1West Real-Time & Automated Lending Market Place

Transcription

Jordan: Hello everyone and welcome. Today I'm here with two customers of mine and also good friends. I met you guys over in New York when I was there at Debanked Broker Fair. It was my first time at a conference for doing sales at all. And I appreciate meeting you guys there. You guys were great to meet with.

Jordan: You guys invited me to the cool parties and I was like, oh sweet. I never, I didn't know I'd be able to get into there. That one party, it was like, you go through like a... It was all cool. I mean, I've, that was my first time in New York and I just assumed that all parties are like that, where you go through this cool looking place with pipes, you know, and you like through the back hallways.

Kunal: That was like a cool thing. I can't say all parties are like that, but all the parties I take you to will be like that.

Jordan: Okay, yeah, all the ones in Kunal are definitely like that. The standards are high now.

Kunal: Next time it's gonna be like what? We just, it's like a normal place. I mean, I don't go through like a back alley.

Jordan: It's all dark and it was a cool venue. So anyway, I appreciated you guys there. But those guys always brought a good party.

Kunal: Yeah, that was a good time.

Jordan: So again, I'm here with 1West is the company and it's not 1West Finance anymore, right? Just 1West. Is that correct? I'm still wearing the old logo here. So got the old logo. We gotta get new shirts, Shane. And Kunal is the CEO and then Shane is the CTO and I've had the chance to work with them over the last few months. So, to start off, either one of you Kunal or Shane, do you guys want to talk about a little bit more about what 1West is and what you guys do.

Kunal: Absolutely. So, I'll take that one Shane.

Kunal: So, 1West is one of the largest marketplaces in the small business financing space. So, customers enter our marketplace, they answer a few questions, upload their bank statements, sign their application. We, in real time, digest the information from their credit report. From their bank statement data, we're reading their bank statements through an OCR that we use. And we've also recently signed up with Plaid and then we're checking the SOS data through Cobalt actually. And the SOS data gives us a lot of valuable info as far as verified addresses, verified ownership, verified time in business.

Kunal: And ABLE aggregates all that data, matches it up. Not just the guidelines from our funding partners, but intelligent...

Jordan: Just going to hop in to clarify. ABLE is that, that's your software, right? That's what you call your software.

Kunal: Yeah. ABLE is our software. It stands for Automated Business Lending Engine. It's not a guy. And, it's not a guy. It's a bot. It's a software that Shane and his team and me, and a lot of us here at 1West have been working on for the last few years. And, it's got a lot of traction now. We have over 90 partners that are signed up onto the platform, pushing traffic onto the platform.

Kunal: We're getting around 20-22,000 leads a month and over 5,000, sometimes 6,000, full loan submissions through ABLE per month. And all of these are running through the bank statement reading. The Experian integration, as well as the Cobalt integration to grab that SOS data. So once we have that data, we're matching it up with the lenders.

Kunal: Lenders are returning their offers to us. The offers get shared with the customer in real time, full transparency to the customers. The customers are able to kind of scroll the list, filter, sort, find the loan that works best for them. Choose the loan amount they want to go with, and they can actually close right there on the platform.

Kunal: So 25 percent of the customers that enter the marketplace through ABLE, they never speak to anybody from our company and they self service themselves all the way through.

Jordan: Wow. That's amazing. As someone who's, you know, I've gotten loans before mortgage car, I know how painful of a process that was, you know, just so much paperwork. It takes a long time. So to hear that you can just do it all on the platform, it's a big deal.

Kunal: Yeah. A lot of it, like in the old days to get a credit card, you'd have to talk to the banker for a half an hour. What do you plan to use this credit card for? How much credit line do you need? Credit cards have evolved way beyond that. Now where, you know, nerd wallet, big player on that side, you can kind of go find the ones that you qualify for and click the ones you need at three o'clock in the morning. And it shows up in the mail a couple of days later and you're good to go. I see no reason small business lending won't go in that same direction over the next.

Kunal: People don't want to talk to people anymore. When I want to buy something, I don't want to talk to a salesperson anyway, really.

Jordan: Right. And, you're operating in like almost the broker marketplace space where you're helping connect both the lenders and the business owner. And they're both important partners for you, both sides, right? That's kind of something that was new to me when I learned more, when I went to broker fair, I learned more about how important, I mean, it's called broker fair. The goal was for the funders to be able to really find brokers.

Kunal: Yeah, finding the right lending partners and we work so closely with all of them and, finding the right lending partners to make sure your marketplace has coverage across the board because each of the lenders, the funders serve a specific purpose. Some are better with the higher credit customers that have been in business a long time. And some of them are for the newer businesses that might have less revenue and a hairier credit profile. Of course, those funders are also going to approve the long time in business with strong credit profiles, but then the rates aren't going to match.

Kunal: And it's going to create a bad user experience. So Able solves a lot of those issues and it's able to do it 24 hours a day, which is, I think what makes the marketplace so valuable to our referral partners, as well as our customers as well as our lending partners is the fact that we're able to service customers day, night, weekends, all the time.

Shane: Yeah, I can say it from the technical side. We, we've invested quite a bit on both ends, both on the partner side and the funder side. So in terms of, we have portals, you know, we have portals for both our partners and our funders, so they can kind of get a sense of what's going on with their deals, just as well as, you know, the integrations with all of them, whether it's APIs on our end. So to kind of make partner submissions more seamless, or integrations with their funders to just to make the submission process and the retrieval of information from them more seamless.

Jordan: It sounds like for me, if I'm a business looking to get a loan, is there any reason why I wouldn't want to go with you first?

Kunal: Honestly, the first stop for a lot of these customers is their local banks. Local banks or wherever they bank with is generally the first stop, especially for a more high qualified customer, but as they'll learn, as most of our customers have learned. The process takes a very long time. You often are not qualified, even though your credit score may be there. Your time in business may be there. There's a lot of reasons. The customer may not qualify at the bank where they have their checking and savings accounts at. And then where often the next stop from there.

Kunal: We work with all the major lead aggregators in the space. They're all pushing traffic through ABLE because they've seen the value and the ability to scale because the customers can service it on their own time. So we try to be the stop. And when a customer can get the loan from the bank and they can wait that time and they can provide all that documentation, usually the rates at the banks are going to be better. So we'll never be the first stop, but I'd like to be the second stop after their local.

Jordan: Yeah. And that kind of leads me on to my next question is there are other marketplaces. You guys have competitors in the space. Why would a partner choose 1West over one of the other marketplaces?

Kunal: I don't believe any of the other marketplaces in the space can full service a customer all the way through funding at the customer's time at their own pace. So we're taking it all the way from start to finish and we give them access to all of the, we'll get them the best loan that they can qualify for in the space.

Kunal: A customer who goes to a different marketplace may not be as robust as ours. The offers are not coming in as real time. They start getting phone calls from 14 different lenders saying, "Hey, we want the deal, we want the deal" and an information overload, and it can be very confusing for the end. Imagine you were booking a flight on Kayak and you had 14 airlines calling you and saying, "No fly with us. No fly with us. Our planes are safer. Our flights are cheaper." It's a lot getting thrown at you, so we kind of give it in a digestible way to the customer where they can pick what works for them as far as payment frequencies, how much they're able to pay on a monthly basis, weekly basis, and then let them select the loan that works for them and let them check out and do the whole process right there in our experience.

Jordan: Are people adopting a similar format or do you think, I mean, in my opinion, I've seen you guys and how you work, your competitive advantage is huge. Steps above anything else I've seen it. The platform, your website looks fantastic. Do you think that gap will be closed?

Kunal: Working with you and your team? I mean, it has been a great. You guys have intimate knowledge of how we're doing everything on our end. So I think there are a lot of other marketplaces. There are a lot of others trying to do what we've done. I think they'll eventually get to where we are, but we certainly have a big head start and we're a lot further along the process than anybody else that I've seen in the space. And we have a very extensive roadmap coming up for next year as well.

Kunal: So we don't plan on stopping anytime soon. And Shane and his team are unbelievable and we have a pretty aggressive roadmap, but I'm confident that we'll be able to achieve that. Most of it, if not all of it.

Jordan: You seem years ahead, honestly. I like when I, from what I see, you know, I work with other marketplaces, brokers and lenders, and you seem years ahead of the other ones. So you're probably in a good spot.

Kunal: I appreciate that.

Jordan: And you know, question, you know, part of this interview is just, I would like to learn more about what you, you mentioned already that you're using Cobalt for your secretary of state data when you're searching. That part's there. Now, what were you doing before this? Like before you were working with us, how were you solving that solution?

Kunal: Before this, we were checking it all manually. So we have a processing team and this has freed up a ton of bandwidth for them. Cobalt helps us verify the file data that the customer is giving us on the applications. It helps reduce fraud for our lending partners as a broker marketplace. It helps us get information on the application to make sure we have the highest chances of obtaining an approval.

Kunal: I think a perfect example of how essentially for us, Cobalt's able to pay for itself is the business start date. So as the customer is going through the experience, we'll run the Cobalt API pretty early on. Once we have the state and the name of the legal name of the business, we'll run the Cobalt API to pull in the verified business start date. It finds it at a very high percentage of the time, more than 90 percent of the time, it's able to find a successful match. The areas where it doesn't is like my company, for example, was New York. We're based in New York city, but our incorporation is in Delaware. So in some of those instances, but more than 90 percent of the time, it's finding a successful match and it's grabbing the start date.

Kunal: And I'll use my company again, as an example, our company is. I incorporated the business in January of 2017, but I didn't start doing any work until May of 2017. So if I was applying for a loan, let's say in February, March, April of 2018, when did you start your business as a common question? I'd probably put the answer of May, 2017, but my SOS says January of 2017. What ABLE will do is take the earlier date of the two customer entered versus SOS.

Kunal: And now having more than one year in business or three years in business or five years in business, these are all major milestones across all the funders in our network. And if you can get over those thresholds, you're going to get much more competitive offers. You're going to get approvals from lenders that would have otherwise declined you. And you're going to get much better options for that customer enables doing that automatically.

Kunal: And in the old days, we would have our processing team do it, but oftentimes they would get bottlenecked and jammed up and they wouldn't be able to do it on every file. And they wouldn't certainly be able to do it in real time. You have to have the customer re-sign the applications again, with a different process date. All of these things just makes being a marketplace more efficient and making sure that you're getting the customers the right options.

Shane: Yeah. And one of our really important things is being able to get that the submitted, being able to submit that file as quickly as possible. And if we have a processing team that kind of has to go in and look up every single business start date or filing date on every single application, it really slows the process down. You know, by minutes, probably hours.

Shane: And then, you know, we thought about ways we could build this ourselves, but, you know, integrating with all 50 States is obviously really complicated, even just for the initial build without even saying anything about the maintenance of all of that, once you've got it all done, so. You know, as a software architect, I'm always thinking if there's a problem, you know, has someone else already solved this? Is there some library out there or some API out there or something that, you know, I don't want to reinvent the wheel basically. And luckily we found Cobalt and it really solved the problem for us. And it was really seamless. And yeah, it's been great.

Kunal: I remember how we ended up finding Cobalt. We were just Google searching SOS API, secretary of state. We're looking for and we saw some post things to a forum and, we went down the rabbit hole and we ended up finding you Jordan. So, I'm glad we did cause it helped accelerate our process a lot.

Jordan: Yeah. It's been great for me too. I learned a lot through you guys and a lot of great information. And now, Shane, this is more of a question for you. We're an API. And so a lot of times when we work with customers, they have varying degrees of technical abilities. You know, you're definitely on the higher end. Your business is, you have very talented engineers. I've already worked with some, several of them. How difficult was the integration with Cobalt?

Shane: It wasn't difficult at all. It was, I would say it was very easy. I mean, it's, I think it's a very well designed API. The data structures, both in terms of the requests and the response are just really simple, you know, they're really simple and intuitive. You know, I think the auth was easy. We didn't, we didn't have really any issues along the way. It was really just, "Hey, we got to build this. Here's the documentation." And, you know, one of our engineers kind of read through it and just built it. I think it took, you know, less than a week in terms of just like the core build.

Shane: Basically, we had one or two kind of thoughts on some of the data that was coming back. I think one of the things was the business start date wasn't standardized. And so we went to Cobalt support and it was updated within a week, I think. So that was super fast. But yeah, overall it was just really, really easy to set up.

Jordan: Oh, shucks. Shane.

Shane: Oh, no.

Jordan: I appreciate that. We really try hard to make it easy and it's good to hear that. And I appreciate that. What else? Anything else you guys want to share? I mean, either about your business or about our partnership?

Kunal: Yeah, on our end, finding integrations that, you know, credit solves a small piece of it. The SOS data was a big missing piece. I don't know if any other marketplaces in our space are integrated. I'm sure a couple of them are, as you mentioned. There are customers of yours already. But it's an important piece, getting that verified data from the SOS. It's often the first step.

Kunal: First stop that, you know, if we're sending a deal to, let's say any one of a funders in our waterfall, we use the two that hosted the party for us. Capitas and forward the junior underwriters, a preliminary underwriter. This is the first thing they're checking. What's the start date on the SOS? Do the addresses match to the person on the application, match the owner that's listed on the SOS. It's often the first place. And when there's mismatches that creates a spike.

Kunal: In the number of incompletes that any marketplace or ISO shop is going to have. When you're a smaller ISO who's dealing with 20, 30 files a month, clearing the incompletes and figuring it all out may seem manageable, but when you're doing thousands and thousands and thousands of submissions a month, keeping those incompletes to a minimum and making sure that the assembly line is working. Running in the deals of flying through becomes very, very important to either solve it by adding a lot, a lot of bodies to the problem or finding tech that you can connect with like cobalt.

Jordan: Awesome. That's about all I have. I really appreciate your time, both Shane and Kunal again. Thanks very much.

Shane: Yeah, for sure. Thanks so much.

Kunal: And thanks for your partnership.