Funding Circle is an online marketplace for business loans. It gives businesses safe and easy access to loans; and investors, the opportunity to make attractive returns.

It’s a proposition that has resonated in the market and in just the last 4 years the organisation in the UK has increased the amount it lends by more than 450%, from £279,000 to more than £1.2m.

A payments bottle-neck

To support this growth, Funding Circle needed to transform its back-end processes. Chris Latchford, Funding Circle’s Global Head of Payments Strategy, explains: “We knew we had a great opportunity and very ambitious growth plans. We needed our processes to be able to scale with us.”

Before 2013, Funding Circle hadn’t developed many of its payment-related processes, including how borrowers signed up to Direct Debit, which was done with paper mandate forms.

As in many startups, processing and reconciling daily repayments was manual, time consuming and open to error. “We had to evolve so that payments didn’t become a bottleneck or a compliance risk,” says Chris.

In 2013, the business started to look for an automated solution. GoCardless was shortlisted because of its API, simple interface, and its handling of Direct Debit compliance. Funding Circle moved its repayments to GoCardless. The business now processes upwards of 40,000 repayments a month and it’s growing fast.

Moving to GoCardless was the natural step in our payments evolution to allow us to scale, without payments being the limiting factor.

Switching to GoCardless

Given the criticality and complexity of making the switch, it was relatively straightforward, reports Chris. The team used the GoCardless REST API to integrate GoCardless into their application flow and systems. “GoCardless’ API user documents are really clear, which allowed our engineers to build out the integration efficiently,” says Chris.

Importantly, the impact on our customers was minimal, as we could manage the process and communications ourselves

Working more efficiently

It didn’t take long for the team to realise the efficiency benefits of using GoCardless. While previously, they had to manually download and upload payments transaction reports, with GoCardless in place, this could be automated. “We have significantly reduced the time we spend managing payments,” reports Chris. “Our team are freed up from some activities and have been able to shift their focus. We have also reduced risk, since we no longer need to manually manipulate this data to be able to upload it into our systems.

The whole repayment operation now takes much less time, and we have greater control and visibility.

Better customer experience

Automating back-end payment processes has also had an impact on the front-end. “Customer experience is hugely important for us,” says Chris. “We want to make sure that access to funding is as easy as it can be for eligible businesses; and that repayment is also as easy as possible, to ensure we receive the money back to credit our investors on time.”

Moving to GoCardless has allowed Funding Circle to improve customer experience at several key touch points. Businesses can now sign-up to Direct Debit online while they are applying for their loan, creating a “frictionless and integrated journey”, says Chris. This has helped improve the percentage of borrowers successfully completing Direct Debit mandates on the first attempt to 97.3%.

Timely reporting

GoCardless has also allowed Funding Circle to improve its customer reporting.  “The GoCardless solution gives us access to data we need to update our investor and borrower accounts quickly and react in the right way to customer queries,” says Chris.

For example Funding Circle can now react more quickly to help a business that might be struggling to pay back a loan. “If a business needs to change its payment plan, we no longer have to send them a paper mandate to sign. We simply send them an online link to update their GoCardless mandate quickly. This helps us support our borrowers and prevent payment issues from escalating.”

By updating accounts quickly, investors are also better served, says Chris. “Investors in our platform can see returns quickly and trust that we are managing their investments in the right way.”

A trusted partner

“As a regulated business, having a trusted payments partner is particularly important,” says Chris. “We’ve gone from a small startup to a medium-sized corporate in just a few years. From a compliance perspective, we’re constantly having to evolve and it’s really important that our chosen partners can support us in this.”

The nature and flexibility of the GoCardless API has enabled Funding Circle to create its own reporting functions. “This helps to ensure we can support and meet our obligations within the regulatory framework in which we operate,” says Chris.

As Funding Circle’s needs continue to change, Chris is confident that the relationship with GoCardless will remain open, allowing the partnership between Funding Circle and GoCardless to evolve.

“We catch up regularly with our GoCardless Customer Success manager to discuss what both companies are doing, what’s happening in the market, the challenges we face and how we might be able to collaboratively work through issues.”

We were looking for a trusted payments partner - and we have found GoCardless to be one.