UK fintech trio found Cape to tap Australia’s SME credit card market
Cape, a challenger looking to disrupt Australia’s credit card market, has unveiled its “recession fighting” alternative set to launch in February 2021.
First reported by P2P Finance News, the start-up is the product of three UK-based fintech employees.
Ryan Edwards-Pritchard and Edo Omoniyi
These include ex-Funding Options MD Ryan Edwards-Pritchard, ex-11:FS senior product manager Edo Omoniyi, and ex-Funding Circle developer Steve Martin.
State of Australia’s credit card market
Reuters reported earlier this month that Australians’ credit card debts fell to a 15-year low in July.
ANZ Bank and Commonwealth Bank of Australia have suffered a AUD 2 billion ($1.4 billion) drop in their credit card loan books since the onset of the pandemic.
The shift from credit to debit in Australia is a result of people and businesses prioritising repayments.
The shift is occurring at a time of economic turbulence, and lockdowns appear to prevent excessive spending.
Low credit card loan books put pressure on credit growth and fee income for banks.
But this creates a ripe opportunity for disruptors like Cape to enter the space and absorb these losses with alternative offerings.
What Cape wants to offer
Cape says open banking will power its credit card. It will focus on helping small and medium-sized enterprises (SMEs) manage cash flow through “live file management”.
It will also provide businesses with access to buy now, pay later (BNPL) financing, and allow them to make revenue-based repayments.
Australia has become the global hub for BNPL giants like Afterpay and Zip. These players are now rapidly expanding into Europe and the US, stepping on the toes of European competitors like Klarna.
But whilst these fintechs focus on the consumer, little has been done in the BNPL format for businesses.
Cape is hoping to tap Australia’s 2.1 million SME market. This is a figure recorded by the Australian Small Business and Family Enterprise Ombudsman.
Access to finance is critical
“We know already from our work in the fintech and digital sectors that businesses are facing hurdles when it comes to accessing credit,” says Edwards-Pritchard.
“Having been locked out of business lending, equity investments or simply are nervous about external finance in the current climate.”
Funding Options, Edwards-Pritchard’s former employer, was vocal about the fencing out of alternative lenders during the UK government roll out of loan scheme programmes.
“It would be great to see Her Majesty’s (HM) Government and HM Treasury embrace the full ecosystem of lenders in the SME sector,” Funding Options’ CEO Simon Cureton said back in April.
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