Delivering an amazing customer experience for small businesses using machine learning, technology and data.

Reinventing small business lending 

Since 2010, we’ve built the capability for any SME in the UK to receive an automated decision – a first globally in SME term lending. Initially we were reliant on publicly available data only and our processes were quite manual. Since that time, we’ve accumulated significant amounts of data and gained extensive insights on small businesses. By constantly evolving our technology infrastructure, we’ve revolutionised the way we operate. And today, through a fully automated process that caters for loans of any size and any risk, we’re reinventing small business lending.

Our unique capabilities are shaped by: 

10+ years

of experience

£14bn

lent to  SMEs

>900,000

applications

26m

businesses in our data lake

2bn

data points

8th gen

UK risk models

Our 4D system

Our success is based on an end-to-end technology system that forms a key part of our overall technology platform. It is made up of four key components:

  • Data accumulation
  • Data engineering
  • Data science
  • Decision Engine platform 

Together, these components integrate to help us gather, manage and leverage data to enhance our decision-making capabilities. We call it our “4D” system and it forms a deep moat around our business. This moat is fully defensible and very difficult to replicate, as we’ve acquired an extensive and unique set of SME data over ten years of innovation and investment. 

How the 4D system works

Funding Circle 4D system diagram

Our system begins with learning, which we achieve through data collection and creation. This data is a combination of publicly available data and bespoke data we generate through customer engagement and analysis. Leveraging this accumulated data, we’ve created a unique knowledge base that provides us with information about customer engagement and their behaviours around taking on and repaying loans. This vital evidence underpins and informs our technology developments and decisions. 

To make accurate risk decisions, a huge amount of data needs to be ingested, cleaned, managed and maintained. Thanks to our data engineering systems and tools, we’re able to do this at speed, quickly absorbing incoming data, in real  time, and channelling it into our data lake. We then convert this data into workable, digitised information. This process involves stitching together individual pieces of data we gather from different sources – P&Ls, balance sheets and bank statements – to create a precisely structured database from which our data scientists can work. 

Funding Circle data scientists analyse our data in order to understand its patterns and characteristics, carrying out the following core activities: 

  • Diagnostic analysis
  • Pattern analysis
  • Predictive analysis
  • Scenario simulations
  • Decision optimisation
  • Back-testing
  • Validation
  • Monitoring

These activities help us make sense of the data we’ve accumulated and develop accurate statistical and predictive models. These models, in turn, enable us to determine the  likelihood of a customer responding to an offer or accepting a loan. They help us decide who we should accept from a risk perspective, which enhances our customer targeting.

The brain of our platform, the Decision Engine, is the culmination of our technology systems and processes. It enables us to leverage our predictive models to make accurate and optimised decisions, in real time. The Decision Engine is the bridge between our machine learning and the borrower, helping us utilise the insights we’ve acquired to provide SMEs with the very  best software and solutions. 

Taking the complexity out of the borrower experience, it determines what the borrower needs to see in order to interact with Funding Circle. The Decision Engine generates bespoke application questions and facilitates a truly personalised customer journey. 

Driving value and deepening engagement 

This world-class system powers the Funding Circle flywheel which drives
innovation, improvements and a competitive advantage.

For borrowers, this means we provide a seamless experience, enabling speed,
quality and ease of access, and increased customisation. The feedback
loop results in strong customer satisfaction scores and higher repeat rates.

For investors, this means we provide positive and secure returns. And it also
helps us to grow alongside our customers, all part of a virtuous circle so that we can continue to meet the finance needs of hundreds of thousands of SMEs.
 

The Welsh Wind Distillery

Founded in 2018, In The Welsh Wind  Distillery, owned by couple Alex Jungmayr and Ellen Wakelam, implemented expansion plans following the lifting of Covid-19 restrictions. 

In The Welsh Wind Distillery in Tan-y-groes – a hamlet north of Cardigan on the west coast of Wales – took off after opening for business in 2018. But plans for growth had to be put on hold as the pandemic hit. 

With the lifting of restrictions, founders Alex and Ellen used a Funding Circle loan to make their dreams a reality. They hired 15 people and began to expand their “grain-to-grass” ethos, using only grain grown within 10 miles to make their whisky. Able now to implement their unique distillery model, Alex and Ellen are also committed to  providing training and jobs and opening up local opportunities. 

Despite the increase in online shopping, the couple recognises the value of purchasing face to face from small businesses. And by delivering a top-quality product made with pride and care, they’re  shaping a positive narrative that links to the local landscape and community.