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Fintech Fridays EP60: Revolutionizing Small Business Lending and Empowering Entrepreneurs

About NCFA Canada | Craig Asano | Dec 8, 2023

FF EP60 David Souaid OnDeck Canada banner 1 - Fintech Fridays EP60:  Revolutionizing Small Business Lending and Empowering Entrepreneurs

FF EP60 David Souaid, OnDeck Canada

Dec 8, 2023: NCFA's Fintech Fridays podcast episode 60

Revolutionizing Small Business Lending and Empowering Entrepreneurs


Featured Guest:

DAVID SOUAID, Chief Revenue Officer at OnDeck Canada (LinkedIn)

Co-Founder and President of Evolocity Financial Group (now OnDeck Canada), David brings over 20 years of experience in the FinTech industry and is a driving force behind platform solutions, distribution, and product marketing initiatives.  Before OnDeck Canada, David was Senior-Vice President of Sales and Marketing at Optimal Payments Inc.  He later became the Co-Founder and President of Sterling Card Payment Solutions, before starting Evolocity Financial Group.  He has been recognized for his thought leadership as a Top 25 Executive Leader in Lending by the Canadian Lenders Association.  David's passion for FinTech extends beyond his professional career, as he actively supports the startup community and empowers women in business through his work with StartUp Canada and the Women Founder's Fund.  David also serves as Chair of the Miss Edgars School Foundation, where his daughters attend.  His passion for FinTech's future and its impact on entrepreneurship is evident through his involvement in various initiatives that support innovation and growth in the industry.

About OnDeck Canada

OnDeck launched in Canada in 2015 to solve a major issue facing small businesses: efficient access to capital. We use cutting-edge technology to evaluate businesses based on their actual performance, not solely business owners’ personal credit scores. Ultimately, this makes it possible for us to responsibly expand access to credit. This allows businesses to spend their time where it provides the most benefit—on their customers and on growing, rather than looking for a small business loan.

In April 2019, OnDeck combined its Canadian operations with Evolocity Financial Group (Evolocity), a Montréal-based online small business leader, to offer small businesses in all provinces and territories of Canada a broader array of innovative financing options and a superior customer experience.  OnDeck offers flexible terms and rates based on your business’ performance. Given approvals are not solely based on personal credit history, an OnDeck loan could be an attractive option when compared to a traditional bank loan. Additionally, we offer a quick response to loan applications. We qualify and evaluate business performance based upon a variety of important performance metrics. Moreover, if approved, it is possible to be funded in as fast as one business day.

Since 2007, OnDeck Group has issued over US$13 billion in loans in the US, Canada and Australia for many business needs. These include inventory purchase, equipment acquisition, hiring and general corporate purposes. OnDeck has been trusted by over 100,000 small businesses across the US, Canada and Australia by providing them with a loan to help them build a growing and thriving enterprise.


About this episode

In this insightful episode of "Fintech Fridays," we dive into the evolving landscape of small business financing with David Souaid, the Chief Revenue Officer of OnDeck Canada. David brings over two decades of experience in the fintech industry and shares his journey from co-founding Evolocity Financial Group to its merger with OnDeck Canada, illustrating his role in transforming small business lending. The discussion delves into the challenges and innovations in the industry, highlighting OnDeck's customer-centric approach, technological advancements, and future trends. David's insights reveal how OnDeck Canada is not just financing businesses but also empowering them to thrive in a dynamic economic environment.  This episode provides a valuable perspective on the transformative world of fintech, especially in the realm of small business lending, and is a must-listen for entrepreneurs and industry enthusiasts seeking to understand the future of financial services. Enjoy!!

Duration:  45mins


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Fintech Friday Transcript of Episode 60:

David Souaid, CRO, OnDeck Canada

Intro: Welcome to fintech Friday's a weekly podcast brought to you by the National Crowdfunding and Fintech Association of Canada and partners. Covering all things fintech, blockchain, AI and alternative finance.


Craig Asano: Good afternoon everyone. It's Craig Asano, the Founder and CEO of NCFA Canada, welcoming you to season four of Fintech Fridays, episode 60. It's a weekly podcast brought to you by NCFA and partners, where we sit down with the incredible people in the fintech and funding community and talk about the trends, the product innovations, developments, what's happening and all the challenges too, of course. So today, we're thrilled to have our guest, David Souaid. He's the CRO of OnDeck Canada with us today. David is the Co-founder and President of Evolocity Financial Group, which is now OnDeck Canada. He brings over 20 years of experience in the fintech industry, and he's really the driving force behind the platform solutions, the distribution and all the marketing initiatives at OnDeck Canada. And prior to that, he was the SVP at Optimal Payments. So he's also got a payments background. He was before that, the Co-founder and President of Sterling Card Payment Solutions. He's a thought leader and active supporter of entrepreneurship and innovation in the startup community, and he's involved with lots of different organizations. I see he was awarded from the Canadian Lenders Association, a Top 25 executive leader, and he's actively working with Startup Canada and doing some really wonderful initiatives. So we're really happy to have you here. David, thanks so much for joining us today.


David Souaid: Craig, thanks for having me and looking forward to the conversation.


Craig Asano: Yeah, absolutely. I think we're going to just get into kick things off, just to learn a little bit more about who David is, the professional.  If you can just share with our listeners a little bit about your journey, your background, and sort of how you became part of OnDeck Canada and all of that.


David Souaid: Yeah. So I think we'll try to keep it brief. But really this journey started back in 2008. I was an executive for a company called Optimal Payments, and we were really looking at different businesses in the US and Canada that were achieving scale and success, and we came across a small business lending business, the ability to access working capital digitally online in an easy, fast and seamless way and basically had the opportunity to incubate that business in Canada and really start to try to build it and introduce it to the Canadian market. So I see myself very much as an entrepreneur. I saw an entrepreneurial opportunity to start a business like OnDeck, which originally was called Mercantile Advance and really build it with my partner Harley Greenspoon over many years. So we had Sterling Payments, we incubated Mercantile inside of it, and we began to introduce the small business financing products to Canadian retailers Those that were underserved by the banks. Banks typically didn't service industries like restaurants and retail sizes that were smaller in nature, and it was in the middle of the credit crisis of 2008, where banks were restricting capital and making it really challenging for those types of businesses to get working capital.  So we built the platform over the next 3 or 4 years, I would say we, bootstrapped it really tried to figure our way. And then in 2011, we brought on some investors, really, you know, employees began to scale that growth. Then in 2015, we brought on a senior lender, the Bank of Montreal. We had proven track record. We started to scale the business, and from there we merged with OnDeck Canada in 2019. So OnDeck wanted to come to the Canadian market in a bigger way, and we merged the Evolocity Financial Group business with OnDeck Canada and became the new OnDeck Canada. So that's a brief history of our journey, and we'll get into more of each step along the way but at a high level I think I view myself as an entrepreneur who's been able to identify and see opportunities and bring it to the Canadian market and continue to try to improve small business ecosystem for finance, for those customers.


Craig Asano: I love the entrepreneurial story. You know, why did you why did you go after the small business lending side of the business, given your payments background? Is that something that you saw as a just an enormous opportunity or was it was ripe for picking? You sort of mentioned earlier that the banks weren't going after some of those loans in some sectors. So what was really the catalyst for small business as an entrepreneur? And then you sort of went after the opportunity and you've been driving it ever since.


David Souaid: Yeah, I think it was that we were talking to customers and we were in the payments business and you saw that it was a fairly commoditized industry, and when we'd asked them what do you need for your business? What do you need to grow? Vast majority of them would say working capital, and when you talk to them about their challenges, it was I have to go into the into the branches. It's complicated. It's long. And you could just see as the internet was emerging and as things were moving online and frankly, companies like OnDeck in the U.S., the original main OnDeck in the U.S. Were solving that problem, right? How do we make it simpler and easier for these small business customers to be treated like small business customers and not retail customers, which the banks typically were dealing with. Where it wass about your FICO score, but really looking at your business, the cash flow of your business, the success of your business and basing it on that. So it really came out of those conversations with those customers, then came across that business in the US and said, there's a void in Canada for this type of business. And that's where the entrepreneurial side, I think kicked in, which is how can we bring this to the small business customers in Canada who are struggling to get working capital in a meaningful way? And and there was an open market for that at the time. And I think we've really tried to fill that void and fulfill that mission over the last 15 years.


Craig Asano: Yeah, it's always a journey, right? It's fantastic. So did you know as an entrepreneur again, since there's so many entrepreneurs and would be entrepreneurs to looking to get into fintech or either scale their business and have a look at these opportunities. Someone with your experience and your background and you're living and breathing it right on the front line every day. What would you say the biggest challenge was, and do you have any advice to those entrepreneurs that might be where you were ten years ago, sort of thing?


David Souaid: Yeah, I would say the first thing is really do believe in your mission. And we believed in our mission of providing the widest possible access to credit products to small business. So and making it fast and flexible and secure. So really focusing on that customer journey, that mission. So number one is really focused on mission and solving the problem. The second thing would be really try to be well capitalized. You know I think we bootstrapped for a while and that's good and that's important. Prove out the concept, show that you're solving a problem. But then at a certain point in time, raise the capital necessary to go execute and scale the business. And then the third thing would be continue to build your team, your culture, your expertise. At the beginning, I was doing a lot of things myself. You know, my partner Harley, doing a lot of things himself, him more risk finance, me more sales and marketing. And then over time, as you're building the business, you're bringing on professional people, people who can help build and grow the business and building that culture. So the combination of people, the culture, capitalize the business properly, and then really being laser focused on the customer experience and solving that problem and your mission, those would be probably the three things that I feel like, you know, we've I've learned the most as an entrepreneur.


Craig Asano: That's amazing to hear. Explained so succinctly. Thank you for sharing that. So I think it goes a long way to inspiring, you know, quite frankly, a lot of those that are sitting on the sidelines for whatever reason, perhaps the market is not ideal timing, but it makes perfect sense to me. So taking those sorts of opportunities that drove you into the business about the culture and being laser focused on the customer and solving a problem and staying true to your mission. Let's shift over a little bit about OnDeck. How did those sorts of ideas resonate in OnDeck's business, and you know what is ultimately the mission of OnDeck, and let's get in a little bit more about your customers and how they're matched up to products and how OnDeck Canada is helping them.


David Souaid:  Our mission is to provide the widest possible access to working capital solutions for the small and medium sized businesses in Canada,and part of that is about the customer journey, right? The ability to go online, apply minimal friction, data, accessing data so that customers have, you know, they're busy, they're stressed, and they have a lot on their plate, and so we want to make it as easy as possible for them to be able to apply for working capital. And then I think the next part of that is making sure that the credit box is wide enough to be able to finance those customers. And thirdly, that we have the widest array of products. So we have, you know, a flex product which works for seasonal merchants. We have a term loan product, which is a traditional amortization product with a fixed term that works really well for consistent merchants. We have a line of credit product which works well for those who want to draw the necessary times for unsure when they might need it. And then we have a what we call our dual financing, which is a combination of our line of credit and a term loan or a line of credit and a flex fund. So I think that wide array of products, that wider credit box, that real understanding of small business and their journey and their expectations, I think is really what allows us to solve this mission that we're on. And really now it's about taking it to the next leve and what do we do next for these customers?


Craig Asano: Has technology been a significant part of the growth story and streamlining the efficiencies at OnDeck Canada? I mean, I love the idea of reducing friction or frictionless finance or all the different buzzwords that come out of the industry but how much does technology play a big part of the the underwriting and the whole business?


David Souaid: Yeah, technology is a big piece. And it's funny that you mentioned streamlining because we have a product called streamline, which basically allows existing customers to renew their loan in a more automated way. So we'll actually make what we call a push offer to that customer and say, look, we know your history. We know you're in good standing. We know you're a lot of data about you. So rather than you have to apply to us, let's use the data we already have and customize an offer back to you and put that in your customer portal and say, hey, you've been approved for $25,000 over six months and really make it easy for you. So yeah, data and technology is at the heart of what we do. The more data, you know, we talk a lot about open data and the sooner we can get to that, the better it is to make custom offers for customers so that they don't have to upload bank statements. We've got direct bank connection feeds to those customers. We have integrations to the various registration platforms. So anything we can do to really simplify the process for that small business customer is really at the heart of what we do. We have something called online checkout. So when you come in and you apply and we approve you for an offer, when you're ready to be funded, you log into your portal, you fill out some additional information, and then you can check out and get funded within a matter of hours or days. So technology really plays a huge role in the application process, the underwriting process. And then I'll call it the boarding and post boarding support, really trying to make it digital end-to-end and an experience that is just easy.


Craig Asano:  It's interesting you were saying that the onboarding, the whole experience, if you were to look at it even five years ago, eight years ago, ten years ago, walking into a bank, a small business, how long would that process be and how different is it? It sounds vastly different. I mean, you're pre-approving based on data and AI it sounds like so.


David Souaid: Yeah, I mean, back five, eight years ago, first of all, you know, when we started calling on customers, you know, the notion of calling offering financing was quite foreign and I think a lot of customers weren't certain about it but fast forward 8 or 10 years later, it's much more mainstream. It's much easier to have a conversation and they're seeing it online. But yeah, five, eight years ago they'd have to go into the branch, again, they were treated as more of a retail customer. What's your personal credit score? We're going to base this decision on financing you off your personal credit. And I think fast forward eight years we're making decisions based on their commercial credit score, their cash flow, their social media reviews, a whole host. Yeah, personal credit's part of it but your bank statement data. So, I think it's so much simpler for them to be able to go in online after hours when it's convenient for them. A lot of small business customers come to us after 6 p.m. after they've closed their day, they're doing their books. It's not when the banks are open.  It's when are you the customer looking to to obtain that financing. So being able to go online, make it fast and easy, use data sources so they don't have to provide us with as much we can pull it ourselves. Fast forward many years later, it's all about that. It's all about customizing that experience for them so that it takes work off their plate. They're already busy. They already have a lot to deal with. Let's make this as easy as we can for them as we move forward.


Craig Asano: Yeah, I think it's great. Is there one differentiator between what OnDeck Canada is doing and the competitors here in the Canadian landscape that makes you stand above and beyond?  What is that one secret sauce? Is it the customer centric approach? Is it the tech? What is it?


David Souaid: I would say it's a combination of two things. I mean, customer experience. Yes, I think I think we're you know, we have far and away the best customer experience. But I think as we have a platform that will allow us to scale, but we also treat the customer in a more personalized custom way. So, not every customer is the same. We have many different industries of small businesses. There's many different models and experiences. Some are very seasonal merchants, and we have an approach with them. Some are very consistent merchants and we have a different approach with them. So I think that's really what sets us apart. I like to say we're boutique style lender in the sense of we're large enough that we can scale and automate but we really do try to treat the individual customer like every customer as an example has an account manager. Once they've been funded, that account manager will work with them on their needs, understanding their business and really guide them through the process with us. So I think that combination of good technology solutions and the human experience is what sets us apart.


Craig Asano: Excellent. How big is the footprint you mentioned just before in your previous response about your big enough, like how big is OnDeck Canada?


David Souaid: Yeah. So I mean, I would say that OnDeck Canada's funded over $1 billion over the last 15 years, we have several thousand customers coast to coast from B.C. to Nova Scotia and North to the to the Northwest Territories. So coast to coast also in Quebec, so fully bilingual and we've we've been in this business 15 years. So we really understand the market. We understand the needs of small business, and I think our size is we're large enough to provide a wide range of products and services but small enough to give you that unique and personalized service.


Craig Asano: You got that sweet spot. I know we're talking about the customer, being customer-centric and having personalized experiences, having dedicated account executives. One thing I noticed when I was doing a little bit of research for the interview questions was OnDeck Canada's got an incredible 4.9 Trustpilot rating, and I've seen a lot of Trustpilot ratings that are not quite as high as 4.9, so I think that's an outstanding achievement. Is it something that consciously the staff's working on, or how does one go about getting a 4.9 rating, and maybe let's talk about a case study of one that OnDeck Canada's really proud of as a sort of best practice example of a small business loan experience, and from a customer-centric approach, if that makes sense.


David Souaid: Sure. I mean, I do think we are very focused on our customer and and doing what it takes to have a happy customer. I think that's core to any business but we think when you operate with integrity and professionalism and empathy and understanding for your customers and how to best help them, that's at the core of who we are. Be authentic, have integrity, do things the right way and treat your customers right, and I think that resonates. I think that's how we have these high Trustpilot scores. I think our team is always asking our customers, what could we do better? What could we have done differently? If you're happy, please give us those good reviews and we have many customers who, frankly, were unable to help because they don't fit our credit box and you're always sort of concerned that maybe those could lead to negative reviews and I think we manage that well. We explain the rationale of why we couldn't work with the customer. So I think, we're very focused on making sure that we're taking care of the customer as best we can. I think in terms of your second question about working with customers and a customer-centric approach, my favourite story, and sort of two examples of where we've worked with a customer that wouldn't have been an obvious choice for some additional financing.  So restaurant in Ontario had a great 30 seat location, busy every night, but couldn't expand beyond that and I think struggling a little bit to grow The location next door opens up. The landlord approaches them. They don't have the working capital to take on additional lease and the workhold improvements, etcetera. They were pretty much maxed out with us, but we built a really good history. We saw their plan for the future. We believed in them as operators.  We saw their social media reviews, and I think we went out of our comfort zone a little bit out of our box a little bit. That personalized touch allowed them. We financed them. We allowed them to take over the space. They doubled capacity, and they took off and they've had a successful relationship with us for years. So it's sometimes those examples of relationships that I think help our customers. And so it's not just about the numbers and the online application and the automated risk decision. That's all there. If you want to just come in, apply, get approved and get funded, we'll try to we'll try to service you that way. But if you need that personal touch because it's a little out of the box, we're there for that too. And I would say lastly, and I know this is getting a bit long, we had a customer who was a wholesale business. They did a little bit of e-com, but it was really just adding to their wholesale business.  Wholesale furniture, and they realized that, e-commerce was the way to go. Again, needed to make an investment in building out their e-commerce platform. Didn't have the funds for it. We were able to finance them and work with them, and whenever you're mixing sort of traditional businesses with sort of new, business models like moving into E-com, it's not an obvious thing, but again, worked with them and they transitioned from their wholesale sort of legacy business where you look at catalogs and go to their location and visit to an e-comm business. And they too took off and really transformed their business. So those would be the two examples where I think working to understand different business models, different approaches helped us with with customer experience.


Craig Asano: Great. That's fantastic. So let's dig in a little to some of the news and programs that are happening at OnDeck Canada. I noticed one that was a post on the OnDeck Canada website about the CEBA refinancing program. We all remember Covid and it's just thankfully not part of our vocabulary anymore, but CEBA was and it still is for a lot of businesses. I know that times were tough and there were a lot of programs available and it sounds like OnDeck Canada had a role and now there's a refinancing program. Can you tell us about it? How it's going? What it's about?


David Souaid: Yeah, absolutely. So and I would say, another example of the customer experience during Covid, we were one of the lenders that didn't stop funding. We continued to fund even though it was challenging in a difficult environment for those of our regular customers where they were open, we were able to finance them. So we took a lot of pride in continuing to finance during Covid when a lot of our competitors really did mostly shut down, and I would say as it relates to CEBA, we have been tracking the CEBA program for quite some time. A lot of our customers, the vast majority of our customers took it, and there's almost 900,000 small businesses that that did take CEBA in Canada. And as we were getting closer to the repayment deadline, we felt a program put together for those customers to benefit from the repayment discount was warranted. And I think we came up with an application process, something a little more integrated to be able to track customer CEBA status and offer some incentives to get in early so that it wasn't all at the last minute. It was originally a December 31st deadline. Governments kind of extended it to January 18th with a little bit of latitude beyond that but rather than you waiting till the last second, come in, let's underwrite you. Let's offer you some promotional incentives to get you in early and take advantage of the discount. So if you took $40,000 and you want to benefit from that $10,000 and we can help finance you, that's really what we were trying to achieve with that program. And I think to date, we've really started to see a lot of merchants as we're getting closer to that deadline, really come in and start to have conversations with us and think they'd like to find ways, if they can, to remove that off their balance sheet and work with us on a shorter term, and then clear it out.


Craig Asano: And just for the benefit of some listeners, in particular the international listeners who might not know about the CEBA and the ten grand,  as part of a $50,000 loan, as an example. Can you just break that down quickly just so they can pick up on what the program was about and why there's a refinancing need because I know that from what I know that the deadline has come and gone, and now it's pushed out a year. Is that correct? Maybe just if you could talk about the current status as well?


David Souaid: Yeah. The one, the thing and the government really it's been very confusing on this front but the extension really is on the back end, so the government has extended by one year the need to repay CEBA in its entirety to 2026. It's not on the extension around the forgiveness of the CEBA program. So just for your listeners, the government had two programs. You could borrow $40,000 interest free until December 31st, 2023, and if you repaid that amount by December 31st, you would get $10,000 loan forgiveness on a $40,000 loan, and if you'd qualified for a $60,000 loan, you'd get a $20,000 forgiveness. So it provided an incentive for small businesses to take that financing when they needed it during Covid and when they repaid it, they got some forgiveness on it. So that's sort of the impetus behind us developing the program. Now, if you're a small business customer and you can't or don't want to take care of the benefit from the forgiveness, the government is allowing you to pay it 5% interest a year for the next 2 or 3 years until the end of 2026, when it has to be paid off in its entirety. So that's the program and we just felt that there was a benefit to these customers to benefit from the from the loan forgiveness program if they if they can.


Craig Asano:  Okay thanks for providing a little bit more colour around the background because surely there were bound to be some questions coming out In this market and economy right now. I mean, all over the news, all over the media, it's all about inflation and the prices across the board and small businesses, individuals but let's focus on the small businesses. People are feeling the pinch and interest rates and people are holding their breath every time there's the prospect of an increase. What do you think's going to happen and play out over the next little while in terms of interest rates, I know this wasn't a question we had talked about beforehand, so by all means you can pass on that one but I think with someone with your expertise and willingness to share and how it applies to small businesses and maybe some of the pain they're feeling. Just love to get your expert perspective on it.


David Souaid: Yeah, I would say, look, interest rates have gone up and gone up rapidly and so everyone's forced to adjust including us. You know, our costs have gone up in that regard. So everyone's adapting to to a rapidly rising interest rate situation and I think it's hard to predict as we move forward but what I can say is our small business customers have been pretty resilient. They've found ways to cut costs, to raise prices where they can, to sort of weather this. And I think as we move forward, the challenge, and they faced a lot of challenges Wage increases have gone up. Cost of supplies have gone up. All of their costs have gone up, and so, managing that, weathering that, getting through that to maintain enough cash flow to keep the business going and continue to invest in their business has been their challenge. But to date, they've done a really, really good job. And again we're there with them, trying to work with them, help them understand it. You know, sometimes it's conversations around, take less funds. Maybe this is an opportunity right now just given your cash flow situation to limit now and come back at a later date. So, really working with those small businesses to understand sort of their cash flow needs and their capabilities at this time as they weather this challenging environment, and then see what, what 24 and beyond brings.


Craig Asano: Yeah, well, let's hope we get one of these softer landings or, can remain as competitive as we can be. I mean, at NCFA here we're always positive advocates for any sort of increase in competition and supporting of small business who are really the backbone of jobs and a lot of the economy. So it's near and dear to our heart for sure. So thanks for sharing that. Let's talk a little bit about the industry. There's obviously all sorts of tech advancements and innovations happening that are shaping fintech across the gamut. There's so many sectors. I liken it to a pinwheel and there's so much happening but specifically in the lending space inside of fintech, what sort of innovations excite you and where do you sort of see things evolving and what sort of impact that might have on the future, as well as OnDeck Canada.


David Souaid: I think the cherries would be embedded finance and obviously artificial intelligence. Those are going to be the two areas that I think over the next 3 to 5 years are really going to impact lending. And and I would say by embedded finance I also mean sort of the ability to build out,  you'll hear terms like super app or ecosystem, this notion that small business customers are looking for comprehensive solutions around banking, lending, payments, accounting, inventory, platforms like the full suite. And you're starting to see various groups really trying to put together these super apps that encompass a comprehensive solution for small business. I think we're still relatively early days. Call it the first inning, second inning. But this notion of embedding our our lending solution into complementary partners to create that super app ecosystem is where I get very excited and I see a lot of opportunity. So, we're talking as an example to a lot of digital banks or neobanks who are doing banking, whose customers are asking for lending and who don't necessarily want to or are able to offer lending themselves, and so they're going to embed our offering into their banking platforms and continue to maybe embed others to create this integrated, seamless solution for that small business customer so that you get a kind of 360 view of the business in one platform. Now, there's a long way to go in that regard but I really I'm excited by that opportunity, and I think it's one area where small business customers have said to us, I've got all these different It would be nice to have sort of one solution that encompasses everything. So think we're early days, but I think that's something we're very focused on, making sure that we have the APIs necessary to embed into various platforms, be it banking, payments or otherwise. And then obviously the second is around data and machine learning, artificial intelligence. The more open data is and obviously open banking and the ability to access data, the more personalized and customized those offers can be without the customer having to apply for it. Right. And we often talk about pull and push. If you're looking for financing, you're going out and finding financing but if, for example, you're with Shopify as an example, you're with Shopify today, you're doing your payments with them, you're doing your inventory with them, they offer capital product, and it is going to be, hey, by the way, we've had 24 months of history with you. We think you qualify for X dollars based on your history, and if you click here and accept, money can be in your account in hours. So that kind of convenience, that personalization, that customization is where this is all going, and I think getting access to that data, being able to make those offers using the predictive capabilities of AI and machine learning to do that is another going to be transformative. And I know, I know, I say a lot of buzzwords, but I really do believe it's going to be transformative in lending as it is going to be in almost every industry.


Craig Asano: This show's all about buzzwords. You're speaking our buzzword language. The neobanks, and open banking, which may not be the best term for what eventually is in the market, but certainly a future like you were describing with embedded financial services and non-bank platforms or omnichannel all over, but it's going to trigger the conversation around the regulatory requirements or challenges that may be upon us, or some are structural challenges or market challenges. So maybe it's just more of a general question or you can make it specific to open banking if you have a very specific view on open banking in Canada as an example, but how do you see the regulatory environment here in Canada today and what's needed in the future if there are gaps to remain as competitive as possible in 2024 and beyond?


David Souaid: Yeah. So I think look the government and the in the last budget really tried to make its focus on small business and really assisting small business, and I think that's had an impact but I think from a regulatory perspective where we would obviously like to see more progress is things like open banking. I think that will widen and open up the market for financing for small business, which is something that they're all looking for. Things like real time rails is another area around payments where a project that's underway that's had delays Things like real time debits, real time credits. More instant funding. Getting money that a small business customer or merchant will process for credit cards that can be instantly funded as opposed to waiting 24 or 48 hours. That affects cash flow. So I think from a regulatory environment, making sure there's protections, but really seeing some progress around open banking, real time rails, I think would go a long way for our business. I'll just use one example. So for our line of credit, again want to make it easy for our customers, so we allow you to draw when you need to draw funds, and then you have two choices. You can either be sent EFT within 24 or 48 hours to receive your money, or you can use Interac E-transfer real time and have your money in 2 or 3 minutes. And I'm supposed to say ten minutes or less is the answer to be safe. But really within minutes and, I think 35% of our customers are electing to take Interac E-transfer. The challenge is it's only $25,000 limit that they can withdraw at any one time. So, things like real time rails would go a long way to helping improve the speed of those types of transactions. Interac E-transfer is good but it's only good for a certain size, and so I think those would be the two things thatI would love to see progress in from a regulatory environment perspective.


Craig Asano:  Without wanting to go too much into open banking, but did you have a message that for the government folks and economic development agencies tuning in to the podcast, what would you say to them about open banking and the lack of progress from your perspective and OnDeck Canada's perspective?


David Souaid: Yeah, I would say to them that this is the trend around the world, this type of democratizing of data. Again, another buzzword, the ability of a of a small business customer to port their data wherever they see fit because it is their information, at the end of the day, to facilitate better credit is only going to help small businesses get access to more financing that they need to grow their business and grow the economy. So by opening that up and frankly, making it more secure, I mean, today, there's all kinds of aggregators who are integrating to banks. We can make this standardized. We can make it portable and seamless. If open banking were to come to the market. Right now, you have groups that are integrating one off to each of the different banks, and it's cumbersome, it's costly, and there's a better way. And we see it in other countries like Europe, the UK, even the US is starting to make real progress on it. So I think if we want to stay ahead as a modern, financial G7 country, it's important that we make progress in regards to open banking for the growth of our small business customers.


Craig Asano: We got to follow fast. We've got to follow fast. So always playing catch up here David. But we let's plug forward here. Got some more questions. Very interesting outlook here as we move to the next section. But before we get into the future I have a question here. I'd like to talk a little bit about the strategic partnerships. How can any of our listeners that might be working in a sector that they might want to become a collaborator or what sort of opportunities and how do you work with strategic partners? Is it a big part of OnDeck Canada's business? It's just something that I think, at least at NCFA, strategic partnerships are have been crucial at times and really evolve the business and or in our case, the organization in new and exciting ways. And so do you look for those sort of win win partnerships and if so, what what do they look like and how can they work work within OnDeck Canada.


David Souaid: Yeah. No, it's a big part of our business. And I would say about a third of our business comes from strategic partnership relationships. And they and they vary and they range. So we have, as an example, a strategic partnership with Global Payments, which is one of the largest credit card processors in Canada. And I think the value proposition to someone like that was we offer payment processing. Lending is an additional value add for those customers who are looking for financing, and they're looking to offer more and more products right to their customers, both for value for increased retention, and I think that's true of many of our different types of partnerships. We have partnerships with, as an example, leasing companies. They're walking into restaurants or locations, equipment financing, but customers looking for working capital solutions, and they want to be able to offer both. They'll refer customers to us for that. So I think anybody who is dealing with a small business customer who's looking to bring additional value to that customer, and where financing might play a role, I mentioned earlier, Neobanks, and know their desire to offer financing to to their small business customers. So anyone who has relationships with small businesses that wants to add value, some bring some incremental revenue and retention, I think are people that we love to have conversations with.


Craig Asano: Fantastic. So if any of the listeners check any of those buckets, you're going to have to get in touch with David Souaid here. He's got a super app written all over it. Well, the future is here at least as part of the podcast. And I think the question that I'm noodling in my head is what is small business lending with AI happening today? With the progress that OnDeck Canada's had coast to coast doing over a billion (dollar of) loans, where do you see OnDeck Canada and the lending markets in the next 5 to 10 years? What vision could you paint here in Canada? It may be beyond, but really it's an open question for you. Let's take a look at the future 5 to 10 years out.


David Souaid: Again, really futuristically you could envision a world assuming that data becomes more easily available, because I think that's at the core of things like artificial intelligence is access to data. Then then you look at machine learning and AI and the ability to take in that data and make very custom and personal offers at the right time to small business customers so that they have those offers available. And then the third piece of that is making sure that they have the widest array of products. So depending on their needs, like I mentioned earlier, some customers have a very clear fixed need for their for their products. Some of our customers, as an example, who take dual financing, it's have a fixed project but might need a little extra, and so I'm going to combine your line of credit with, with a term loan. So I think data the ability again to learn from that data and predict and make customized offers and then having the right offer to that customer is where lending is going to go in the next five years. Ten is a bit longer, but certainly five. And I think when you're able to do that in combination as part of an overall ecosystem or platform where you can combine multiple things like payments and bookkeeping and just in its entirety, I think that brings tremendous value to the customer and makes their lives better and easier, and allows them to grow because many of these small business customers, that's what they want to do. They want to just continue to build and grow their business. And these are the tools and things I think they need and want to do that. So that's big picture where I sort of see things in five years.


Craig Asano: And in the short, more near term future for OnDeck Canada. Are you working on any exciting innovations or programs right now? Things that excite you? You know you're not losing sleep over it. I'm talking about these things are they're keeping you up for a reason. They're great opportunities. Is there anything they're happening?


David Souaid: Yeah. My problem is, is I have too many exciting things that I want to work on. And I have a team here who tries to keep me in check a little bit. But there are a few things that we're working on that I would say, innovation is always challenging, especially in this environment where there is such a relentless focus on profitability, profitable growth. The world's changed a lot in the last 12 to 15 months from grow at all costs to profitable growth. So I think we're going to be more strategic. We're going to be more targeted. We're much more narrow and focused on that small business customer and their needs. But there's certainly a lot of innovations that I think we can bring to market around things like, I would say loyalty, and customer experience and areas around the edges that I think in the near term are really going to show customers how much we value them. And, like I mentioned, loyalty and and ease of access to capital are areas where I think we're going to develop some things in the short term that will really make our small business customers happy.


Craig Asano: Yeah, it's exciting times. I think OnDeck Canada has done tremendously well. And to get to this point and the future's bright, let's just hope the economy can stay in tact. And we'll be certainly tracking the story. So I think that for me wraps up most of the questions I had around the future. It's sort of everything else beyond that, because we're living in a practical world here is probably a little bit even too far. So we're at the point of the show where we get to do my favourite. It's the rapid just quick questions, one answer, short answer. So I'm just going to fire out a quick question. And I'm expecting a short answer just to keep you on your toes. So if you're ready for that (I'm ready). Let's let's get into some rapid fire questions. So in a word, how would you describe the future of fintech?


David Souaid: Wide open.


Craig Asano: Well that your visionary, David. Your visionary. You had to choose one core value that defines OnDeck Canada. What would it be?


David Souaid: Integrity.


Craig Asano: That's a great answer. One word, or maybe one thing that drives you every morning.


David Souaid: One thing that drives me every morning. Building.


Craig Asano: Yeah. Like the motivation building your developer development. It's good. Name a recent book or movie that you can recommend for our listeners here on Fintech Fridays.


David Souaid: Yeah, I watched the Netflix documentary Nyad, and it's the story of perseverance of a woman who swam from Cuba to the United States and just tremendous tenacity, perseverance. It was a great, great movie.


Craig Asano: That was called Nyad.


David Souaid: Nyad? Yeah, Nyad. It was the name, the last name of the swimmer who swam it. Incredible story.


Craig Asano: I'll have to include that in the show notes here. Fantastic. Okay, and last question. What's your favorite go to financial tool or app that you use all the time?


David Souaid: I love my Wealthsimple app. I find it, it's a great, great app.


Craig Asano: Wealthsimple app. Well, you heard it here first. David's waited OnDeck Canada. Well that's it. I want to just ask one last question so people know how they can get in touch with you, David, if they have any questions or like to learn more or explore one of these strategic partnerships, or take a look at the products and small businesses, contact you directly. How do they get in touch?


David Souaid: Yeah, they can find us on or on our Instagram, Facebook or LinkedIn pages. We're accessible in any of those areas.


Craig Asano: That's fantastic. Well, David, you're welcome anytime. Thanks so much for sharing your expertise and knowledge here. This is David Souaid, the CRO of OnDeck Canada. Thanks so much for coming on to the show today, David.


David Souaid: Okay. Thank you. It was a lot of fun. Appreciate it. Great.


Craig Asano: So for everyone else, thank you so much. Just want to say if you're new to Fintech Fridays please check out some of the incredible past episodes. They're all on the website. We think you'll be surprised with what you find. We look forward to seeing you next Friday for another episode of Fintech Fridays, so have a good weekend, everybody. Take care.


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