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The European Fintech Startup Offering Software and Financing to SMEs

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Polish Fintech Wealthon Offers Lifeline to SMEs with AI-Powered Loans and Software Ecosystem

One of the biggest problems that SMEs continue to face is a lack of access to finance. Business owners of small medium enterprises are often forced to use traditional banking products. But traditional banking products rarely focus on this segment of clients. Today our story is about an up-and-coming young fintech startup trying to provide more support for SMEs than traditional banks. Wealthon, a leading fintech from Poland, has found a unique way to solve the need for finance for SMEs. And offer some compelling value added on top.

According to Statista there were over 1.2 million POS or Point-of-Sale terminals in use in Poland in 2022. At the same time in the European Union there are 21.8 million POS terminals. There also continues to be a growing trend of using cashless payments including e-wallets. In fact, e-wallets are now actively used in the Nordic markets as well as Switzerland. But there are still more enterprises who need to embrace all things digital.

There are plenty of fintechs offering POS terminals and user experience to small businesses. These fintechs offer POS software, they offer a digital presence, a marketing service, some hardware. Many of them are even industry specific. The problem is that apart from these interesting add-ons, not many of them have tried to add financing to the products offered.

One of the companies that has been offering a financing solution to SMEs, in the United States, is Square. Now called Block, the company is a multi-billion-dollar financial powerhouse today. One of the early clients of the company was Starbucks. In Europe there is a huge need for the same solutions for SMEs, yet with a European touch. To cater for the needs of local restaurants, bars, cafes and even the hotel sector. 

Debt Financing in Poland and Europe

According to a European Commission report ‘debt financing is relevant to 82% of EU27 SMEs’. Companies across Europe have been finding it harder to gain access to finance. Inflation, tensions on the border, layoffs amongst tech firms, rising energy prices and looming elections. All these challenges individually are easier to tackle. But with geopolitical and economic challenges constantly appearing it continues to be hard for all stakeholders.

Poland, a country with its own tensions on the border, has a strong SME segment. In Europe this segment represents 50% of the entire GDP. In Poland this percentage is 40%. At the Micro, Small and Medium Enterprises Forum in 2023, dr. Tadeusz Bialek, the President of the Polish Banking Association highlighted some key facts about SMEs.

Dr. Bialek highlighted how there were over 2 million SMEs in Poland today. Adding 190 billion PLN (zloties) to the economy each year. But, he added, loans are still less popular than investing into the business as an owner.

It’s this inherent need for business owners to be the first ones to invest in themselves that was one of the reasons that Aleksander Majchrzak founded Wealthon. Today Aleksander is the CEO of one of the most promising Polish fintech startups. The company is becoming a leading player in the ‘LendingTech’ space.

There are plenty of banks like PKO Bank Polski or ING Bank who offer financing to SMEs. It is these financial institutions along with the likes of Nest Bank that are most prominent as lenders to SMEs in Poland today. Nevertheless, none of them can offer similar services to the ones of Wealthon. Because banks are not fintechs.

From Installment Loans to LendingTech

Established in 2019, Wealthon operates in a growing niche market. More importantly, the company is preparing for international expansion. The company was founded when Aleksander started to offer bridge loans for entrepreneurs locked in a debt spiral. This was related to the need to ensure all tax obligations were paid on time. This is needed to get any kind of funding in Poland. In some cases it is needed to simply continue to have a license to trade.

In 2019 Wealthon raised 1.25 million PLN which allowed the creation of Wealthon Core. This is the system designed by Wealthon’s team of experts based on AI technology. Today it forms the basis of decision-making for the financing solutions listed by Wealthon. Namely Wealthon POSCASH, Wealthon CARD, or bridge loans. The company also offers a Wealthon WALLET, a digital wallet for business owners. There is also hardware like terminals and a POS till system for digital payments.

“It was clear that once we have access to the bank account of a business and have issued them with cards, a credit limit and POSCASH, then we should provide them with the payment terminals. That’s when we started our project to get acquirer licenses for Mastercard and VISA,” Aleksander shared. “It’s when we became a company connected with payments that we started to look at international expansion.”

Wealthon focuses on Software Today.

Aleksander sees the future of Wealthon involving in-house development. He sees partnerships with hardware companies but remains focused on the software as a differentiator. In 2023, Wealthon acquired a company called Ristorio. The company offered POS systems for the gastronomy sector.  

The Ristorio acquisition has helped develop the Wealthon POS offering, Aleksander shared. It has allowed Wealthon to offer all the companies products directly to the business owners and employees devices.

“We want to attract customers who are interested in a software solution,” Aleksander highlighted. “Every gastronomy, beauty or other retail business needs to have a software solution to help run their business. After we introduced our terminal, it became natural for us to connect customers with the Wealthon POS solution that facilitates their daily operations and at the same time allows us to extend our services by offering a loan to this customer. It’s a win-win situation.”

Data is the Next Challenge.  

The team at Wealthon have already collected a substantial amount of data from the POS activities of clients. It has been supported by the roll out of features like QR code ordering & payments. Drill down analysis, sales reports and more. The Wealthon POS features also include overseeing production and delivery of products. Managing inventory and customer profiles. And the acceptance of orders and payments securely.

Wealthon has even added repayment insurance to its Wealthon POSCASH loan. The protection scheme is available as part of collaboration with Societe Generale and insures clients in case of death or business closure.

This approach ensures that business owners get not only financing, but also the tools they need to manage their businesses, from a single provider. Wealthon is creating a unique business habitat – giving customers easy access to financing, quick acceptance of payments, and smooth payments processing. 

An important place in Wealthon’s development roadmap is also taken by a project allowing us to integrate the POS system we offer with the Wealthon Wallet product, permitting customers to achieve a 360-degree approach to their business within the ecosystem. 

AI is used in the application process for new clients currently. There are plans to develop this further, Aleksander assured. But, for now, the AI is only used to analyse customer account information. This is completed in Step 1 of 4 of the application process, Aleksander continued.

“We download all the data from the business accounts for the last twelve months,” Aleksander said. “Based on this data we are able to calculate the probability of default or chance of late payments. This allows us to offer the maximum loan amount.”

“POSCASH offers a semi-automated process,” Aleksander explained. “It can offer a decision for up to 500,000 PLN in thirty minutes. Additionally the Wealthon Wallet allows for a decision for up to 20,000 PLN in just six minutes. The offer is submitted directly to the customer’s WALLET.”

What’s Next for Wealthon?

Earlier this year Wealthon partnered with Silverflow, a cloud native SaaS platform. The cloud-native solution that Silverflow offers will provide Wealthon with sophisticated technology as well as an abundance of card scheme data. 

This most recent partnership just adds to the suite of products that the team at Wealthon want to offer SMEs. The mission at Wealthon is to create a comprehensive ecosystem for enterprises.

Aleksander sees a future where Wealthon will be able to offer further innovative products. Products that could better utilize data, analytics and machine learning tools and report online traffic.. Anything that might impact positively on the performance of a customer’s business. The company wants to add bank accounts to its offerings for SMEs too.

“We want to offer instant settlements to merchants who use our terminal and our wallet,” Aleksander shared. With the ability to oversee both payments and sales Wealthon is well placed to assist merchants in focusing on their money.

Nearing the end of the conversation, the discussion moved on to how Wealthon could become the Apple of SMEs. A desirable product and amazing software that is best used when inter-connected with other products from the same company. Siri or Alexa wouldn’t be much to add after that.

Wealthon has attracted a lot of interest from investors. Shareholders want to invest an additional four million euros. Additionally, private equity firms are eager to get involved. The number of applications for finance from SMEs has also increased 180% year on year.

Find out more about Wealthon and other promising Polish fintechs in the How to do FinTech in Poland Report 2023 here.

Author: Andy Samu

See Also:

Supporting both sides of e-commerce transactions, with ZEN.COM | Disruption Banking

The systemic need for Working Capital amongst FinTechs | Disruption Banking

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