Thought Leaders in Financial Technology: Nectarine Credit CEO Alex Armitage (Part 3)

Sramana Mitra: The trend that I’ve seen in this market is, people zero in on one set of data and develop a set of heuristics based on which they are making these decisions. You look at Kabbage for example. They weigh heavily on online transactions. They are willing to lend against that transaction volume. That’s their primary heuristic.

In the case of Intuit, they’re basically using QuickBooks data. You’re not a proprietary data provider. You’re basically bringing on a lot of data signals and then you’re offering heuristics on those data signals. I’m curious about how you got the company going. What was the MVP for a company like what you’re talking about?

Alex Armitage: The MVP question is passionately debated on every startup blog and podcast. There’s the expression, “If you launch your product and you’re not embarrassed of it, then you’ve waited too long.” While there is truth to that, we have some competition, but our competition is quite fragmented. Some of our competition is this old rudimentary system of going back and forth over email and fax.

The bank account verification is a key element of our platform; we knew we had to have that. The current system of bank account verification is 100% broken. It’s manual. It takes time – 24 hours to 24 days. It doesn’t take a Harvard grad to realize that there is a better system than calling a banker and going back and forth. We just knew that that system was broken.

This is what kept our team up at night. What do you launch when your competition is a manual system? You don’t want to come out with something so futuristic that it turns people off, but you want to come up with something futuristic so that they realize it’s worth the time and effort to invest in this.

Sramana Mitra: In your case, the bank account verification was almost like table steaks. It’s a low-hanging fruit. It has to be done. Was there anything else that was in that category that needed to be in the minimum viable product?

Alex Armitage: That’s a good question. There were a lot of things. When you talk to a customer or a prospect, everybody has a different opinion on what is the MVP and what they have to have. Full disclosure, it’s a struggle because everybody says they want something. When you look at the data, they’re not using what they said they had to have. That’s a real challenge. We’re a startup. We have nice traction. I’ve spoken with bigger companies. They have the exact same problem. 

Sramana Mitra: Now that you have some data and customers, what are some of the more actively used features that you put in early on that are part of the success factor of your product?

Alex Armitage: The bank account verification is a key component. It’s a low-hanging fruit. It’s important to note that the credit application process for small businesses was broken. It was broken to the extent that companies don’t get credit not because they have bad credit, but because the system is broken. People don’t get faxes. Banks don’t verify bank accounts, because they didn’t get the fax. 

Sramana Mitra: You’re digitizing the process as part of the MVP. 

Alex Armitage: Exactly. It’s not bells and whistles. For us, it was about making the process seamless. Earlier, it it took much longer. For the credit seeker, it was a six or seven step process to just answer those questions. Of course, we’re at MVP 2.5 now. We’re always adding to increase that efficiency and decrease the friction. We’re always trying to find ways to improve that. I can talk about features.

Sramana Mitra: I’m thinking about what are the data signals and heuristics that are driving these decisions that are being automated. 

Alex Armitage: I can give you an anecdote. One of the things we’ve discovered is, a credit seeker is tired of filling out credit applications a dozen times a month. It’s essentially the same data. Everybody asks for the same thing on 80% to 95% of the applications. We solved that problem by allowing credit providers to build their custom credit app.

What we haven’t quite solved yet is the other side of the equation. The credit seeker is filling out the same form again and again. We are collecting lots of data every day. One of the things we’ve realized is that the credit seekers are sick and tired of filling out this information. Now we’re creating an onboarding system for them to not have to fill out a credit application again. We’re building a way for them to build a one time profile.

Sramana Mitra: And then auto-populate the applications.

Alex Armitage: Exactly. The obvious step was to feed both ends of this equation. That’s an example of a feature that wasn’t in our MVP. 

This segment is part 3 in the series : Thought Leaders in Financial Technology: Nectarine Credit CEO Alex Armitage
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