As financial institutions seek to stand out in the small-business market and avoid losing business to fintechs, quick-and-simple cash advances are a draw. Machine learning makes it easier to provide this revenue-based financing fairly and safely.
Barclays is partnering with UK fintech Liberis to offer revenue-based financing to its small business customers, wherein merchants receive a cash advance that they can pay back on a flexible schedule, plus a pre-agreed fee. Liberis uses machine learning to understand customers’ risk profiles and maximum funding options, allowing it to offer faster turnaround times for underwriting than what legacy banks can traditionally provide.
By helping assess risk more accurately and quickly, Liberis allows partners like Barclays to make faster, better decisions, leading to higher origination volumes.
Barclays has invested tens of millions in Liberis, including a new infusion at the end of September. Liberis is a veteran in the revenue-based financing space: Newer entrants include Booste, Karmen, and Clearco, which provide financing to businesses directly. Using AI for underwriting in general is also a hot market: Insight portfolio company Zest.AI has signed on clients like Fifth Third Bank, FNBO, and a slew of credit unions.