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Success at Deutsche Börse FinTech Hub, part 3: Fintura

02 Jun 2017

Success at Deutsche Börse FinTech Hub, part 3: Fintura

The FinTech Hub is an initiative to support the fintech community in Frankfurt and in the Rhine-Main region. Alongside dedicated consulting and networking services, it also offers fintech start-ups like Fintura co-working spaces and a modern event location. We spoke to Gernot Overbeck, one of the co-founders of Fintura. The company runs an online comparison portal, providing small and medium-sized companies (SMEs) with a quick and simple way to carry out their financing plans.   

Mr Overbeck, you are one of the founders of Fintura. Could you tell us something about yourself and your co-founders?

Gernot Overbeck, CEO Fintura

As the CEO and co-founder of Fintura, I am the “non-banker” among us. I’m a physicist. I launched my first start-up while completing my PhD at the Max Planck Institute for biophysical chemistry. We produced and sold laser microscopes. After leaving university, I worked for McKinsey & Company and Oliver Wyman, followed by my second start-up, which catered to the real-estate sector: a software-as-a-service company. After that, I joined a medium-sized private equity fund as a partner and finally, in 2014, Thomas Becher and I founded Fintura. Thomas is a banker through and through. He was a director at Deutsche Bank and looks back on 15 years of experience in SME banking. Having met through a small advisory project at Deutsche Bank, we decided to team up and transform SME banking, which led to us founding Fintura in April of 2014.

Fintura is an online financing portal for SMEs. Why target this specific market?

We looked at the overall market. There are comparison portals everywhere you look, it’s where you buy cars, book flights and hotels – and even search for a partner. But there was no such thing for SME financing, even though SMEs form the very core of the German economy. They employ 82 per cent of apprentices and generate more than 50 per cent of the German economic output. That is why we said: “Let’s do this, we will be able to actually add real economic value.” We did not simply want to found a company; we wanted to create something meaningful. Image-wise, the financial crisis has taken its toll especially on the banking sector. We liked the challenge of creating a company in this sector to fulfil an actual economic purpose.

How did the banks you cooperate with – your financial partners – accept your idea? 

Generally speaking, our financial partners were very open. Of course, some are more innovative than others, but banks’ experiences in the mortgage sector have been excellent with Interhyp. And it was quite clear that something of the kind – something like Fintura – would also be developed in the SME sector, which is why our initiative was very well received. 

How fast does the granting of a loan proceed through your portal? 

Our credit approval process allows for risk-adjusted comparison of interest rates within 15 minutes, which is our key value proposition. After that, if the uploaded documentation is complete and if there are no skeletons in the applicant’s closet – which does happen from time to time – the loan is usually granted within 72 hours. 

That’s very fast – what data is this first appraisal based on? 

The documentation we provide to banks is very well prepared. And the banks’ contact persons are extremely motivated; their approach is: “If we are successful, our clients are successful.” But loans are not always granted within 72 hours. It takes longer in cases that are very complex or where the required amount exceeds €250,000.  

What kind of documents are your clients required to upload, what kind of information do you need?  All we need initially is information on the company in question, the person applying and, of course, on the financing project. We then request a credit ranking through the rating agency Creditreform and, based on the level of information, create an automatic comparison of our partners’ terms. This comparison is risk-adjusted. The client can then select a financing partner and must upload the required documents to our platform, such as the past two annual financial statements and the latest business assessments.

Can clients theoretically use your portal for any financing project?

Generally speaking, our portal can be used for any financing project, but it has to be commercial. We do not process private financing applications and some sectors are excluded, such as the sex trade or weapons industries. Then there are sectors that face more difficulties in financing than others, such as the hotel and catering industry. Our services can, in principle, be used for any kind of financing project, provided the prospective client’s level of creditworthiness is acceptable and he is able to repay the loan.

And how do you make money?

We take a commission of 1.5 per cent, independent of the financing partner. And it is the financing partner who pays us, after concluding the contract. Our partners view it as a fair commission for the service we provide. In return for the commission, we reduce processing costs in the sales and middle offices of our financing partners: we provide them with high-quality documentation on the request, equivalent to that of the first vote within the bank. And when he receives documentation from us, the financing partner is no longer in competition with other potential financial institutions, because at this point, the client has already made his choice. The financing partner can be sure of the job, which drastically cuts down on the amount of work the institution would have otherwise invested in deals that it may end up losing to competitors or decide against altogether. As processing costs are what banks spend the most money on in the SME sector, we help our financing partners to tackle their key issue.

How and why did you decide to join the Deutsche Börse FinTech Hub?  

They called and asked whether we wanted to join, and we said yes. We were located in Darmstadt and had always wanted to come to Frankfurt, and we were on the lookout for a good opportunity. When Deutsche Börse contacted us, we jumped at the chance: the entire setting is perfect.

So the location has advantages for your business?

Yes, first of all Frankfurt is a significantly better location than Darmstadt, because it brings us into close proximity with the banks, making it much easier to meet over a cup of coffee. The Bornheim neighbourhood is really nice, with Sandweg and Berger Straße just around the corner – both wonderfully vibrant streets. And the FinTech Hub is magnificent as well: the open architecture dominated by glass and the beautiful balcony. There really is nothing more a fintech could ask for. 

How has your fintech developed since you joined the FinTech Hub?

We have doubled our number of employees, which is now twelve. The requested credit volume has approximately tripled, and the same is true for the disbursed credit volume. To date, we have acted as agent for financing projects in a total volume of nearly €80 million. That is an enormous development.

What steps do you have planned next?

The next step is a major financing round which we are currently working on and will soon close to induce our own growth and professionalisation phase. We have proven that our business is viable, that we have both financing partners and customers at our side. We were the first ones globally to succeed in implementing just-in-time risk-adjusted interest rate comparison. And our customers seem to like what we have to offer: they keep coming back. We now need to professionalise our organisation, keep on advancing the product and improve our market presence to promote and achieve strong growth. 

What is the volume of the current financing round?

We have succeeded, thus far, in accumulating €2 million from private investors over a number of tranches. We are currently contemplating sums that are substantially higher.

All the best to you and thank you!

The interview was conducted by Claudia Aden.

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