Automating SME Lending – How Teylor Innovates the Credit Cycle

We talked to Patrick Stäuble of Teylor about lending automation, and he had the following to say:-

First of all, how are you and your family doing in these COVID-19 times? 

Patrick Stäuble: Thankfully, everyone is healthy! We have spent most of the year in lockdown and haven’t seen each other much, but everyone is in good spirits.

Tell us about you, your career, how you founded Teylor.

Patrick Stäuble: I used to work for a fast-growing Fintech company in Zurich, where I first started as a product manager and later became Head of Business Development. During this time, I noticed that there had been some progress in digitizing and automating consumer loans, but almost no bank was offering digital business loans. That’s a problem, in particular for small and medium-sized enterprises (SMEs) who do not really have the time to fill in lots of paperwork or go to the bank branch many times. On the other hand, because banks still handle almost all of their lending processes manually, their small business lending costs are high, and the margins are low. As a result, banks prefer lending to larger companies, not to SMEs, which means these customers are neglected by traditional banks, and it usually takes weeks or months for German SMEs to get a loan offer. Imagine you need urgent liquidity, or you have a business opportunity that you want to jump on quickly. Eight weeks for a loan is simply too long.

How does Teylor innovate? 

Patrick Stäuble: Our idea was to digitize and automate SME lending to get rid of cumbersome, error-prone, and time-consuming manual processes. We developed technology that automates the entire lending cycle, from onboarding, KYC, and scoring to document and contract management, and much more. Our first product was the Teylor Loan platform www.teylor.de, on which SMEs can get a business loan offer within just 10 minutes. We finance these loans through partner banks and through our own loan fund. As the Teylor Loan was hugely successful in the German market, banks started to reach out to us and asked if we could provide a technology solution to digitize their own lending processes. That’s when the Teylor Lending Cloud was born, a Software-as-a-Service solution that enables banks and other lenders to digitize and automate their loan processes.

How the coronavirus pandemic affects your business, and how are you coping?

Patrick Stäuble: Everyone in banking knows that there is a need to digitize and automate, so that’s not a secret. However, during the pandemic, banks have had to experience first hand what it means if they do not have the digital tools needed to conduct their lending without physical bank branches. Since mid-2020, we have received many calls from banks who were asking for solutions, and we are currently running several digitalization projects with banks. So overall, despite all the negative effects the pandemic has had, the silver lining is that our technology is now in great demand – even more so than before the pandemic.

Did you have to make difficult choices, and what are the lessons learned?

Patrick Stäuble: As a company, we were quite decentralized from the start. Half of our employees mostly work from a home office, so we always used digital infrastructure in our business. We have always found this to be the best way to run a business in the modern age as it comes with many advantages. The pandemic has now made home office much more common, and I don’t think this trend will go away again after the pandemic. So the lesson we learned is that we have made the right decision in how we have set up our business, and many other companies will follow.

How do you deal with stress and anxiety?

Patrick Stäuble: Honestly, I think it is just something you get used to with time. There are very few moments in the process of founding and growing a startup that are not stressful, but after a while, you have experienced a lot, and you just get on with it. 

Who are your competitors? And how do you plan to stay in the game?

Patrick Stäuble: What we do is so innovative in our particular niche that we don’t really have any competitors. There are other fintechs that provide digital solutions, but those are pure technology providers; they don’t run their own lending operations. We do both, we have the technology, and we use this technology ourselves to lend to small businesses. This unique combination of technology and lending gives us a huge competitive advantage because we understand both sides of the business. Because we are using the technology ourselves, we constantly update it, adjust it to our own lessons learned, and change our regulatory environment. We can use the data we gather through our lending operations to improve our pricing and scoring models. That also answers your second question: We plan to stay ahead of the game by always providing the best solution available in the market.

Your final thoughts?

Patrick Stäuble: This pandemic will soon be over, and the hardship many people and companies had to go through over the last year will end. What we should try to do is learn the lessons of this crisis. One of those lessons is that we need to become more digital, more interconnected, more agile, and more resilient as a society. I am convinced digital technologies will reshape the world in the next years, and if we do it right, we can create a more inclusive and more efficient economy and society. That will be for everyone’s benefit and in particular for the benefit of those who need it most: Small businesses and the people working for them.

Your website?

www.teylor.de