Fintechs have gained momentum by unbundling old-fashioned banking and financial services – money transfers, for example – and building entire businesses around separate functions. That’s what spawned Zelle, Venmo, and other popular financial apps that are now household names.
In the second phase of the digital shift, disintermediation is reintegrated, in some cases, by relying on organized and interoperable ecosystems accessible and fueled by the rapid rise of super-applications.
A prime example of the trend is based in Toronto Nuula, a newly formed FinTech that disrupts disruptors with its superapplication focusing on the data and processing needs of small businesses while simultaneously creating opportunities for third parties to serve the needs of small and medium enterprises (SMBs).
In a recent interview, the CEO of Nuula Marc Ruddock told PYMNTS’s Karen Webster that the rising generation of entrepreneurs – increasingly in the millennial age – are approaching value creation from a set of digital native expectations that are not well represented in current offers from many major players.
“[Millennial entrepreneursâ] expectations are defined by the rest of their digital lives, not by their relationship with traditional financial institutions, âsaid Ruddock. That, coupled with the fact that the digital transformation enabled by technologies such as machine learning “finally allows us to break into the digital subscription nut in the small business space and create much more of a mobile user experience and modern around that â, fuels a new kind of FinTech.
To that end, Nuula announced a $ 120 million fundraiser in early September to further develop its ecosystem of super apps. Ruddock said that Nuula âisn’t trying to beâ¦ a traditional alt-fi. We’ve redesigned the entire end-to-end experience, from acquisition to monetization.
Read more: Small FinTech Nuula Secures $ 120 Million Funding
Saying that “we’re sort of bringing the unbundled bank together,” Ruddock told Webster that Nuula has no ambition “to become an end-to-end financial provider ourselves. We are looking at the innovation that is happening in the business. Fintech space around small businesses andâ¦ keeping the best components of the small business financial services space in one super-app.
The super-application as SMB Neobank
Joining a constellation of brands such as Shopify, Square and Stripe that are revolutionizing retail, Nuula aims to give SMEs “access to a mix of insightful content, critical business metrics and innovative financial products that can help propel their businesses, anytime and anywhere, “according to a declaration outlining the plans for the new capital injection.
Ruddock told Webster that âWe want to create an app that small business owners in particular are going to. [use] every day âto accessâ the metrics that matterâ¦ in the palms of their hands â.
The Vision is a super app with “free tools like cash flow forecasting and business and personal credit report monitoring because that’s how you assign small business credit.” This mix will also include customer sentiment, social commerce, âand even Shopify data,â he said, âAll of their ecommerce data in one place at a glance on their phone. is a really important element that boosts both engagement and retention on [our] Platform.”
The Nuula ecosystem is designed to attract third parties in verticals ranging from restaurants to insurance, whose most relevant offerings will be presented in a timely manner to small business owners based on an ever deepening understanding of trading needs based on data signals.
In this way, Ruddock said that Nuula discovered a sweet spot obscured by events that rocked the world.
âUnfortunately, the pandemic has made a lot of very good companies look like very bad companies, and that’s unfair to them,â he told Webster. “What we are saying is that we are going to look at all [an SMBâs] historical dataâ¦ we will continuously monitor you as you move forward, as you recover, as you grow, as you evolve.
As the platform detects financial improvement, âwe will unlock capital and other financial products for [that business] earlier in the cycle. We do this by examining both this data for subscription purposes and for intent signals. “
By aligning intention and timing with data, he said third parties in the Nuula ecosystem – insurers, for example – can come up with deals at ideal times in a small business’s life.
If an SME uses the super app to do cash flow forecasting, for example, Nuula sees the data and machine learning algorithms and can ‘know’ whether it’s time to unlock a line of credit or not.
âInsurance is much more subtle,â he said. âLet’s say in your transactional data, we’ve detected that you’ve started to acquire significant assets, whether it’s kitchen equipment in your restaurant or whatever. It’s an interesting time to think about reassessing your insurance. Are you properly insured for these investments you are making? “
He added that “Rather than creating a mess …”
Insights into loans, collections and more
The benefit of the third-party services offered in the Nuula super app is to sit at the table when SMBs are ready to make relevant purchasing decisions.
âOur partners can access these ongoing signals so they can refine their response in their own application,â Ruddock told Webster.
“Lenders who work on our platform [will get] signals about cash flow problems before they normally see them. We hope that this representative sample of truly amazing data, proper qualification, continuous scoring, and continuous movement and analysis of the data will make it even more compelling as an ecosystem.
Stating that Nuula’s customer acquisition goal is âthe smaller end of the small business spectrum,â Ruddock told Webster that managing risk in SME lending is a key feature of the super-app.
“If the [revenue] the curves go up, we can gradually advance more credit in the form of this dynamic line of credit to the customer, âhe told Webster. âBut if we see the trajectory changing, we can slow or restrict the growth of this credit, or maybe even start to couple it back a bit. What we’re trying to build is a self-healing line of credit in a way that grows with the customer and protects downside risk.
It’s not just about finding data for loans and offering other services. Collections is another greenfield for the Nuula super-app, Ruddock said.
âWe believe there are huge opportunities in algorithmic collections as well. If we know two days in advance that you’re not going to make your regular loan payment, it doesn’t make sense for us to route that transaction and bounce it back, and charge you a fee and we pay a fee. However, if we can dynamically tailor our collections to that customer’s availability or affordability at that time, if it’s within an acceptable range for us, it becomes a self-healing loan. “