Case Studies

How kennek used embedded payments to solve frustrations in lending

Modulr By Modulr on 2 December 2022   •   4 mins read

How kennek used embedded payments to solve frustrations in lending

Products used: GBP accounts, EUR accounts, Direct Debit collections, Faster Payments, SEPA, CHAPS

Sometimes, innovation comes out of frustration. That was certainly the case for kennek, the vertical software solution for lenders.

As Thibault Lancksweert, kennek Founder and Co-CEO puts it, “Our motivation for starting kennek stemmed from our own frustrations as lenders. We found that, despite the many technological innovations that have characterised the past two decades, tools to support lending were firmly stuck in the past. Data was not connected or centralised. Borrowers sent a jumble of documents in different formats. Workflows were manual, offline and typically very time-consuming. Not only does this make day-to-day life as a lender more frustrating than it needs to be, but it limits lenders’ ability to scale.”

When trying to find a solution, lenders may have tried to develop their own tech stacks. However, the extremely high costs associated with this – both in terms initial upfront development cost and ongoing maintenance – mean that building a proprietary solution simply isn’t a viable solution for the vast majority of lenders. These frustrations are why a vertical software infrastructure seemed like such a compelling idea for kennek.

The kennek proposition

Kennek’s mission is to bring more funding to the real economy. While many non-bank lenders fill the gap in funding for small and medium sized enterprises (SMEs), many of these lenders are unable to scale to meet the demand. The result? An enormous funding gap – estimated at £59bn, with only 8% of SME loan applications being accepted by traditional banks.

Kennek covers the entire lending lifecycle – from origination and underwriting all the way through to maturity. Instead of focusing on one specific part of the process, kennek operates as a one-stop shop, meaning that lenders don’t have to apply to different providers for each part of their process.

They also know the lending space well – their founding team has combined 50+ years of experience in alternative credit. This specialist knowledge is vital when it comes to working with lenders. And this also means they understand the challenges lenders face.

Two such challenges relating to payments are automatic cash reconciliation, and an inability to open segregated collection accounts on a per-borrower basis. These two challenges alone can lead to a mass of manual work to make sure that lenders can keep track of who has paid what, and how much they were meant to pay.

How Modulr fit into the story

In order to solve these challenges, payments need to be instant and seamless. In order to do this, Modulr issues service user numbers (SUNs) to each of kennek’s customers, enabling these lenders to collect payments from their borrowers via direct debit. The borrowers will also have accounts issued to them to enable ad-hoc repayments via Faster Payments (made possible due to Modulr being a direct participant of the Faster Payments scheme) along with access to SEPA and CHAPS.

And thanks to webhook notifications, kennek and lenders are instantly notified of any payments, meaning that cash reconciliation can be automated.

“We chose to work with Modulr because of their strong coverage in the UK,” said Edmund Parsons, Founder and CPO at kennek, “along with their ability to cater for large ticket repayment schedules. We needed a solution that was robust enough to scale with us, and that had a reliable up-time. After all, when we’re working with lenders, they need that reliability so they don’t end up spending further time and money trying to reconcile problems that happened during down-time. A lot of frictions can happen in the middle- and back-office lending processes, so making them smooth and seamless was really important to us.”

While kennek are currently operating in the UK, they’re looking forward to expanding across Europe and the globe.“We’re looking forward to a future when we can continue this partnership to offer services across other areas, like North America, Latin America and Africa. As we grow, we hope that we’ll be taking advantage of new services from Modulr as well,” said Edmund Parsons.

Frustration may be a key part of innovation, but it’s not something anyone wants as part of a lending process. We believe embedded payments are a large part of the solution for companies like kennek, providing seamless experiences for their customers and enabling lenders to focus on what they do best.

Find out how embedded payments could help your business by downloading our new whitepaper: Embedded Payments: From pain points to strategic enablers.