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[Music] [Applause] [Music] hello everyone and welcome to the fintech finance virtual arena and today we're going to be talking about how payment innovation is actually going to be helping small medium enterprises or smes get back on track after the pandemic and joining me i have lara gilman from eyewalker laura how are you doing you're all good today uh yeah yeah it's um it's sunny out feels like uh springs on the way so i'm doing fine i mean in in london that's always a good sign for me so i mean that's absolutely brilliant here laura with that in mind um we've brought you on the show here today obviously because of ayahuaka um i feel like you you solve some of those issues so before we go any further can you tell our audience a bit about yourself your role and uh iwaka in general please yeah with pleasure um so i've been in iwaka for uh for three years and i walk it really focuses on small business financing we've been around since 2012. um we have brought more than a billion financing to small businesses and through the corona virus crisis we've been able to actually help through distributing of sea bills loans and we've done well over 200 million and and hopefully a lot more to come before the end of the scheme but our real mission is to make businesses um to finance more than a million small businesses and um and to really bring finance and and financial solutions to where businesses need them and so we do that in a number of ways we do it through offering flexible financing we do it through um our open lending platform which allows um businesses to to connect with us and we can provide financing uh through other fintechs through other payment providers through other accounting software platforms and we do it through um iwakapay um so i spend most of my day on a walk of pay um but it certainly kind of fits into the broader suite of of what iwaka offers absolutely well i mean with that in mind that yeah that is quite a broad suite there are so many issues currently facing small medium enterprises um i think we're going to tackle throughout the conversation but to get things started then since it's really your forte what is the what are some of the issues that smes face that i walker pay addresses yeah so our wikipedia really is a is an invoice checkout solution and so one of the problems um you know as i mentioned kind of our core businesses is a uh sort of offer flexible financing and what we have is what's called a flexi loan and the flexi loan was really um allowing people to access cash flow when when they where when they needed it so instant easy seamless and we also talked to customers about you know why are you using this and one of the big reasons we heard was it was either to pay an invoice um or to cover an incoming invoice and so there's a cash flow gap around invoicing and so we started thinking about how can we make finance more accessible at that point of invoice and we realize actually there are two problems one of them is a financing problem invoices come with payment terms and so we wanted to help de-risk some of that so payment terms whenever you see an invoice you typically get 30 60 or 90 days and so we wanted to offer customers a 90-day flexible option that allowed them to spread the cost over their invoices while the supplier still gets paid it's our pay later function but beyond that we realized there was a payment problem associated with invoices right now most b2b businesses rely on bank transfers to get invoices paid 80 actually and the problem bank transfers is they're not that easy for your buyer it's one more reason that invoice doesn't get paid and so we also have a pay now solution so waka pay really brings the best of payments and financing into the invoice checkout experience which means we can help businesses get more invoices paid this will have a huge impact on the economy we believe because actually unpaid invoices really lead to a bigger problem around late payments around time lost around inefficiency in the economy and to really think by bringing a better payment solution to the invoice that also kind of helps to risk some of the cash flow issues around getting paid we are we think we can both have a meaningful impact on small business directly but actually also have a really meaningful impact on the economy as a whole well i mean i think it's an absolutely brilliant place to start because once you get the small medium enterprises going then we're going to create a mass well and hopefully the economy is really going to yeah succeed because of that so um with that in mind why has it been such an issue when it comes to cash flow and invoices for smes historically and why hasn't that been addressed potentially by other payment players in the market before so it's it's there's a few things that have kind of changed i think one is actually um that we can especially on the payment side a lot of changes has happened one of the big innovations has been open banking and so for up until now um typically the only solutions you had to offer a an online checkout and actually i'll take a step back because what's important is right now most invoices don't have an online checkout you know or an online payment option associated with them but as i said they rely on bank transfers the thing is we know that actually and xero come out with some data that you're twice as likely to get an invoice paid if you do have an online um payment option the thing is why aren't people using it like that seems like a no-brainer and one of the big problems that's kind of um historically is that your only real option was cards well cards have two big problems one they're expensive if you've got invoices that are you know 10 15k you're gonna be paying somewhere in the region of like one to three percent just to get paid so nothing else just getting paid and actually um bank transfers are free so why would you why would you take that kind of hit whereas now because of open banking you can bring a all the benefits of bank transfers so basically a a costly solution but just um but with the convenience of cards in fact actually even more convenient cards so we have now a pay now proposition built off open banking which is basically a two-click solution that allows customers to pay instantly without sellers having to pay some of the big card fees which we think is really exciting now that's one problem the other thing is kind of what i mentioned earlier around payment terms so invoices come with payment terms and payment if you kind of give someone 30 days you as the seller are basically taking on that credit risk what that means is that whatever's happening to your customer you're kind of having to kind of carry that so if they have a tough month if if they aren't very um sort of their liquid if they run to liquidity problems you're going to run to liquidity problems the thing is that's a financial service and we understand one of the things we're really great at is understanding small businesses and so we can take on that credit which for you which allows sellers to really just focus on what they're good at focus on their business on running their businesses on delivering great services and we'll step in and understand your customers and and give them you know the appropriate kind of options around financing that they'll help them kind of spread their costs get the payment terms they need without forcing the seller to take on the credit risk it almost seems absurd that this hasn't been tackled before people creating uh businesses um in any different industry it doesn't mean that they have to be payment experts and and i i really believe that they shouldn't be and it's brilliant to hear that you guys are now offering this service that enables people to become the business that they wanted to be um and i think that's a really interesting play now um if we could you know focus on that um that product you mentioned just then uh pay now you know what i've heard from my research that you made that free you know what do you think that's going to do and what was the thinking behind that uh for you obviously your customers but also ayahuaka as a whole yeah so so the value that we bring to tara wakape is really around taking on the credit risk taking on the collections risk allowing your customers to to have an option to to make um to spread the cost of their invoices that's our value and so that's that's where a seller will pay a fee to be able to to use that pay later product but we don't really think that you should have to pay just to move money we live in a world where you know you don't really pay for every email you send you don't pay for every text message you send those that that model is kind of gone um and so money should move freely in the system with faster payments with open banking we don't see that as a as a place where um where where we should be charging that that should just be you get paid money moves a payment uh a day it's it comparably the same size as any other data transaction why is there this payment but the payment behind it to send effectively what is now just data from one bank to another it's absurd yeah exactly and so i think they're we're gonna see a lot of innovation in this space um and certainly you know the big card players are looking at it but but cards really were there they were an incredible invention 40 years ago they were amazing um and they were really their business models were built off of much higher cost in this internet age you know we don't we don't need that kind of that that kind of um infrastructure like we did but the business models haven't really adapted so they will adapt and and we're excited to kind of be part of that and so really it's it's about assigning value where there's real value where there's real delivery of of a service that you that's unique to you um for us pay now is just enabling money to move and and we're happy to kind of allow that to happen really as it should that's absolutely brilliant now speaking in terms of you've brought brought up one uh one concept and that's open banking but on a payment side of things and we have talked about some innovations but i want to know for you what has been some of the biggest payment innovation um out there that has directly impacted smes and that will become a bigger player now because of organizations like iowaka and xero that are going to enable this payments revolution for smes so i i i'm probably going to sound like a broken record open banking is at the core of it but i think it's even bigger than that the fact that actually and i think the uk is in a really exciting place everything from the fca taking open mind you know to how they think about fintech and supporting fintechs sounds of individual providers experimenting with everything from business model user experience um etc it just we have a whole new toolkit of how fintech and payments might evolve over the next you know decade uh 10 20 years and that's exciting and i think that a lot of that has come from groundwork that has already been been laid and that has been um i think you know probably going to be one of the most exciting kind of you know transformations going to happen i think we really will become much more of a digital society overall and kind of payments being a core part of that in terms of smes that's going to be really helpful because smes are historically um you know a little bit slower than than consumers in terms of digitization but with other kind of supporting enabling technologies in this space and i would say xero is a great example sort of the the digitization of accounting platforms is already making kind of a more traditionally paper-based kind of solution a bit more um a bit more flexible it's interesting that you say um smes are slightly slower than individual uh maybe private or retail bankers um bank customers sorry uh and i think you're completely right there but i'd also i find it interesting that maybe also the banks have been slow to adopt this payments revolution for smes and considering that smes do make up quite a sizable majority of a lot of european asian and north american customers why has it taken so long for banks to actively apply this data that they have actually had and maybe improve the payment streams and improve their offerings to smes it's a great question and i think that it's it's probably got a lots of of of arms and legs and to get a good answer i think a big part of it is i mean everyone talks about legacy technology right it's really hard to change huge organizations that were kind of built on on legacy systems and especially if you have banks that have combined or um you know sort of are working across multiple systems it's just it's it's a huge investment now i think that is starting to change and you're seeing more um sort of core banking system software players out there and like great example stop machine so i think that that will absolutely um kind of we as fintech providers cannot rest on our laurels i think banks are are absolutely investing in this more and have more flexibility and optionality in terms of how they might develop in future but that's actually great for smes it's great for consumers competition breeds innovation and so actually we welcome banks kind of joining the joining the fray in terms of bringing new and exciting solutions to market we get inspired by them and and vice versa so so it's overall best for for for smes and for consumers it's exciting to be able to be in an industry i remember even just five years ago it was talk about fintechs taking over the huge amount of market share which now you look back in it is almost absurd um but it's interesting to kind of hear how we're now in an industry that actually is going to be very innovative even from the traditional players now you brought up the um you know uh m a some merging acquisitions and how that's led to some of the large institutions maybe becoming laggard but one thing i'm really interested from my research is um iowa has had a partnership with xero um which obviously transforms a lot of the ways that smes operate can you tell me a bit more about that partnership what it means for ayahuaka and what it means for your customers yeah so so i can speak um so our partnership actually we've been working with xero for a long time um iwaka customers were able to to link their zero data so that we could kind of get a better understanding of the whole business um uh because xero really does have kind of a powerful really three-dimensional view of how a business operates and how it works and for for a lender that that's um that helps us understand our customers better and understands you know what appropriate financing options would be for them and more recently we've uh we we're now the first uh iwakapay is the first pay later payment proposition in xero's ecosystem um that's an exciting development of our partnership currently and it means it's even easier for customers to be able to to use iwakapay and offer it as part of their invoicing process for us this is a huge step um but our and our partnership kind of is ongoing xero really looks at the world in a similar way we do how can we make these services more available more easy to use for small businesses so they can spend more time on their business and so that ethos has kind of really laid a great partnership and i and i'm yeah we will continue to develop and and i'm um enthusiastic about more um more products and services where we can kind of work together on it brilliant now uh also talking about working together um you mentioned the uk and and its adoption of open banking as being a significant boon to smes um one thing that's become apparent maybe from someone on the sidelines like myself um is it seems like the uk government has done a lot for lending to small medium enterprises uh during the crisis can you tell us about how fintechs and maybe alternative lenders and and other fintechs in the space have kind of used that to kind of springboard and launch a massive campaign to help smes in this very difficult time yeah so so one thing that fintechs have been really effective at uh in terms of our ability to adapt is around distribution around being able to support and onboard and and um ac ess customers or allow for seamless kind of user experiences and in a world where um finance and access to finance is critical through this pandemic uh fintechs were great distribution arm and we ourselves kind of were really proud to be able to play part of the the sea bills um story on that front uh as i kind of mentioned earlier we have already kind of delivered well over 200 million in financing of siebel's products to smes to support the crisis and um and we are on track to provide 300 million before the end of the scheme congratulations that's absolutely brilliant um and and you know just to hear those those concrete numbers and knowing that because of the use of data and the agility of that fintech like ayahuaca can bring you know those those that money is actually getting to the places that it needs to be so lara i want to say thank you so much for your time it's been really insightful hearing um not just about the plight of smes but how that's actively being solved so thank you very much for your time i hope you've enjoyed yourself as well oh thank you so much no it's been great i was always happy to talk about this kind of stuff and it is it's going to keep changing so excited to see where we go from here yeah it should be absolutely brilliant and to all our viewers thank you so much for watching you can catch the rest of the series and much more over at www.fintech.com and of course youtube and linkedin so i'll see you then [Music] goodbye