Multi-currency lending, with Jorge Juttner and Maggie Gemmill

I've got a drawer in my bedside table that is filled with an assortment of foreign notes and coins: euros and dollars and Rands that I need relatively often but that I'll nevertheless forget to take when I travel next; some Indian rupees that have long since been decommissioned; some Hong Kong dollars because how can it have taken me four years to find an excuse to get back; and what I think are Cambodian riel. It's chaotic, but even more organised people than me have to work extremely hard to keep international trade relatively efficient, with multiple accounts at different banking institutes to Rands into American dollars so those can be turned into Hong Kong dollars.

Or at least they did, Currencycloud makes this easy to do, enabling efficient cross-border lending at cross-border lending operations at scale. One example doing it really well, is the Spanish startup Ritmo.

Ritmo is at home online at https://www.getritmo.com/ and on LinkedIn at https://www.linkedin.com/company/ritmo-capital/

And as he mentions on the show, you can either email Jorge directly, or find him at https://www.linkedin.com/in/jorge-juttner-cfa-55a3a068/

Currencycloud can be found at https://www.currencycloud.com/ and on LinkedIn at https://www.linkedin.com/company/the-currency-cloud/

And if you'd like to learn more about what Currencycloud can do for your international business, Maggie can be found at https://www.linkedin.com/in/maggie-gemmill-779697119/

LinkedIn is also where you'll find me, and when you do, send me a connection request: https://www.linkedin.com/in/brendanlegrange

As mentioned more than once in this episode, my action-adventure novels are on Amazon, some versions even for free, and my work with ConfirmU and our gamified psychometric scores is at https://confirmu.com/ and on episode 24 of this very show https://www.howtolendmoneytostrangers.show/episodes/episode-24

If you have any feedback or questions, or if you would like to participate in the show, please feel free to reach out to me via the contact page on this site.

Keep well, Brendan

The full written transcript, with timestamps, is below:

Jorge Juttner 0:00

Put your financing management on autopilot mode through the platform, and we will take care of the rest - that's pretty much what we do.

So we've got our own internal complexities in our operations, and through Currencycloud we've automated those operations - I think we've reduced our cost of operation by, no exaggeration, about 98% - and at some point, we said, well, if we are taking advantage of the service, why don't we pass it on to the benefit of our clients, right?

If the needs are multi currency or cross border, our lending solution needs to be cross border, too. Obviously.

When you work at a bank, things work, right, and you execute. When you work at startups is not that like things don't work, it's that they simply don't exist, first you need to develop them and then you need to make it work.

Brendan Le Grange 0:53

I was living in Hong Kong when I got my first royalty cheque for Drachen, my pulpy action adventure novel, which is still available as a free download on Amazon and for a small fee in other formats

That cheque was written in US dollars, about 120 of them. We're not talking Stephen King numbers, I'm afraid. Now the Hong Kong dollar is pegged to the US dollar at about seven and a half to one, so that 120 USD should have netted me about 900 HKD. And yet, by the time the various commissions and fees and exchange rate differentials had been taken out of that transaction, I don't think I saw 700

It wasn't an issue for me, because writing Drachen - again, available as a free download on Amazon - was a hobby, published for the experience of doing so rather than any expectation of income. But that's no way to run a business. Welcome to How to Lend Money to Strangers with Brendan le Grange.

Jorge Juttner, Head of Business Development at Ritmo, welcome to the show.

Jorge Juttner 2:10

Thank you very much, Brendan, and good morning.

Brendan Le Grange 2:12

Jorge, you've got a strong background in investment banking, both in terms of your education and your early career before you pivoted to join a months old startup. So let's follow that same path here in the introduction.

Jorge Juttner 2:27

I think I was as lost as anyone at the age of 15 to 20, but I was lucky enough to have very good teachers in high school in economics. And I always had a genuine interest in all money related matters, so I went on to study economics.

And then throughout the university, it came clear that I could do three things: either teach, go into policymaking as an economist, or into banking. And back then I had a need to pay bills, so I decided to go into banking, it was sort of a natural step after my bachelor and after my CFA.

Brendan Le Grange 3:03

Well, you've even mentioned there, you know, a natural step, but you had this very strong corporate resume in your pocket but instead of going off to join one of the other big international brands that no doubt would have snapped you up, you joined Ritmo when it was only two or three months old at the time.

So that leads me to two overlapping questions: (1) who is Ritmo, very quickly, but then also, you joined in those very earliest days of the business, really of the idea, I suppose, so (2) what excited you enough to say, I'm going to take this leap of faith?

Jorge Juttner 3:36

I promised my boss that I wouldn't join another bank. I worked for JPMorgan, which I still consider to be the best bank in the world, and I was quite happy there so I wouldn't I wouldn't join anyone else anyway, but one of the senior bankers I used to work with was a founder at Ritmo, he left the bank to launch the business.

And I felt, why not give it a chance to actually be at the forefront of changing finance, right? I mean, you're single, you don't have a family, you don't have a mortgage, and you've got a chance to contribute to the development of finance from the core. So why not do it, right?

And so I decided to leave.

And what what does Ritmo really do. So it was born as a classic revenue based financing platform, as was the case with many other players around the time that we were born just given that rates were ultra low. We have since then pivoted to an alternative lending platform for SMEs. So that includes online and offline retailers, but also all the type of office businesses, and it's an alternative lending platform: we provide credit in a more flexible way than traditional finance providers do, and we try to do so with that technological approach, with a digital process

Brendan Le Grange 4:51

When you made that move, what did it feel like when you were on the ground and in the startup, maybe a few months in, how was the experience of being in those early stages of the business versus your days at JP Morgan?

Jorge Juttner 5:05

I mean, it's exciting, exciting to be to be on the ground, developing things from scratch, you develop creativity, you're constantly facing challenges that you are not prepared for, and that nobody in your organisation is prepared for or has thought of before, right. So that's fun, I guess, if you like those challenges and overcome the friction, and then it really comes down to your personality, right?

It's less secure, but at the same time, you feel a lot more ownership. When you achieve things, you've got a much stronger sense of pride and success than when doing so in a bank where you're actually achieving success for someone else. Quite different. Both interesting, but quite different.

Brendan Le Grange 5:46

And obviously, that doesn't always work out, but with Ritmo it seems to be working out really well: in the two years since you've joined, it's generated significant growth, awards and plaudits.

And I've seen in some of these articles, Ritmo described as the financial ally of digital companies in phases of growth, financial, and it doesn't always mean lending but obviously, lending is a big part of that - so you gave us a little taster, but let's return to that, where does lending fit into the current version of the Ritmo business? And who and how are you doing that lending work?

Jorge Juttner 6:24

When we speak about success, we change our focus about a year and a half ago, towards the platform concept.

And that was a big, big shift, right? Because all alternative lending platforms were profitable, when rates were at zero, they started to go up, most of them are going past. The reason I think that we are noticed. And obviously we didn't do this, anticipating that this was going to happen. But rather, it was just our strategic focus at the time, we decided to cover the full spectrum of working capital of our clients, right?

So we started as, hey, we get cheap money, we lend it digitally to clients. But then as we interacted with those clients, and we recognise that they had a broad range of needs, we decided to cover the whole spectrum. And that includes payment, it could include reconciliation, it includes connection with the supplier, it includes a lot of other things, right?

So we moved from, hey, how can I give you money, to how can I simplify your operations through money, right? And how can I make your financial operation simpler, smoother and more effective and efficient through money.

So lending is obviously at our core, we've got a broad range of financing solutions, starting from invoice financing, growth, capital financing, instant payout, or merchant cash advance. And the whole idea is saying, Hey, let put your financing management on autopilot mode through the platform, and with a strong technological focus or platform based focus rather than email exchange and sending invoices and this and that, and we will take care of the rest. That's pretty much what we do.

So we started with ecommerce businesses, just as there was a boom around ecommerce following COVID. But then ecommerce businesses are retailers, if they've got an working capital constraint or issue, there is high chances that other retailers have a similar problem, right with a with a similar capital structure. And that's when we open up the market for a broader range of potential clients.

Brendan Le Grange 8:28

I may be mischaracterizing this a bit, but to me, it's got a lot of the good side of the embedded finance wave that we've been having as well. But we embedded finance tends to go from somebody who provided a service saying, well, I can embed some financing within that.

People just want these problems solved for them and you're kind of creating a same sort of experience as embedded finance, but starting from the finance side, and then embedding out the the services expanding out the services.

Jorge Juttner 8:57

In fact, we use embedded finance partners for different parts of our value proposition. But we are also embedded ourselves in platforms that offer our services, embedded finance, right. So our focus is not so much on embed, or not embed on who embeds work. It's about how can you combine existing technologies into a single platform that the end of the day looks to simplify operations for the end client, right?

Brendan Le Grange 9:25

We've always said in the lending world, we love data, and sure it's got data, but the data you're working with is a very different type of data now and so it takes a different type of mindset. You're not saying have you paid your last X number of months of invoices, and doing a traditional credit check, you need to understand these businesses you need to understand what the retailer is doing.

So talk to me a little bit about that, if you don't mind. What do you look at when you make a decision to advance financing in this world? How is it different from a world of FICO scores or Dunn & Bradstreet data on on a corporate?

Jorge Juttner 10:02

Yeah, that's spot on, right.

I mean, the the key is what data you look at how you process it, how fast you process it, and how you come up with underwriting based on that data. Okay. And that's sort of the approach we have the typical sign that joins our platform will register and give basic data on their businesses, and then connect as many accounts as possible. When I say accounts, I'm referring to open banking PSPs, to your marketplaces, if you've got to your sales accounts, and in minutes, we build our own p&l and balance sheet from the data that we extract.

Often clients, they only reconcile balance sheets by the end of the year, or maybe quarterly and so on, we have real time balance sheets of our clients, and that is processed, period, obviously, with credit reports from third parties, payment delays, information from suppliers, etc, etc, to come up and say, okay, this is your working capital cycle. This is your reliability. This is how much we can let and for what time horizon? And to the extent possible, that is all done through API's from our different information providers, so that we can be as agile as possible in providing an answer.

Brendan Le Grange 11:12

Yeah. And what excites me so much about this space is when I think back to when I started my SME lending was seen as the dull side of the industry, because there was so little data and the data you had was so old, and it was very much more about it accounting principles, then, you know, data science, whereas all of a sudden, these API's have just opened up this view into companies that is so big and so fast, that it really is where all the excitement is happening now with data that's far beyond now what's available in the consumer world. So with open banking, we can start doing this with consumers, you know, seeing consumers incomings and outgoings, but yeah, definitely an interesting space for lenders to be exploring.

Jorge Juttner 11:56

Yeah, it also allows us to extract information on their behaviour, and we got information on their invoices, and we can reconcile the time it goes between the invoices raised until the invoice is paid. So all those sort of things are also taking into account when we underwrite clients.

Now the next step for us, and that's what we're working on now is, how can you connect the second side of the equation, which is your supplier, so your commercial partners, right, because at the end of the day, we've got so much information on the client, sometimes more than they even know about themselves that we can leverage that to make the client be more reliable at the eyes of the supplier and connect both sides of the transaction and cover the whole value chain of the same.

Obviously, it makes a business for ourselves, but it also provides a lot of value to both the client and the supplier.

Brendan Le Grange 12:48

Ritmo is a Madrid based FinTech, but your clients aren't restricted to Spain by any means, so to what extent does cross border lending impact your strategy and impact the business as a whole?

Jorge Juttner 13:01

In our case, there's two aspects to that, right. The first is the International needs of our clients. Our client can be a retailer based in France, or in Mexico, that has suppliers in the Southeast Asia, or even within Europe, or wherever. And that then goes and sells merchandise in Europe, in the US, Canada, Mexico, UK, wherever. But they need to report everything at the end of the day in their local currency to the authorities and so that they can pay taxes in their local currency, right?

So you can see a single client can easily be exposed to I don't know, four or five different currencies at the same time. So that's one aspect of it. If the needs are multi currency, or cross border, our lending solution needs to be cross border, obviously, because we are trying to solve that pain.

But then internally for ourselves, we are based in Spain, we've got our SPV in Luxembourg, we've got lending partners in the US in the UK and Europe. And we've got clients in LATAM, in the UK and in Europe, right? So our own internal operation requires a lot of cross border transactions for ourselves.

Brendan Le Grange 14:08

And it's a situation that I would say, even 10 years ago, would have required a huge international bank, to try and envisage a small startup business taking on this sort of problem would have been impossible. And one of the ways it's certainly been helped is by the likes of currency cloud, because it's not just you and I on the show today, we also have our friends from currency cloud, who will speak to in a minute, but before we do, perhaps you can sort of set us up a bit by talking me through what currency cloud does for you. In the space.

Jorge Juttner 14:40

Simply, Currencycloud has allowed us to think of how can 10x or 20x look like, rather than 10% growth, right?

It moves from how can you really scale your financing operations through infrastructure and technology, which we then have and we could not develop ourselves?

We've got our own internal complexities in our operations. And through Currencycloud, we've automated those operations. And at some point, you said, well, if we are taking advantage of this service, why don't we pass it on to the benefit of our clients, right. And that's when they come in: clients upload invoices in our platform, or they are the platform received invoices directly from the supplier, and once the client signs their debt acceptance, the Currencycloud infrastructure allows us to cover the full cycle of executing that lending contract, completing the payments, and then initiating and completing the repayment of the loan without any human interaction.

So that means I think we've reduced our cost of operation by, no exaggeration, about 98%.

Just because we were doing about 40 or 50 operations per year, two years ago, we are doing over 3,000 per month, financing individual financing operations per month now, so you can imagine, and our operations team is smaller now than it was back then.

And it's through the API and the payments infrastructure that Currencycloud offers. And then on the other side, our clients have needs by selling in different currencies and in different countries. And the collection of those sales in local currencies is a huge challenge for them as well, which we can solve to currency cloud as they've got local collection capabilities in different currencies.

And the fact that those local collection capabilities can be embedded on our platform, the client has a smooth experience by signing up on our platform, they see their accounts, they can connect those accounts to their payout platforms, and collect the sales in local currency directly on on their own accounts so internal operations, accounts payable, automation, and then account receivables automation as well.

Brendan Le Grange 16:45

Yeah, and I'm not gonna mention my my bank's name, but I can't even receive US dollar payments into my British account yet, which is a wonderful way to welcome you to the show, Maggie Gemmill - you work with Ritmo, but also all the other lendtec and paytech clients that Currencycloud.

And when we first met, I thought I knew what Currencycloud did but as I've learned more, I've seen I was missing a big piece of the picture: so if you don't mind, would you help bring me up to date with the full scope of what currency cloud does, and where lending fits in that.

Maggie Gemmill 17:16

Thanks, Brendan, thanks so much for having me on the show, especially alongside a current client of ours.

So in terms of what Currencycloud does, we're a platform for embedded cross border money movement.

What that means in technical terms, I suppose is that are a suite of seven to seven modular API's that allow banks fintechs, and obviously lenders to move money around the world. At the moment, Currencycloud has over 500 customers. And those range from global tier one banks to seed level startups. And we're really proud of the diverse nature of our customer base.

And what the whole team is really focused on is how we can ensure that we've got the correct products and the correct people to enable our customers to be as successful as possible.

So I work in the lending team, and I'm responsible for new business sales and Ritmo, obviously, is one of our clients. What we can really do for lenders is that we can give them access to our global banking connections via a single integration.

Brendan Le Grange 18:09

What sort of lenders are we talking about here, is there sort of a niche?

Maggie Gemmill 18:14

Actually pretty broad. We've obviously got invoice finance lenders, buy now pay later lenders, working capital lenders, essentially currency cloud services, anyone that's got a cross border need. So that could be a lender that has a cross border transaction within a loan cycle.

Or if there was a lender who was based in multiple jurisdictions and just wanted to manage all of their multi currency needs via a single integration, you could have an invoice finance lender that needs to pay out to an SME business in the UK, but then receive a repayment back from a debtor in euros. So what currency cloud can do is facilitate the local payout in GBP, to their SME customer, and then receive a local collection back in in euros from, let's say, France in this example, and then manage the eventual currency conversion back from Euros to GBP once everything is reconciled on that lenders books.

Brendan Le Grange 19:09

Yeah, and I think initially, that was the like the the obvious part I had not thought of tend to perhaps get a bit fixated with the front end of lending. And while we do have increasingly a number of companies around the world doing cross border lending, there's exponentially many more who lend just within their market. They do have supplies and bank accounts they need to take money in and out of when it comes to that.

What is it about Currencycloud, that is bringing these lenders to you?

Maggie Gemmill 19:37

100% agree with your full statement there.

And I think just on the point you were making previously around SMEs, being more globalised, that's absolutely why currency cloud is is winning in this space. What's really important for a lender is that they can pay out in collecting all of the currencies that their customers would need to operate in, so that they're giving their customers the best POS For service, but also so that there's payments and repayments can happen quickly.

You know, lenders can sometimes take a long time to reconcile loan repayments. In terms of what attracts lenders to guarantee cloud, I think it's our ability to give them access to new markets, whether that's lending in multiple currencies, as we've already discussed, or a lender that maybe wants to move to a new jurisdiction. And instead of actually setting up that banking infrastructure themselves, they can just use Currencycloud to manage banking connections around the world on their behalf.

We've got a brilliant banking team here at Currencycloud, who is managing all of those very, very complicated relationships. And then the lenders can obviously focus on on what they do best, which is providing a wonderful service to their customers.

Brendan Le Grange 20:47

Yeah, and I think there's within that also some risk benefits that when we think about collecting money from from people that owe it to us, we want it to be as easy as possible for them to send us some money. And you could see how they pay the locals but not bother with all the hoops you used to have to jump through to get money abroad. Whereas if you can create a simple process that links it up, you get rid of those those hurdles, you make it just as easy to pay you as a foreigner, as it would be to pay you as a local, that's going to ease up your collections processes.

Maggie Gemmill 21:18

I completely agree.

Brendan Le Grange 21:21

Maggie, you've got a rare bird's eye view of this alternative lending space as so it would be remiss of me if I didn't take this opportunity just to pick your brain a bit. Are there any particular trends you're seeing that those of us in the broader industry should maybe be paying closer attention to?

Maggie Gemmill 21:38

Of course, so the biggest trend I've seen in the 18 months that I've been working at currency cloud is just around traditional lenders essentially diversifying their product offering. So whether that's a prepaid card, or a neobank proposition, or perhaps an AR AP platform that wants to embed, lending into their services as well, rather than a startup going to market with one product, they're actually going to market with multiple products to ensure that their customers have as much choice as possible.

Obviously, we've seen a trend of cross border increasing as well. We do live in a more globalised world, SMEs are doing business abroad more and more frequently. And they need to ensure that their lending provider can pay out and collecting as many currencies as possible.

Another thing I'm seeing quite a bit as well is emerging markets. And I think this is something that is so interesting to watch. So, for example, Egypt and India are booming in terms of B2B lending. So I'm really, really looking forward to see what happens in those markets and the types of innovation that companies that are setting up there are looking to do.

And then the third thing I'm seeing is just the embedded lending market and how it's expanded and how it's continuing to expand over the next five to 10 years, I think actually read an article recently from Oracle about how the embedded lending market is eventually going to be worth over $7 trillion in the next 10 years. So I think we're just going to see more and more startups doing really well, because there's just still so much opportunity in this market, which I think is untapped, and really exciting to see ritmo and everything that they're doing. And it's great to be kind of on the journey with them.

Brendan Le Grange 23:19

It's an area that had a vacuum of innovation, it feels like, for so long and all of a sudden and all at once, we've had several technologies arrive in the field that give you this bird's eye view. But it means the incumbent banks don't necessarily have people employed with the skills to interpret that data. And it means startups can emerge and can take the state run without needing these massive operations we would have had in the past. And yeah, I'm just expecting a lot of innovation here as well.

But as we said, maybe it's not just for those people on the cutting edge. Almost all lenders have some exposure to cross border transaction. So if anyone listening would like to start their conversation, see what currency cloud can do for them? What's a good way for them to get a hold of you? Or to learn more about Currencycloud's products and services?

Maggie Gemmill 24:09

Yes, absolutely. So our website is www.currencycloud.com

Anyone interested can also just reach out to me directly, Maggie Gemmill and I can be found via LinkedIn. So yeah, we just love it, if any lenders looking to integrate a cross border payment solution into their platform should reach out to us and the team over here can show you exactly what our suite of 77 modular API's can do.

Brendan Le Grange 24:33

Great. And Jorge, I'm going to jump back to you to wrap up. You talked about Ritmo as both an invader and someone being embedded. So there are lots of relationships potentially that people could be interested in discussing with you. If people wanted to learn more about ritvo and its story or people wanted to speak to you about getting involved, what's a good place for them to go.

Jorge Juttner 24:54

If it's a potential client looking for financing, they can register on our website and within hours is wrapped in contact by someone in the team.

If they want to discuss potential business collaborations or partnerships, I'm happy to help. My email is Jorge at getritmo.com, but I'm also reached reachable through LinkedIn, I'm happy to help and distribute the the request or the ask or the or the question to whomever is more relevant.

Brendan Le Grange 25:25

Excellent. And I'll put links to all of those for both of you in the show notes as well, if anyone wants to get the easy way to do that.

And one last thing, then as we look forward, you've seen and helped to create a tremendous amount of change and growth over the last two years with ritmo. What is keeping your attention as you look ahead to? Well, I guess we're getting late in the year. So as we look towards next year,

Jorge Juttner 25:50

I think it's from our perspective to add as much value to clients as possible by covering as many parts of their financing or financial operations chain as possible. Right, I think the cheap money is not on the table anymore. So playing on interest rate margin is I don't think there's a lot of success on that front.

Now being able to capture the value from the whole financial operation. So payment paying, receiving, converting, lending repaying, if you're able to cover that full spectrum, everything money related on a single platform, then you're in business. And that's what we're going to try to do. Well, we're going to continue to put focus.

Brendan Le Grange 26:33

Great ways to close. I think there are a lot of places within these businesses, we can get real value and you're showing that so yeah, to both of you to Jorge to Maggie, thank you so much for joining me really happy to have heard from

Maggie Gemmill 26:45

Thank you so much for having me on. It was it was great to explain a little bit more about what we do and to hear a bit more about Ritmo story as well.

Jorge Juttner 26:53

Thank you. And thank you.

Brendan Le Grange 26:55

And thank you all for listening.

Please do look for and follow the show on your favourite podcast platform and share the updates widely on LinkedIn where lending nerds are found in our largest concentration. Plus, send me a connection request while you're there.

This show is written and recorded by myself Brendan le Grange in Brighton, England and edited by Fina Charleson of FC Productions.

Show music is by Iam_wake, and you can find show notes and written transcripts at www.HowtoLendMoneytoStrangers.show and I'll see you again next Thursday.