A survey by Monto shows that half of SMEs in Sweden are now securing their financing from alternative or fintech lenders. Moreover, four in ten businesses are planning to change their financing partner in the near future.


The market for SME financing is evolving fast. The digitisation of finance and rise of challenger lenders – coupled with new, pandemic-fuelled customer behaviours – have drastically redrawn the financing landscape in the past years.

But few stats are available to quantify this trend. To get a better sense of where the market, we decided to go straight to the source. We asked 667 small- and medium sized businesses based in Sweden a series of questions about their behaviours and preferences with regards to financing.

Firstly, we wanted to understand the market’s general makeup:

* 50 percent of SMEs have legacy bank as a primary source of financing

* 33 percent are customers at alternative lenders, either traditional or modern

* 18 percent get their financing from fintech challengers

* 9 percent use public sources of financing

Analysis: A more diverse financing landscape


While we don’t have a historical baseline to compare with, the results indicate that banks’ market share in Sweden is being challenged by alternative and fintech lenders. The latter categories are also expanding financing to new corners of the market.

Historically, SME businesses have had a tricky relationship with banks. Whether it’s convincing a banker of growing revenues (beyond past years’ annual reports), or getting access to funds fast enough to seize investment opportunities, securing capital from a bank has for most businesses been either slow, stressful or simply impossible.

Granted, banks remain the biggest single source of capital for SMEs. They are also investing heavily to enhance their offering towards that segment. And many businesses are indeed happy with their bank relationships. Once approved as customers, they value the predictable, relatively affordable financing services that banks can offer.

“Alternative and fintech lenders targeting SME businesses are now generating billions (SEK) in annual revenue. The growth is largely driven by players that provide easier ways for SMEs to access working capital.”


There’s just two problems. One, SMEs account for 99,6% of all businesses. Two, serving smaller businesses at scale requires focus and modern capabilities. Banks are too weighed down by legacy processes to serve existing demand today, or to drive the innovation that’s required to close the funding gap tomorrow.

It’s quite logical that entrepreneurs are turning to alternative players to secure their growth capital. Michael Hansen, Monto’s co-founder, comments:

“Alternative and fintech lenders targeting SME businesses are now generating billions of SEK in annual revenue. This growth is largely driven by players that provide easy, safe ways for SMEs to access working capital. Many are specialised in invoice financing or excel at efficient application handling. We’re still in the early days of an exciting diversification of the financing market, and that will ultimately benefit a large number of businesses.”

Key drivers behind a more diverse financing market

* The number of financing providers has grown in recent years, in particular digitally–minded challengers targeting SMEs with tailored offerings.

* Accounting providers, such as Fortnox (Monto’s parent company) and Visma, are doubling down on financing offerings aimed at their installed customer base through an embedded finance model.

* Most businesses today expect services that are as seamless as consumer services. The pandemic’s “time-machine effect” on digitisation has accelerated the sophistication and availability of online lending services.

* The SME segment is driving a growing share of GDP, resulting in bigger demand – and a recognition among lenders that SMEs are a huge business opportunity.

* The growth of lending brokers has spurred increased transparency and competition in the market.

4 in 10 businesses are planning to change their lender 


Another key finding is that businesses in Sweden are proactive about choosing the right partner for their needs. A substantial 38 percent are planning to change their primary financing provider within the next two years.

18 percent say they are on the fence (“not sure”) about a change. All things considered, it’s clear that legacy banks and alternative players are going to be competing fiercely to capture this business.

“Traditional banks are facing the challenge of becoming more efficient and digitised, which would allow them to compete on an equal footing with nimble and customer experience-focused challengers. Challengers and alternative lenders, meanwhile, have more work to do in building trust and brand recognition with SME businesses, as well as getting access to cost-efficient funding,” says Michael Hansen.

Financing services used by SMEs in Sweden:


Thank you for taking the time to read about our survey results. More fresh insights will be dropping soon!

If you have any questions or want to get started with Monto’s API for financial data, please shoot us an email at hello@monto.ai

* The survey was conducted in November 2022 together with Netigate, a leading panel research provider, and Capcito, our sibling company. The respondents representing SMEs were predominantly business owners, CEOs and CFOs.

* The survey respondents were able to choose more than one primary financing partner, explaining why the tally amounts to over 100 percent. Half of the 1,337 initial respondents hadn’t used (or simply hadn’t been able to access) any external financing in the past two years, and were excluded from the survey.

We asked 700 SMEs about their financing habits (and banks have plenty to worry about)


We asked Swedish SMEs about financing

Stockholm-based Monto is determined to reshape the Nordic SME lending landscape. Through its credit intelligence platform, the company enables both banks and fintech lenders to gain a real-time understanding of their borrowers.

First published in: Nordic Fintech Magazine

For small to medium enterprises (SMEs), access to adequate funding is key to maintaining operations and investing in growth. However, lack of access to financing continues to be a major hurdle for many businesses, as lenders are reluctant to give loans to SMEs that may not be able to repay them. This dynamic has resulted in a €1,000 billion SME funding gap in Europe.

According to Monto’s CEO Leonard Schreij, the funding gap is largely driven by an information chasm. Lenders have historically lacked access to the data that’s required to make accurate credit decisions and run efficient underwriting processes. As a result, the financial incentives among business lenders have been tilted towards serving large corporations.

“The industry has lacked quality data on how SME companies are performing. When you go to the bank to get funding for your business, the credit agent requests records of your past performance – information that’s often up to 18 months old. That’s actually quite insane. It’s little wonder, then, that banks have focused on serving bigger corporations with plenty of public financial information available, leaving SMEs at a disadvantage,” says Schreij.

This is where Monto comes in. The company’s credit intelligence platform provides direct, consented access to financial data from SME companies’ accounting systems.

“Our mission is to provide lenders with the data and tools they need to understand and delight SME businesses. We use a proprietary scoring model to evaluate SME companies based on a host of factors, taking into account not just their last annual report but also how they are performing now, ” says Leonard Schreij.

“Our edge is that we don’t just deliver data — we also keenly understand the SME credit scoring and underwriting process from both sides.”



Covid-19 has had far-reaching consequences in the SME sector. For Monto, the pandemic underscored the importance of fresh financial data in credit decisions, especially for SMEs who were heavily affected. Because they play such a vital role in society, Monto believes that facilitating access to SME financing is one of the best ways to help society as a whole.

“While big businesses receive the lion’s share of attention, small and medium enterprises are the true job creators today. According to Swedish statistics, 80 percent of new jobs since the 1990s have been generated by SMEs,” remarks Schreij. “We are committed to empowering lenders to extend the credit entrepreneurs need to grow and create jobs – starting in the Nordics.”

Since it spun out of its sibling company, direct lender Capcito, in 2021, Monto has been working to help businesses and lenders simplify access to financing. The company’s technology is giving lenders the insights they need to make informed decisions through fresh financial information.

“Our platform uses AI-based algorithms to assess the performance of companies in real time. We have been validating this solution in Sweden through Capcito for the past six years, and are now ready to scale the underlying technology to lenders everywhere. Partnering with Monto, lenders will no longer be blindfolded when it comes to understanding how their portfolio companies are faring, a competitive advantage especially during times of volatility,” adds Schreij.

Monto’s ultimate goal is to enable the SME sector to prosper by facilitating fairer credit decisions. The key is removing information asymmetry from the underwriting process.  
“For us, fair financing means being assessed on up-to-date performance, rather than being judged based on data that doesn’t make justice to the hard work that entrepreneurs are putting in. Fresh financial information empowers lenders to onboard more business, while giving borrowers higher chances of getting the capital they need – when they need it,” remarks Schreij.

The demand for real-time borrower data is evident among Monto’s partners. One of Sweden’s largest banks, SEB, partnered with Monto to leverage this data in order to improve their lending decisions.

“Our edge is that we don’t just deliver data – we also understand the credit scoring and underwriting process from both sides, because we’ve done it ourselves. Capcito has leveraged Monto’s credit intelligence technology to lend SEK 2.5 billion to date. This gives us a unique perspective and in-depth knowledge of what it takes to successfully serve businesses. And it puts us in a strong position to help our clients achieve their goals,” says Schreij.

Tom Turula, PR and Marketing Manager of Monto, highlights that the pandemic helped accelerate expectations for financial services that are instant, online and embedded.  
“As embedded financing becomes a bigger trend, businesses are looking to access financing in the places where they spend most of their time. For example, accounting systems or e-com platforms. Open banking and the increased sophistication of financial services towards small businesses are other important trends that lenders should stay on top of,” adds Turula.

Monto (and Capcito) was recently acquired by Fortnox, the leading accounting software provider in Sweden. Besides serving the financial ecosystem through its API and credit intelligence dashboard, Monto is helping Fortnox become a one-stop shop for business services.

Both companies share the vision of delivering easy-to-use business services to small businesses – and Monto’s technology will power many of the new financing services Fortnox is launching. This means that Fortnox’s 450,000+ business customers will soon be able to get invoice-based financing with a few clicks, based on real-time accounting data.

“Fortnox is a publicly-traded company with an ambitious strategic objective of expanding from accounting services into integrated financing. We’re excited to have an owner with such a massive scale, allowing us to build and grow embedded financing services. With their vast access to data, we can make financing as easy and straightforward as possible for our customers, so they won’t need to go anywhere else,” says Turula.

“As we look to the future, we see companies from all corners of the industry striving to provide smarter and faster financing services. Our focus will be on helping lenders both big and small achieve sustainable business outcomes through improved efficiency, increased margins, and reduced portfolio risk. By doing so, we can create a much better financing landscape for everyone involved,” concludes Schreij.

Author:  
Marria Qibtia Sikandar Nagra  
\(Nordic Fintech Magazine, freelancer)

How Monto helps SME lenders make smarter credit decisions


We’re delighted to introduce Monto’s new Product Manager, Salim Gabro. His experience in understanding customer needs is a major asset as we launch Connect and Assess to the market. Here’s a few quickfire questions with our superstar. 🚀


Salim joined our team in early April and has hit the ground running. His very first week he got to celebrate our move to new offices at Kungsgatan, along with four other new joiners.

“I’ve only been here for a month, but honestly, it feels like much more than that,” Salim says.

”The people at Monto have been very welcoming and made me feel part of the team early on. You can feel the scale up atmosphere here and the strong focus on delivery. It’s amazing how everyone has so much to do but still takes time to welcome and introduce you to stuff. That says a lot about the culture here.”

Salim has taken on a wide range of responsibilities, from customer dialogues and user journey mapping to implementing a seamless API architecture. All of this feeds into the companywide focus of launching Connect and Assess for our fintech and bank customers – enabling them to make better decisions through easy access to high-quality financial data.

I joined Monto because the company is solving some really fundamental problems in the financing industry. 

Here’s a few quick questions and answers with our new joiner:

Everybody at Monto is both talented and friendly. It’s rare to find a place where literally everyone is good at their job! Here they definitely are. In my opinion, this is a key factor behind Monto’s success so far!

I joined Monto because the company is solving some really fundamental problems in the financing industry. The reason why many promising small and medium-sized companies struggle is not due to bad business plan or poor execution – it's lack of access to capital. By empowering financing companies to better understand and serve SME businesses, Monto can be part of transforming how these businesses secure their cash flow needs.

I’m really inspired by being part of this journey from the early days. If we can equip financial providers with the best possible credit intelligence tools, the financing industry can function  much better for everyone. And more SME businesses will be able to thrive as a result.

Tell us something about your professional background?

I have a background within consulting at a big firm for larger banks and insurance companies in various product owner and business analyst roles. I also have experience working with business development in the early startup phase, most recently at Zimply, an AI assistant company.

How are you going to apply your skills at Monto?

In my previous roles, I have done plenty of user research and conducted user workshops. I have experience from digging beneath the surface and figuring out what customers really need and expect from a service. I think this mindset will come in handy as we develop Monto’s credit intelligence offering. But I believe what I will bring foremost is to keep the product customer-focused, and meet users’ requirements through a service-minded attitude.

I have two small kids so… not a lot of spare time 😜 When I do get some alone time I like to watch sports, catch up with the old gang, play football or hang out with my wife!

Meet Salim Gabro, Monto’s new Product Manager


Meet Salim Gabro employee story monto

2022 is a year of growth and development for Monto. Our CEO Leonard Schreij talks about how we got here, and what's ahead.


Since Monto’s launch in 2021, our team has been picking up the pace. We’ve signed a handful of customers and welcomed amazing new talent. To make room for our growing team, we just moved into a brand new office space in central Stockholm.

We were also recently acquired by Fortnox – Sweden’s leading accounting software provider – along with our sibling company Capcito. Besides being a humbling milestone, the acquisition brings new resources and exciting co-operation with an owner that cares about SMEs’ success as much as we do.

In conjunction with the deal, Michael Hansen, co-founder of Monto and Capcito, has stepped in as EVP at Fortnox. Michael is in charge of everything fintech, and a big part of that is to make sure that Monto and Capcito thrive as key parts of Fortnox.

The new CEO of Monto is Leonard Schreij. Back in 2016, Leonard joined Michael Hansen as one Capcito’s founding members. Since Monto and Capcito are tightly interlinked, Leonard was the natural choice for taking Monto to the next level. Here’s his take on our past, present and future.

The blueprint for Monto’s SaaS service comes in part from Capcito. Could you walk us through how Capcito got started?


Launching Capcito in 2015, our goal was to deliver the best possible working capital experience for SMEs in Sweden. The vision was — and is still today — to give “all businesses easy access to fair financing.”

As many of you will know, SME:s have been highly underserved when it comes to access to financing. Even though they account for 40-60 percent of GDP in most economies, securing a loan or a credit line has been either too slow, expensive or impossible. As a result, cash flow shortage has unfairly become a chronic problem among young, promising, or otherwise healthy businesses.

Our founders experienced this barrier first hand, through their own businesses and investments.

Historically, traditional lenders have turned away SMEs for a simple reason: assessing their creditworthiness is hard. Much harder than, say, doing it on a publicly listed company. When it comes to SMEs, traditional lenders base their decisions mostly on outdated annual reports and static credit bureau data. Combine this with manual processes, poor unit economics, and a lack of understanding for SME needs, and you end up with a €1 trillion funding gap for SMEs in Europe.

Going into 2021, we made the strategic call to break out Monto into a separate business and make sure we could deliver on our vision faster.

With Capcito, we devised a way to base our credit assessments on up-to-date information. We were the first player to integrate real-time accounting data into our credit scoring engine. With better quality data, we could make better decisions. This unlocked benefits not just in terms of serving more companies with less risk, but also laid the foundation of a leaner and smarter business; with credit agents empowered by the right information; optimised portfolio risk through real-time monitoring; and financing products that were tailored for the SME audience.

Another key enabler was responsible data sharing. This has been Capcito and Monto’s top priority from day one. We’ve made sure that businesses know that their financial data sharing ends up benefiting them – through faster, more transparent and more affordable services.

In all of this, our technology was key. We built everything from scratch, and brought on board key accounting software partners in order to access real-time data for credit decisions. We essentially embedded automated financing inside the leading accounting systems in Sweden.

We grew the Capcito team from four to 45 people in three years. Along the way we got some great investors onboard, including SEB and Schibsted – who exited when the Fortnox acquisition happened. To date, Capcito has paid out over SEK 2.5 billion and helped thousands of Swedish companies access smooth and fair financing. And we feel like we are just getting started.

In 2019 SEB told us they were interested in licensing the Capcito technology platform. That's when we got our first SaaS client.


On top of technology, our secret sauce is a dedicated team of credit experts who guide our customers to the best possible financing setup. Our culture is super strong, we are our customers’ biggest fans. This positive, customer-centered energy has translated perfectly into Monto’s culture as well.

Our idea of a financing service aimed at SMEs required us to build a full end-to-end lending management system. In 2019, SEB told us they were interested in licensing the Capcito technology platform to automate and optimise their invoice financing products, and that's when we got our first SaaS client. The idea of Monto started to take shape.

Usually, focus is the essential ingredient of any success, so we had to think deeply about the future of our SaaS opportunity. As the pandemic struck in early 2020 we decided that the primary goal was to make sure the lending business stayed healthy.

The pandemic got most lenders to truly realise the value of having real-time financial information on their borrowers.

The pandemic became a time machine in terms of accelerating digitalisation. Interestingly, this was also the time when the lending industry truly woke up to the value of having real-time financial information on their borrowers. As the world shut down, Capcito could monitor what borrower segments were being positively or negatively impacted and could take proactive measures to adjust credit and risk exposure. Other lenders were blindfolded.

Going into 2021, we made the strategic call to break out Monto into a separate business and make sure we could deliver on our vision faster – through enabling more lenders to serve businesses, with better credit intelligence tools powered by real time data sources.

What are the plans for Monto going foward? 

We have plenty of exciting initiatives in the pipeline. We are developing our products, primarily Connect and Assess, in order to give our customers the best possible ability to access borrower ERP data and make data-driven decisions – faster and better. We look forward to having the leading credit intelligence tool on the market.

We work with both banks and fintechs, and for the coming years I expect the biggest growth to come from the fintech lending segment. We are seeing huge demand for real-time financial information among our leads and customers, especially the more tech-savvy customers who have the ability to get started in a matter of days. Once we deliver the up-to-date data, they know exactly how they can put that data to work to achieve major improvements. 

How are you going to be benefiting Fortnox, your new owner? 


That’s a super exciting chapter. We both share the vision of providing seamless business services to SMEs – and by combining our resources we make a huge impact, starting in Sweden. Monto’s technology will underpin many of the new exciting financing services that Fortnox is launching. Essentially, Fortnox 430,000+ business customers will soon have unique access to invoice-based financing at the click of a button, based on fresh accounting data.

In the first few months, I’ve been impressed by how well our respective cultures and ambitions fit together. This deal also means that we have a treasure trove of data to make sure that Monto has the most efficient SME credit models on the market. Having the backing of Fortnox is equally a great launching pad for Monto’s standalone growth operations, giving us loads of credibility on the market.

You are now busy building and scaling an organisation that shoots for fast, international growth. What are your priorities as a leader?


Number one, getting people fired up on the vision. With Monto, we want to unleash the promise of real-time data for the lenders and b2b platforms of the world. Keep it simple.

Second, getting the right people in the right positions. So what I focus on is making sure I’m surrounded by pros smarter than myself, and giving them responsibilities that align with their skills and motivation. Then it’s about ensuring they feel full trust and freedom to prioritise and execute.  

Thirdly, I’m responsible for setting and communicating the strategic direction. This is what helps Monto leaders and teams prioritise on a rolling basis. In order to balance autonomous teams with company objectives I am a believer in having crystal clear goals – both on the company and team levels. Our culture of ownership and accountability is crucial to this. 

To summarise: when great people are fired up about a common vision, feel empowered to make it happen, have the resources to do it, along with processes to course-correct, I have a hunch that great things can be achieved.

What are your views on technology, in general?


I’m a technology optimist. David Deutch’s idea that nothing is impossible except for that which is prohibited by the laws of physics is something I find truly epic. All that we need to do is create good explanations. This makes the universe an even more exciting place to be a part of.

In my spare time, I enjoy being outside, away from all technology! I’ve always loved skiing, and make time every winter to hit the mountains.. I’m also keen about F18 catamaran sailing, climbing and music. Drums are my main instrument and I love playing everything from jazz to death metal – with our in-house Monto band!

Lastly, since you are a bookworm – what are your favourite books? 


* The beginning of Infinity by David Deutch 
* The Dream of Reason by Anthony Gottlieb 
* High output management by Andy Grove

Meet Monto’s CEO, Leonard Schreij: “I’m a technology optimist” 


Meet Monto CEO Leonard Schreij

Today marks the birth of Monto. With a firm vision that growth financing should be readily available to all healthy businesses, we equip banks, fintechs and other lenders focused on small & medium sized businesses (SMEs) with the technology they need to transform their lending.

The most meaningful change underway in the financial industry today, we believe, is innovation around business financing. While consumers long ago learned to love and expect seamless services — from instant money transfers to Netflix-type user experiences — the same has hardly been true for entrepreneurs and business owners.

When it comes to their most essential need, financing, the problems of access and quality remain largely unsolved. The financial industry has long struggled to understand and meet the unique needs of SME businesses — the backbone of the economy — whether it’s because of manual processes, lack of access to actionable credit data, or poor financial incentives.

But this is changing. The possibilities to offer smarter, faster and more economically viable financing are growing. Thanks to rapid technological advances on the one hand, and growing demand among businesses for smarter financial services on the other, the next five years of business financing will look nothing like the past one-hundred (and that’s a good thing).

Monto was founded to accelerate this development. Our vision is to provide easy access to fair financing for all businesses, everywhere. This vision is rooted in the conviction that growth capital — delivered to the right business, at the right time — can have major positive ripple effects in terms of job growth, GDP and innovation.

And we have built the technology to make this vision a reality.

As we launch from our base in Stockholm, our team is determined to help lenders navigate a fast-changing world. Both new and incumbent lenders face challenges (alongside huge business opportunities) trying to serve the needs of the massive SME segment that represents 99% of all companies.

In the wake of the pandemic, it’s become even more important to serve customers through digital channels, as well as to leverage data in decision making. Assessing credit risk on SME businesses, after all, is challenging enough as it is .. so how could you possibly do that by relying on pre-pandemic financial reports? (Our short answer is: you can’t.)

With an end-to-end lending platform, our goal is to empower banks, fintechs and other financing companies with flexible, data-driven lending capabilities.

The bottom line is this: in a changing world, business lenders need a new set of tools to successfully serve SME businesses.

With an end-to-end lending platform, Monto’s goal is to empower new and incumbent lenders with flexible, data-driven capabilities suited for today’s and tomorrow’s business needs — whether the borrower is a software startup seeking new investment or an industrial company looking for bridge financing to cover overdue payments.

By providing real time data connectivity to borrowers’ accounting systems and banks, we can help lenders make better credit decisions, fast-track onboarding, implement proactive portfolio monitoring, and more. Leveraging data insights and automation throughout the lending journey, lenders can take their offering to the next level.

Key features of Monto’s modular platform:

* Broad access to enriched real time borrower data from leading Nordic accounting systems and banks (with customers’ full consent)

* Customisable, easy-to-use products that cater to everything from seamless onboarding to proactive portfolio monitoring.

* Ready-packaged business lending and invoice financing/factoring solutions.

* Added dimensions of intelligence and efficiency throughout the lending journey; powered by tailored features, forward looking projections, smart and streamlined lending administration, etc.

As we continue to develop our platform, we’re thrilled to see the industry’s growing appetite for modern lending solutions. Offering digital, real time lending capabilities is fast becoming a must-have for challengers and incumbents alike.

This demand is evident among our partners. One of Sweden’s largest banks, SEB, partnered with Monto to leverage real time borrower data in order to make better credit decisions within its SME segment. Meanwhile, Profina, a traditional financing company, is well on its way to transforming its entire business with our end-to-end proposition — allowing for applications to be processed in minutes instead of days, among numerous other benefits.

We are equally seeing other industry actors — from fintech startups to financial providers entering lending from adjacent categories — keen to offer smarter financing products and services. Going forward, our focus will be to help all types of lenders achieve sustainable business outcomes, be it through improved efficiency, increased margins or reduced portfolio risk.

By bringing humility, hard work and a healthy dose of imagination to this mission, we believe we can affect positive, win-win-win type change in the business financing industry — and thus ensure that growth capital is within reach for any ambitious entrepreneur.

We’re thrilled to get going. And we warmly welcome you to join the ride.

*We’d love to hear from you - so please reach out at hello@monto.ai if you have questions or want to learn more about how our technology can help transform your lending business.*

Blog

We asked 700 SMEs about their financing habits (and banks have plenty to worry about)

How Monto helps SME lenders make smarter credit decisions

Meet Salim Gabro, Monto’s new Product Manager

Meet Monto’s CEO, Leonard Schreij: “I’m a technology optimist”

Meet Monto: Building a brighter future of business lending