Our talk at the Big Data Corridor Event at Innovation Birmingham Campus
Credex is a business credit network that will provide businesses within the West Midlands with more clients and access to a zero interest credit facility. We have been supported by the Innovation Engine project at Innovation Birmingham, the region’s leading digital and technology community. Yesterday I was given the opportunity to present Credex to a small group of that community to gage the initial reactions. We have spent the last couple of months engaging and presenting to region decision-makers and academia, but this was the first time that we presented to small businesses.
I felt that the presentation went well, although it is currently a little clunky as I have been used to presenting the project from a public policy perpsective. The challenge for Credex now is boiling down our offer to messages that individual businesses will understand. The audience did pick up the project quite quickly and began asking how the model would relate to their individual business circumstances. The engagement also allowed me to realise the potential contribution that the Innovation Birmingham community may have on the development of our network. We are drawing our inspiration from Sardex, in Sardinia, Italy. Some of the services that are provided on the island by incumbent companies, even public monopolies, are being offered by Birmingham-based startups. If Credex can encourage some of these companies on to our network, we could find ourselves with a very diverse set of services being offered by providers in the region.
The “Big Data” element of the event is also very interesting to Credex. We believe there are two foreseeable ways that “Big Data” can be used by Credex to benefit its users and the region. Firstly, what is currently now being trialled within Sardex is the idea of using the transaction data from within its Business Credit Network (or Circuito di Credito Commerciale for Italian-speaking readers) to price Euro-dominated loans more effectively. One of the main reasons why small business loans cost so much is something that economists describe as “asymmetry of information”, which means the just isn’t enough data on small businesses to understand the risk. What a Business Credit Network can provide is a history of transactions alongside an understanding of business interactions. We have had some conversations with Unity Trust Bank who are based within the West Midlands along these lines. Secondly, “Big Data” could be used for a broader objective to ensure that the right credit conditions are available for the network as a whole. An extreme example of this is the problems the Eurozone currently face where the European Central Bank has to set interest rates for economies diverse as Germany and Greece. A Business Credit Network within the West Midlands could use publicly available economic data and its own network data to ensure that businesses have the support to face market uncertainities. The network would essentially have its own central bank which could provide credit lifelines to businesses in times of economic crisis. This is something that has been demonstrated over many decades in another inspiration for Credex called the WIR Bank (German website) who are in Switzerland. Both of these examples are obviously very interesting, however they are based on the premise that there is a functioning Business Credit Network.
Over the coming months we will be finalising our processes and developing our offer. We hope that we can continue to work with Innovation Birmingham. We believe that a launch in Q1 2019 is now certain, although it will be ultimately based on how many companies we have come on to the network. I’ll keep you all posted.