Armitage: Yes, it takes a lot of time. What’s important to understand about the credit decision process is, there’s no one right answer. Everyone’s going to have different answers. Different credit analysts will have different answers.

Also, you’re dealing with imprecise and missing data. It’s a bit like putting a puzzle together partly in the dark. We’re providing a platform with tools, data, and analytics. The credit analysts who use our platform can then take those data points and use them to fit their own algorithms and their own credit decisioning models. What that really looks like is that everybody has a different answer when it comes to credit decisioning because everybody values data points differently.

There’s no right answer, but our job is to provide as much data and as many options that people can use. To go back to your comment on the 10,000 banks, just having bank account verification and getting cashflow data, that is not enough information for a credit analyst to decide. Our job is to offer a lot of data and a lot of analytics. Part of that includes partnering with people. You can’t do it alone. Even the behemoths are not primary sources for their data. 

This segment is part 2 in the series : Thought Leaders in Financial Technology: Nectarine Credit CEO Alex Armitage
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