The fintech transformation of a 16-year-old company

Technology has transformed the financial sector over the past two decades. Now common parlance, fintech is a core component of the UK’s digital economy; there are an estimated 1,600 fintech firms across the country – a number expected to double by 2030 – while the sector contributes an estimated £11 billion and over 76,000 jobs to the UK economy.

Channel has witnessed and been part of the fintech revolution. The London-headquartered company offers financing solutions for businesses along with asset management services for investors. Founded in 2007, Channel has recognized the need to keep up with the technologies that are reshaping the industry. But how?

Kristian Wilson is Chief Technology Officer (CTO) at Channel. In this Q&A, Kristian sheds light on what is involved in the digital transformation of an established financial company, including how to balance risk, the importance of partnerships and the challenge of building and nurturing a fintech team.

What has Channel’s digital transformation journey looked like so far and what inspired it to invest so heavily in building its fintech credentials?

Christian Wilson: Digital technologies have reshaped industry after industry, but the asset management sector has historically lagged behind. This awareness has been a constant driver of change at Channel – translating into a commitment to disrupting the status quo in the financial services ecosystem and accelerating the pace of innovation.

Digital transformation quickly became a strategic imperative for the business. The management team had a very clear vision of what they wanted to achieve, both so that we could provide a better service to our investors, but also to disrupt the world of trade finance and SME lending.

This was the starting point for our technology-driven journey, which required us to pivot quickly and embrace agility and migrate away from legacy systems. After strengthening our technology department, we invested significantly in developing proprietary systems using APIs, open banking and cloud-based technologies to facilitate a fast and efficient data-led lending experience.

Is SME lending lagging behind consumer lending when it comes to digital transformation, and how can this be resolved?

KW: SMEs have been largely neglected by the lending industry. Despite playing a key role in the economy, they continue to be underserved by financial services, with lack of access to finance proving a critical barrier for many.

I would say that their commercial banking experiences are ten years behind what we see in the consumer space. And at the end of the day, businesses are made up of people, and people expect a consumer experience when it comes to accessing financial products, such as loans. But this is sorely lacking.

Outdated, inefficient and cumbersome decision-making models represent a major stumbling block for SMEs seeking funding. Much of this comes down to the fact that the SME sector is harder to play in; consumers is fairly well understood, which facilitates risk assessments, but on the SME side there are more variables involved – lenders face a much larger data set. This inevitably makes decision making more challenging.

That said, it’s also the opportunity to truly understand their needs and help them unlock growth by making better lending decisions than anyone else in the market. At Channel, we’re passionate about fixing this – that’s why we recently launched ours Fintech Lending Fundwhich provides capital to other fintech and digital SME lenders.

As a CTO and technology team, how do you focus on developing the right technology for your business?

KW: I think the hardest part is communication.

First, it’s about making sure people include technology in the conversation, because that’s where it adds the most value. For innovation strategies to be successful, they must be a company-wide endeavor. Technology cannot sit in an ivory tower – it is important to maintain two-way communication to understand business problems and find the right solutions.

The biggest risk in technology is building the wrong thing. Software is a people problem, so it’s about keeping the conversation going and gathering frequent and honest feedback to ensure that what you’re building is what people really want and need, without putting yourself at too much risk. There is a lot of testing, re-testing and validation involved. You have to strike the right balance between opening people’s eyes to the art of the possible, but also managing their expectations.

As an asset management and trade finance specialist, where mitigating risk is everything, how can you develop a fintech culture to not fear failure?

KW: Part of the fintech mentality is to commit to being a learning organization, which means that sometimes you have to value the learning that you take over the delivery.

Technology moves so quickly that you need to be comfortable with the pace of change and the uncertainty that comes with it. My approach to innovation is “if it fails, kill it fast”. This is something I have brought to the table and has been embraced by the team.

It comes from having a healthy attitude to risk and the flexibility to pivot when what you’re working with is no longer aligned with what you need to achieve. Learning to accept failure as part of the innovation journey is also important.

At Channel, we have settled into a symbiotic relationship between technology and the wider business, where we challenge each other to make strategic efforts in the right places, but at the same time we rely on our experience to rein in the associated risks. .

How important are partnerships between fintech firms to allow the sector as a whole to flourish?

KW: Fintech lending platforms play a crucial role in providing much-needed capital to SMEs, and the sector should aim to achieve greater synergy through innovation. There is a lot of room for collaboration in the fintech space and as a business we are very aware of the benefits of combining strengths in partnership models to deliver better results across the financial ecosystem.

This is where technology can play such a critical role in driving optimization through collaboration and leveraging synergies between different players in the sector to redraw the boundaries of B2B finance.