Five Questions: Ryan Rosett on Payment Technology in Online Lending
(Photo via Crain’s Detroit)
Last month, Credibly Founder/Chief Revenue Officer Ryan Rosett was part of the “Race to Deliver: Strategies for Success in Payments” panel at Lend360 in Atlanta, where he discussed payment innovations in the online lending industry. We caught up with Ryan afterward to get his thoughts on the topic.
Credibly: Have you seen consumer attitudes towards online payments change over the years, compared to when you founded Retail Capital in 2010?
Ryan Rosett: There’s a lot more acceptance, and I think the acceptance continues to grow. As the younger generation begins to start their own small businesses, they’re going to look more to the Internet for a frictionless way to access capital. But we haven’t reached a point where everything in our business is done online; there’s still some conversation involved. There’s a relationship and an experience that has a human touch to it. That’s important because a business loan is probably the second biggest loan that a business owner has outstanding, next to a mortgage.
How is Credibly helping to drive payment innovations in the lending space?
I feel like we’re very much at the cutting edge from a speed standpoint; we’re moving much, much faster than banks, for instance. And from a technology standpoint, we’re using so many different data feeds that are giving us real-time views into our small business customers’ bank accounts, which is giving us extremely rich data on the ebbs and flows of certain businesses.
Of course, “payment” is a big word. It encompasses credit cards, Bitcoin, cash, things like Apple Pay, and all these other mechanisms now available. Credibly still focuses on cash flow and the availability of cash flow in order to size up and analyze a small business, so that we can provide access to money prudently. The goal is to create a user experience and interface that’s seamless and elegant, where our customers can walk away and say, “Wow, that was easy.”
What do you make of payment providers like Square, PayPal, and Intuit moving into the small business lending space? Do you view it as a threat or is there long-term benefit from these companies getting involved?
I think it’s a benefit because it creates more awareness, which is one of our biggest marketing roadblocks. The margins in the credit card processing industry are diminishing — they call it a “race to zero” — and everybody’s trying to undercut everybody else. Square and some of these other payments companies are looking for different ways to get yield, but by doing that, it’s creating more opportunity. The increase in awareness will allow consumers to shop around and look for who has the best product set.
Was the topic of cybersecurity brought up at the “Race to Deliver” panel?
No, it wasn’t. Having the best security from a technology standpoint is certainly important, though I don’t think it’s a driving force for small businesses when they’re looking at accessing capital. Keep in mind, we don’t take our customers’ bank account information — we have third parties that handle anything that accesses their accounts — so we’re not really entrusted with any confidential information that would make us vulnerable to an access or breach of their accounts.
Do you have any predictions for the future of payment technology?
There’s a lot of conversation right now about the “rail system” of ACHs. There’s a credit rail and a debit rail, and consumers can access capital more quickly depending on which rail system they use; a credit effectively takes place immediately, while a debit doesn’t settle until the next business day. So if an ACH has the ability to act like a credit instead of a debit, it could give you almost instantaneous money, similar to a wire but even faster. Theoretically, a small business could get access to capital in seconds.
My feeling is that one- or two-day access to capital is fast enough. If you’re running a small business, you should have the ability to manage for two days to access capital, and if you don’t or can’t, there might be more problems with your small business than just your ability to access capital. If a small business is in need of working capital in seconds, that’s a little scary.