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Meet the CEO of October Spain

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 Gregoire de Lestapis, CEO of October Spain.

 

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

“I studied International Finance in Paris before initiating a 30 years career in banking. I worked at Banque Indosuez, an investment bank later acquired by Credit Agricole, for 15 years. And the other 15 years I worked at the Spanish retail bank BBVA. These companies allowed me to change position every three years and to work in various cities across the globe. I worked in Jakarta, London, Johannesburg, Madrid, Paris, Chicago and London with Credit Agricole and Madrid, Hong Kong and Paris with BBVA. In that last position I had the opportunity to meet Olivier Goy (CEO of October) and Patrick de Nonneville (COO of October) in early 2016. I got fascinated by their vision. I decided to join them as CEO of October Spain in this incredible journey of transforming SME financing thanks to technology.”

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

“Spain is a country made of SME’s. Spanish SME’s account for 99% of the total companies in the country, and 70% of employment and GDP. The market opportunity was there, coupled with a difficult environment for banks. Indeed, after the financial crisis of 2008, the relationship between SME’s and their banks suffered due to the credit crunch, some financial abuses and heavy cross selling mechanisms. The dependency on banks was enormous. Hence the resentment and understanding of the required diversification of financing sources.”

“Spain is home to very large banks like BBVA, Santander and CaixaBank, with over 200 million customers worldwide. In terms of market share, the top five entities represents 75% of the market. This is 40% compared in 2008. Like everywhere in Europe, the Spanish banks face a triple legacy. These are physical branches, outdated technological platforms and a human mindset on product instead of customers satisfaction. The Spanish banking system has to contend with digitalization, low profit margins, recurring economic crises, and increasingly strict regulations. As a result, banks are undertaking measures that include closing branch offices and downsizing to effectively reduce their operating expenses.”

“However, despite 10 years of banking concentration and commercial branches reduction of over 40%, the density of branches in Spain is still extremely large. The downsizing process is still very much in the works in 2021 and in the coming years. And this is causing banks to focus less on improving their customer experience.”

“On the alternative banking side, the private equity and debt funds are concentrating either on large transactions (above 10 million euro) for a few players while on small short term financing for a few platforms. We believe that we can make a change, combining the alternative financing opportunity together with the process efficiency thanks to technology.”

What trends in financing do you see in Spain at this moment?

“In 2020, the market got flushed with loans that were provided exclusively by banks with a guarantee of the state. However, a large portion of these loans were a mere transformation of short term credit lines into long term financing. Hence creating need of additional liquidity for the SME’s. In addition, we know that in the banking world one plus one does not make two in terms of credit exposure.”

“The current mega mergers in the Spanish market will therefore have a double effect: a credit offer contraction, hence less credit to SME’s, and a focus of implementation the operation expenses reduction objectives instead of customer satisfaction, hence less innovation and transformation. That situation makes October more relevant to SMEs today and tomorrow.”

How do these trends differ from other October-countries?

“Over the last 10 years, Spanish banks have been able to offer a high level of service to the retail customers thanks to a profound shift in the digital services offered. They are probably the most efficient and digital savvy banks in the retail segment in Europe. The question is how long it will take them to offer the same level of service to the SME and corporate segments, taking into account the “perfect storm” we mentioned earlier. Spanish banks are extremely efficient in their cross selling strategy generating a “Stockholm syndrome” among the SME’s, who remain conservative and quite price sensitive, overlooking the overall cost of all services attached and the time and efforts spent on satisfying the banks requests.”

“The Spanish bank focus on retail banking left the service to SME quite inefficient, with cumbersome credit processes across multilayer risk management structure, resulting in frustration and time consumption for SMEs when looking for financing needs. That is where we believe we have a role to play offering them our collaboration with October Connect, our neo lending technology. We have the will to partner with banks, together we trust we shall find the way.”

What will October Spain focus on this year? 

“We have a triple focus. First of all is what we name ‘Fill the gap with October Classic‘. This is a financing solution for “investment for growth” deals between 1 million and 2 million euro. The crisis is generating opportunities for resilient companies to invest in new markets, investing in production capabilities or acquiring competitors. These transactions are too small for private equity, debt fund or investment banking institutions. But they are too big and difficult for the traditional commercial banking network. We have developed quite an expertise and reputation with our partners in the market in that field and are involved in many of these transactions.”

“Second is the development of a scalable offer for small tickets below €250.000. By leveraging our data and scoring models we improve the customer journey through a unique App dedicated to our partners and provide direct access to the platform for our borrowers. The objective is to be able to provide a credit decision within hours, the famous “Time to Yes” as my good friend Thorsten Seeger mentioned in the German CEO interview.”

“Our third focus is to present October Connect, our neo lending technology to financial institutions, as an end to end B2B integrated solution or as a modular connection via API for one or several modules like our scoring model or antifraud tools.”

What do you think is typical about October?

“October is unique in so many ways. We say what we do and we do what we say. Transparency and reputation are generator of trust, and trust is at the core of the financial service industry. Customer experience is an obsession leveraging technology to offer an efficient and differentiated service for our stakeholders.”

“I am fascinated by our constant evolution, building our technology and deploying our wings in five European countries. We started as a traditional lending platform, doing an outstanding job for our retail and first class institutional investors, while thereafter building the datalake and expertise to industrialize our offer for the SME’s. Now we are going to the next level with October Connect, the neo lending platform for financial institutions.”

“In terms of talents, we have assembled an amazing team across 5 countries. They are diverse in origin, gender and experience striving together to accomplish our mission: to empower businesses by simplifying and democratizing their funding.”

What makes October a true tech company?

“At October we are building something tangible, thanks to the value added by each team member. Since everyone is part of the construction and is empowered to make his or her contribution it is immediately visible. In the current organization we have the product team interfacing between the users and the tech team.  With a 3 weeks cycle of delivery we created a recipe for scalable innovation and implementation.”

“We focus on scaling our business,  to allow sustainable growth. We can do this thanks to technology improvements, with the goal to satisfy explicit and implicit needs of our customer. That focus includes now as well banking partners who are interested to use part of our technology. With this technology they can offer a digital process to their customers in order to improve their experience while controlling operating costs.

Which October company value do you identify most with?

“Of course Think customer experience first and Always improve are my professional favorite company values. Because it is the heart of what we do and how we do it. But Enjoy the Journey is my personal choice because it represents my way of going through life. I joined October because I here I found exceptional people with a rare combination of visionary and operational capabilities. And now, 5 years later, I am proud to be part of that diverse team and to participate in the collective construction of a unique company leveraging technology. That is the journey that moves me every single day, with determination and excitement.”

Finally, tell us something about your most memorable project?

“Looking back, the most memorable project was the first one ever financed by October in Spain. It broke the mold of financing platforms by the size and duration of the loan. This was unseen in the Spanish market up to our arrival. That was the result of hard work by all the pioneers of the October team to start the international expansion. This allowed cross border transactions by investors through the first foreign platform approved by the Spanish regulator.”