Members of Borrowell’s founding team, including co-founder Salim Naran, recently secured C $ 3.1 million for a startup they launched in 2017 to tackle the banking infrastructure side of digital lending.
Over the past five years, Naran and his team have created a platform they believe transforms banks into FinTech, focused on modernizing loan processing. The startup, Savvyy, has developed automated cloud-based software for underwriting and managing loans. The goal is to replace a patchwork of legacy systems and manual processes, and improve the customer experience.
“The core infrastructure of financial institutions needs to be replaced for these front-end consumer products to function properly. “
While many FinTech startups, like Borrowell, focus on the consumer side, Savvyy takes care of the banking side of the mortgage process.
Savvyy secured seed funding (its first award round) from a group of angel investors. The list includes Joe Canavan of Canavan Capital (formerly LOGiQ and Next Canada); former global head of fixed income at Scotiabank Michael Zych; Kevin Walton, member of the founding team of Real Matters; and Michael Vanderkaden, formerly of Filogix and Equifax, and currently CFO of Savvyy. The startup is also supported by ScaleUp Ventures.
The recent round also includes previously secured SAFEs, which have been converted to make Savvyy’s total funding to date C $ 5.7 million.
Since launching in 2018, Savvyy has secured three Schedule I Canadian banks as clients, including Concentra Bank, which used Savvyy to jumpstart its entry into the residential mortgage space.
Without disclosing any numbers, Savvyy co-founder Norm Cappell explained that the startup has positive earnings that have allowed it to delay the need to raise capital. Now, Savvyy is looking to accelerate his roadmap with his new capital, with plans to add new loan repayment features and expand beyond Canada.
The startup claimed it was set to experience significant growth in 2022.
The idea for Savvyy grew out of the work Naran, Cappell and other team members were doing at Borrowell, and, before that, Paradigm Quest, which operates in the digital mortgage underwriting space.
Naran was CTO at Borrowell, which was originally started to allow institutional lenders to fund consumer loans.
This is where Naran and Cappell saw the need for banks to digitize their lending processes, as well as their willingness to work with SaaS providers to develop core banking products.
After Borrowell changed focus (now offering credit and card monitoring, personal loans, mortgages, investments, insurance, and bank accounts), Naran and Cappell set out to create Savvyy.
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“It’s through experience with these companies and seeing what is broken [that Savvyy was created]”Naran said in an interview.
“There are currently many companies working on digital mortgage solutions: direct to consumer businesses and digital brokers,” added CEO Savvyy. “They are very consumer-focused, and what Paradigm and Borrowell have helped me and the team have been [understanding] The backend infrastructure of financial institutions needs to be replaced for these front-end consumer products to function properly.
Savvyy, as a Canadian mortgage FinTech startup, stands out among a crowd that includes major consumer-focused player Nesto and Doorr, which offers a mortgage platform for brokers and financial institutions and was acquired by Filogix last year.
Research Savvyy conducted through Deloitte revealed that the banking aspect of mortgages has been overlooked by the financial services industry.
“In Canada, not much has happened in the past decade,” said Naran.
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“The traditional distribution of financial products is accelerating towards digital… so that traditional methods of originating mortgage products are being challenged,” he added.
Andrew Hamer, partner and Canadian credit leader at Deloitte, noted that “the first wave” of digital mortgages was focused on consumer experiences. “Now the major players in the industry are digging deeper into the heart of lending, with an emphasis on innovation in credit operations and legacy decision-making processes,” he said. “This emergence of a modern cloud-based lending infrastructure is a positive development for the Canadian lending industry, leading to more efficient outcomes for the consumer and the business. “
Naran pointed out that Savvyy’s ability to take on this task is only possible through the culmination of previous experience in the financial services industry.
“Enterprise technology in banks is something very difficult for new businesses to integrate,” he said. “You need some expertise in the field, you need to be on the right side of the divide, as we call it. And, if we look at the story of how Savvyy was born, it’s a business that has been built over the past 10 years, through Paradigm, Borrowell, and now Savvyy.