Analysis Featured

Selling pickaxes to Klarna

It is often said that during the Californian Gold Rush, it were not the miners but supplier of the tools to these miners who made the most money. Instead of trying to create their own proprietary technology from scratch, startups are leaning on software firms to provide them with a ready to install flexible platform. This has led to the birth of “platform as a service” industry and Provenir is the proverbial tool supplier to the gold miners of today. Provenir, who has Klarna as a client, is a software tech product company that provides risk analytics and decisioning solutions to multiple financial segments including SME lending, consumer and P2P lending, auto lending, commercial lending, commercial real estate finance, payments providers and other disruptive lending models.

Company history

Provenir was founded in 2004 in New Jersey.  It has another office in New York & has two more offices in London and Leeds, catering to the European Market. The company is self funded and is privately owned. Jeffrey Oulton is the President and Chief Operating Officer. He has over 25 years of domestic and international experience which includes nearly 12 years in Provenir as Chief Operating Officer. Brett Norton is the Chief Technology Officer at Provenir since its inception. Paul Thomas, having 25 years of experience with reputed Fintech entities including Bloomberg, is the Managing Director and is also the Global Head of Sales & Marketing. The company has a team of 100 employees, with sixty percent of the team in tech and delivery division.

Services provided

Provenir employs first of its kind orchestrated hub, with the integration and automation of various mission critical services including Location Services, Anti-Fraud Services, Credit Bureau Data Integration, Models and Analytics. Provenir charges on an annual basis, the amount varying according to clients’ volume and complexity of implementation. Provenir has more than sixty clients located across Africa, Europe, Middle East and North America, including financial behemoths like Elavon, HSBC, Klarna, GM Financial, Nordea and Wells Fargo etc. Fintech lender Oakam became the latest addition to the clientele list of Provenir in January 2016. Annual revenues of Provenir are to the north of $ 23 Million.

Klarna is a client

Klarna is one of Provenir’s marquee clients. It is now the leading provider of invoice-based payments for online merchants, employing over 1,400 people and servicing 45 million customers in 18 European countries. Klarna provides payment after delivery, which lets buyers receive ordered goods before any payment is due, while assuming the credit and fraud risk so that sellers can be sure they will be paid. It is valued at over 2.25 Billion Dollars and is a stellar unicorn of the Fintech world. Klarna partnered with Provenir to establish a single, core platform which can automate the business operations and introduce flexibility and simplification to the business systems. Provenir software allows them to complete more than 350 transactions a second and powers Klarna algorithms to make a credit decision in less than a second. For instance, if a user goes to Overstock.com and selects goods and checks out as a guest, the user will see the tag line “powered by Klarna” at the checkout and the site will ask the user for his email address and zip code. This kicks off the data enrichment process and Provenir’s software validates the customer through the hub of various analytical tools. So the company is not creating algorithms or analytics for Klarna, but has structured a single platform for the client where all the actions are performed. This gives Klarna enormous speed and flexibility in operations.

The software maker has also created the option of API integration with SME accounting and operating software. The software uses the graphical orchestration tool to model different business wok flows; Integration and Foundation Adapters help create a prebuilt data interface solution for customers especially with respect to data from/to credit bureaus; and analytical models based on SAS,R or Excel, enable clients to run multiple models a day versus traditional banks who need months to employ iterations.

Future Prospects

Macroeconomic fundamentals across the globe are positive but the brick and mortar banks are in no position to fund this growth, especially in the SMEs and consumer finance segment, due to the damage caused to their balance sheets by the 2008 financial crisis. The need of the hour is for lending institutions to employ analytical tools that are integrated, swift and sophisticated for informed credit-rating decisions. Provenir empowers lenders by providing them with a platform software solution and by leveraging its orchestrated hub so that informed decision making is executed within minutes or seconds compared with the earlier time horizon of weeks and months. The company should also open up an office in California, to cater to the growing Silicon Valley based lenders. Pay day Lenders or “point of sales” lenders like Affirm are obvious targets for the company.  Provenir is poised to become an important support system for marketplace lenders as its systems mature with its existing clients and late entrants (like the traditional banks) do not feel the need to reinvent the wheel again.

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Author:

George Popescu
George Popescu

About the author

George Popescu

Serial entrepreneur.

George sold and exited his most successful company, Boston Technologies (BT) group, in 2014. BT was a technology, market maker, high-frequency trading and inter-broker broker-dealer in the FX Spot, precious metals and CFDs space company. George was the Founder and CEO and he boot-strapped from $0 to a $20+ million in revenue without any equity investment. BT has been #1 fastest growing company in Boston in 2011 according to the Boston Business Journal and the only company being in top 10 fastest in 2012-13 as it was #5 in 2012. BT has been on the Inc. 500/5000 list of fastest growing companies in the US for 4 years in a row ( #143, #373, #897 and #1270). After the company sale in July 2014 until February 2015 George was Head-of-Strategy for Currency Mountain ( www.currencymountain.com ), a USD 100 million+ holding company focused on retail and medium institutional currencies, precious metals, stocks, fixed income and commodities businesses.

• Over the last 10 years, George founded 10 companies in online lending, craft beer brewery, exotic sports car rental space, hedge funds, peer-reviewed scientific journal ( Journal of Cellular and Molecular medicine…) and more. George advised 30+ early stage start-ups in different fields. George was also a mentor at MIT’s Venture Mentoring Services and Techstar Fintech in NY.

• Previously George obtained 3 Master's Degrees: a Master's of Science from MIT working on 3D printing, a Master’s in Electrical Engineering and Computer Science from Supelec, France and a Master's in Nanosciences from Paris XI University. Previously he worked as a visiting scientist at MIT in Bio-engineering for 2 years. George had 3 undergrad majors: Maths, Physics and Chemistry. His scientific career led to about 10 publications and patents.

• On the business side, Boston Business Journal has named me in the top 40 under 40 in 2012 in recognition of his business achievements.

• George is originally from Romania and grew up in Paris, France.

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