The Value of a Personal Touch

By Jeff Brannon

In the early 2000s, Americans became familiar with the concepts of outsourcing and offshoring (although both had been around for roughly two decades at that point). As overseas call centers gradually became the norm, we grew more accustomed to speaking with customer service representatives in other countries, many of whom used false names to create the illusion that they were working out of a local call center in the U.S.

Today, that is still the norm and we accept it. In fact, our tolerance for a lack of personal touch now extends to U.S.-based firms, too. Thanks to the explosion of the financial technology industry (“fin-tech”), many Americans now have no problem applying for a loan with an online lender who never makes personal contact with them. With fin-tech, there are no phone calls and certainly no in-person meetings. Everything is done online, and loan applicants are lucky if they receive more than one email from the lender. This is the case whether their application is approved or denied.

Fin-tech is everywhere you look now – but finally, people are seeing how dangerous it can be to place their capital acquisition needs in this industry’s hands. Why? Because of Lending Club, the online lender that fired four of its executives this week (including the company’s own founder/CEO) after its board discovered faulty lending practices and shady investment deals.

One violation that was uncovered: Loan applications totaling $3 million were altered for compliance reasons before they were sold to an investor. And of course, the Securities and Exchange Commission is reviewing Lending Club’s other disclosures in anticipation of more unsavory discoveries. This week, Lending Club’s stock plummeted by 35%. It’s no surprise.

Now, let’s say there’s an online lender that doesn’t engage in these practices. Let’s say they’re upstanding as the day is long. That’s fine – but before you fill out a loan application with them as a way to get capital for your business, ask yourself if they:

• Have the expertise to design truly customized financial solutions for you?
• Have ever made an equity investment? This is an important question if you’re looking for potential investors.
• Can detect your entrepreneurial passion, determination and other intangibles via your online interactions?

Most of the time, the answer to all of these questions is no. A big no.

Another new media option for getting capital is crowdfunding. For some reason, certain entrepreneurs think the idea of asking strangers to contribute to an online capital-raising campaign is really sexy. Here’s what I ask them: Can a crowdfunding site ascertain whether a business owner can look someone in the eye? Obviously, that’s also an emphatic no. But a financing expert who is a living, breathing human being can. I tell people that my firm doesn’t specialize in being “exponentially scalable” or “hype-worthy.” We specialize in a personal touch.

The next time you need a business loan, look for a lender who offers you that. And the next time a prospective customer seems to be looking for you to use new economy buzzwords, tell them buzzwords aren’t your specialty – but a personal touch is.

Jeff Brannon is managing partner of Solve Capital Group. He can be reached at (949) 356-6601, or by e-mail at [email protected].