Marc Morris, Fiduciam

Why knowing your customers facilitates repeat business

The phrase ‘know your customer’ is bandied about across many industries, but in the financial world it is mostly used in terms of identity verification and money laundering. However, knowing your customer is important for other reasons.


From a lender’s point of view, it is much easier to make decisions if we can really get to know our customers, understand their needs and work together for our mutual benefit.  Despite this, with many of life’s necessities available at the click of a button, it appears that relationships between providers and their clients are becoming rarer.

We believe that there is little substitute for knowing our borrowers well and understanding their businesses — an approach that facilitates repeat business. 

Over the last few years, we’ve assisted a number of developers in organically upscaling their businesses. From a credit risk perspective, we like to see repeat borrowers — those who know their market and seek to expand it — and build a niche of projects and experience.

Growth can come from gradually increasing the projects taken on and carefully building the capital required to invest as equity. We can also work with developers to accelerate this cycle and increase the number of projects undertaken. 

In one recent transaction, we helped a client who had originally come to us several years ago for a £200,000 development loan. Since then, he has continued to expand his business, working on bigger projects that require different types of funding. We just completed a £1.6m loan for a permitted development facility in South London with this client using our ‘Stepping Stone’ loan. 

Having recently completed a scheme, but not yet sold the available units, he was ready to start a new project. However, without the sales, he didn’t have the funds to move on.  Knowing this client and his development capabilities, we were confident in his business and wanted to ensure he was able to continue to grow.

Using the ‘Stepping Stone’ facility, we enabled the borrower to transfer equity from the recently completed development to his new project without the need to wait. This meant that the new project could begin earlier and the developer would be able to take on more projects — effectively growing by simply using the same capital more efficiently.

As Covid-19 slows the sale of completed projects, it is also likely to generate attractive opportunities to purchase new sites. The ‘Stepping Stone’ ability to transfer equity from one project to the next is something that could keep projects flowing. Importantly, it starts with really getting to know our customers — that way, we are not only providing creative borrowing solutions and mitigating credit risk, but we are helping businesses to grow and cycle forward.

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