An exclusive interview with Mafalda Duarte, CEO of FiveCredit, an organization that is changing the digital lending ecosystem for SMEs in Portugal. 1. What are their current difficulties for SMEs to access credit and how much time will FiveCredit initiative save to the process when comparing to traditional banking?
Five Credit is bringing to the Portuguese SME a completely new way to finance their growth. As the first credit fund registered in Portugal, we’ve entered the credit market supported by a platform that uses the latest technologies to pre-approve operations and speed up the closing of the financing process.
This is revolutionary to the SME landscape that continues to face, in many cases, several months wait to see their financing needs approved. We, at Five Credit, have the ability to do that same process and credit the funds in the SME account in just five days. 2. Regarding FiveCredit's project that started in February of loaning 300M€ in the next 3 years to SMEs, what has been the impact so far?
We’ve made a soft launch to test all the technological infrastructure and are now starting to ramp up our commercial operations. We’ve already financed several SMEs and we’re gaining traction, reaching everyday more and more SMEs that understand the value proposition that we offer. 3. Five Credit estimates to finance between 300-500 SMEs this year and around 5.000 in 3 years, how big is this initiative when compared to the needs of the Portuguese PMEs? Portuguese SMEs are eager to grow. At Five Credit, we know that they need financing to do that, and we know that they need that credit to be made available fast, allowing them to grab the opportunities that they identify. We hope to be the partner that those SME need.
4. Five Credit is the only player in the market to offer financing through a credit fund, launched by Circle Capital. How hard is for other traditional banks to implement the same system?
We’ve been working on a platform that uses the latest technologies for quite some time. It was a process that took us 2/3 years to achieve the level of accuracy that we wanted and that represented a substantial investment.
Traditional banks are investing in the digitalization process, but their own nature prevents them from being as agile as we are. So, I think it will be difficult to them to compete with us in terms of the speed of the whole process.
5. What are still the main challenges that Five Credit sees when processing a digital lending request? (Ex: Identity Validation, Risk Analysis, etc)
As a new comer in a traditional lending market and, somehow, traditional economy, it might be longer and more challenging to build a known brand and gain a substantial market share.
Also, the main challenge looking at the Portuguese SME universe has to be the digitalization capabilities.. This is particularly the case in the traditional sectors where companies’ abilities to develop digital assets tend to be more limited. We believe Five Credit will simplify and enhance the financing process for the companies.
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