I have a reality check for my industry: We’re doing it wrong.
Technology was supposed to make everything easier, including financial decisions.
And in 2017, it has. We can use Venmo to pay our part of the big birthday dinner. We can deposit checks from our phones. Antiquated technologies — like ACH, which powers most bank-to-bank payment flows, but still takes 2 to 3 business days to process — are finally being challenged. And many lenders, like us, are making it faster and easier to get your business funded.
“Fintech” companies racked up a $5.4 billion investment first quarter of 2016; that’s a 67% increase over this time last year.
As I look toward the future, I’m thinking hard about what “innovation” really means to us, and to our customer. I’m thinking about where our North Star should be, and the metrics that really matter. “Fintech” is neither good or bad – it’s just a tool, like any other technology. How we use those tools to serve our customer, and which financial behaviors we choose to encourage: those are the choices that will matter going forward.
For us, fintech must be guided by “fintouch”; a human-conscious approach to lending, innovation, and customer experience. Here are the principles — a lender’s creed, if you will:
Financial decisions are human decisions, and technology should better inform those decisions, not make them for you.
We think we can use technology to enable you to make better decisions with your business that roll up to YOUR goal, and enable us to better help you with those decisions.
This is a world increasingly dependent on algorithms. If our President tweets about a company by name, that company’s stock price will be affected in a matter of milliseconds from the moment he tweets – before you’ve even finished reading that tweet. That’s because automated algorithms can parse that tweet, and the sentiment involved (“Sad!”) and make market decisions based on that information. That’s just one example.
That makes sense for stock prices, but it makes less sense when you’re talking about the constant financial choices you make as a business owner, because the thing that’s not clear to an algorithm are the personal, qualitative goals that led you to those decisions.
You might have come to us for financing because your goal is to open up time in your day to build your business, or it might just be because you need to meet payroll that month. Either way, that’s really hard to track, and most people don’t, but it matters.
We’re building a dashboard on our backend that will allow us not only to better track the financial part but also the qualitative, human part. What are your goals as a business owner and a person? Do you want to sell your company in 3 years, or build a family business you can hand down to your kids? Do you want to hire more employees in the short term or make more product?
We think we can use technology to enable you to make better decisions with your business that roll up to YOUR goal, and enable us to better help you with those decisions.
We want to create raging fans, people who can’t stop talking about how we helped them grow and succeed. We create raging fans by bringing a lot to the table. We are going to continue to bring value to the table, using technology as much as we can to do so.
Our priority shouldn’t be a faster loan. It should be a better business outcome.
Our lending process is full of friction, because it’s designed to uncover human problems.
There’s this concept of “friction” that fintech is trying to avoid. Friction, in this sense, just means “something that slows me down” and often, in this business, it means “I have to wait for a human.”
Our lending process is full of friction, because it’s designed to uncover human problems. We can review and better understand the numbers part with technology. That’s easy.
What’s harder is to uncover the person at the core of the decision, the business operator who’s going to be the biggest factor in success or failure. We want customers who are okay with that, who are less concerned with the exact rate we’re giving them than with what we understand about their business.
In return, we deliver custom solutions, custom support, and flexibility to the clients who survive that friction. When your needs change, we change.
To put it in millennial terms: Less Tinder hookup, more long-term relationship. Which is a good segue to…
Financial relationships, like most relationships, benefit from time and trust.
We’re not lenders who give you money and shut up.
This is where the “touch” part really comes in. Every quarter, we ask five questions of every client:
- How are we doing with our promises? Are we doing what we said we would?
- Do you have what you need in terms of cash?
- Anything else we can do?
- What can we do better ? What would get us fired?
- Who else should we be talking to?
As time goes on, we get closer and closer to getting real, honest answers to those questions, and understanding how they’ve evolved over time. That’s why we’re building this dashboard — so that we’re not only asking the questions, but tracking the answers in a way that lets us understand success the way you understand success. Whether your version of success is “I fed my family” or “I bought the boat I’ve always wanted” we’ll know how to help you get there, and how far we are from that goal.
Trust comes in most handy when there are problems. We’re not lenders who give you money and shut up. If you have cash flow issues all the time, let’s get to the real issue.
Our job is to run alongside you and say “In ten feet there’s a ditch — go ahead, feel free — fall in it if you want”. But, hopefully we can help you soften that blow.
There shouldn’t be such a thing as a bad loan.
What’s another way to say “bad loan?” Failure.
For us, but more importantly, for that entrepreneur. That’s a small business owner who borrowed money and sank his livelihood.
I think we have a responsibility to deliver success from the outset. Could we absorb a bad loss? Sure. But our goal, our metric, our vision is no bad loans.
These days, there’s plenty of disrupters who see fintech as an opportunity to scale lending to a point where we don’t need humans. The problem with that is, you’re inevitably going to have some bad loans. And when you scale to that point, you don’t have the ability to do “fintouch” – you simply can’t check in with your customers proactively like we can.
We touch so many lives. Far West has over 350 small business customers. Think about how many families that represents, how many employees, spouses, kids. Think about that business owner’s dreams. There’s a lot of rhetoric flying around right now, politically, that’s just toxic. I think we could do a lot to heal some of the divisions that we have by helping each other.
So — are you in? Will you commit to “fintouch” with me? Comment below and let me know.
Cole Harmonson is the CEO of Far West Capital, a company that funds the goals of high-growth entrepreneurs. Know a great company in need of capital to unleash their potential? Send them here and we’ll give them a call.