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Meet the CEO of October Germany

In our Meeting the CEO’s of October item, we have a chat with all our European October CEO’s in France, Italy, Spain, the Netherlands and Germany. In this episode we sat down to have a chat with Thorsten Seeger, CEO of October Germany. 

 

 

What did you study, and where did you work before arriving at October?

I studied International Business in Germany and worked at Accenture in the consulting division. Afterwards I did an MBA at CEIBS at Shanghai and worked then 10 years in the banking industry in the UK. I was working for large banks, mainly focused on SME’s but in a variety of roles, at the head office, regional management as well as product development. In 2017 I had the opportunity to move from banking to the fintech industry. I did my own Brexit and moved back to Germany and spent two years to built out the SME lending marketplace, before I moved to October.

What are the challenges and opportunities in the German financial market?

People would say that Germany is fairly overbanked. That is because we have over 1600 different banks in Germany, mainly spread across two big regional umbrella organizations. But these are banks with their own boards and who make their own decisions. The advantage is that these banks have a good regional focus, they understand the local customer needs better than banks in other countries.

The challenge is that they are not digital. They are so small, all their change efforts are towards regulatory projects like Basel III and MiFID II (Markets in Financial Instruments Directive). They struggle to keep up with all these regulatory changes. As a result they hardly have any resources left to improve their customer experience. They are analog and paper based, their development has not kept pace with the change in their customers’ needs.

So whilst there are many different banks, the choice – especially for SME clients – is limited and they do not have access yet to state of the art digital solutions.

How did you think October could make a change in Germany?

The German market is still very traditional and there are only 4 or 5 companies within the digital disruptive field of SME lending. None of them are big yet. We are at the beginning of our journey into moving to a more digital and customer centric environment for our customers.

When I joined October at the end of 2019, the market felt ready for alternative lenders taking a bigger stage. Together with the 4 or 5 companies in our market we financed about 400-500 million euro in 2019 . But this was in a market with an annual volume of 150 billion euro. So its a huge market and alternative lending for now is only a tiny piece of that. I felt that the end of 2019, coming into 2020 was the opportunity to do something big. And personally it was a fantastic opportunity to move from a larger fintech organization to October. At October in Germany I was the first employee and started building the business from the ground. Taking into account all the experiences I have from my previous roles and putting that into a product that we believe is a lot better than what the market currently offers.

At the start of 2020, the corona crisis got a bit in the way of launching a new lending platform in Germany. But I believe that in the long term, this crisis provides an opportunity for us. Not only for October, but also for fintechs in general. In my view, the crisis really is an accelerant for digital disruption and has brought forward the change of the next 5 – 10 years into a period of 12 months.

What trends in financing do you see in your country?

For many years, entrepreneurs considered SME financing to equal bank-loans. They would go to their house bank and ask for a loan. When the bank would say no, an entrepreneur would think there were no other options. Now, alternative players become more interesting. This is not exclusive to lending platforms, but also for other financing solutions for SME’s, like factoring, leasing and capital market offerings. The spectrum is opening up. With the services of fintechs to SMEs, the transparency is much higher, and the costs are much lower. Products that where inaccessible before to SMEs, because they were too expensive, have now become an option.

How do these trends differ from other October-countries?

When you look at trends from a product perspective, each country has its own challenges and the banking landscape is different, especially on lending products. Lending is the only asset class that has no pan-European regulation. There is a huge opportunity for regulators to think about what they can do.

Germany is price-sensitive. The unfortunate outcome is that people will only look at the obvious costs, which is the interest rate. Therefore, bank-lending in Germany it is extremely cheap because the interest rates are very low and banks earn no money from this. But entrepreneurs should take into account the whole cost that they have to pay, including all the time and hassle when arranging a loan with a bank. And if they start thinking about a fast, simple and transparent lending product, they should consider how much time it saves. And consequently what they could earn from investing this time into growing their business. There is a real opportunity for October to facilitate this.

Entrepreneurs all across Europe want a fast, simple and transparent lending process. I believe that as a pan-European platform, October is uniquely positioned to offer this. So, the need of the European customer is the same. How we address it in the detail will vary a bit, because of the various financing landscapes.

What are the goals of October Germany in 2021?

We have three main goals at October Germany for 2021. The first one is to continue to build awareness and the October brand in the German market. Germany is the latest country to join the October family, so we still have a lot of opportunity to make sure that people know what October is and what we stand for.

The second building block is to build out our technology and the data that we have access to. Technology and data are extremely important for us and together are the foundation on which our business model is built.

The third goal is to develop a fast track product for smaller loan request, up to 250.000 Euro, so that we can make a decision for our customers within 24 hours. After a year in the German market we noticed that there are two big customer needs. The first one is delivering a fast, simple and transparent product. However the definition of fast is changing depending on the situation of the entrepreneur is in. We make a distinction between the time to yes and the time to cash. The time to yes is considered as how fast an entrepreneur can get an answer on getting an approval for a loan request. The time to cash is how fast the entrepreneur can get the money into their bank account. We found that entrepreneurs really value the time to yes. This could be because they have an ad-hoc opportunity or maybe they can buy something if they react really quick. It is important for them not to wait too long, and sometimes even a week is too long. Therefore we created a product where we can give a ‘yes’ or a ‘no’ to an entrepreneur within 24 hours.

What do you think is typical about October?

The first thing that comes to mind it that October is the most collaborative company I have ever worked at. Everyday I am amazed by how open everyone is to helping each other and customers. I never heard anyone say ‘no’ to someone else’s request for help. This is truly unique. Also, people are thinking about the customer experience all the time. That is important for me as well, and I’ve seen from the 100 people working at October, everyone is thinking about the customer first.

What makes October a true tech company?

It is hard to pinpoint what a tech company actually is nowadays. At October, we have a relentless focus on tech to make our customers’ lives easier. For example decreasing our time to yes. As a result we introduced the instant process for Italy and France. But I actually don’t think that being a tech-company can be considered a standout factor today. Companies that want to survive in a digital economy need to start thinking how to use data and technology to continuously improve their offering. As October we are great at technology, but it is really our people that are the stand-out factor to bring this all together and fuse it into something that is truly powerful.

Which October company value do you identify most with?

It is difficult to pick one, because the October values are all so important for us. They are guiding principles and we live by them. But if I had to pick one, I would go for the October value always improve. This is closest to my personal character. I am never satisfied with where I am today, I always want to get to that next level, do more and run faster and further.