Electronic Commerce is changing the world. It varies by country but typically makes up around 10% of retail decisions and is growing at around 18% pa compared to 1-2% pa for conventional ‘bricks and mortar’ retail. However if you extend the measure beyond retail into overall commerce and gross world product, then only around 2% is conducted electronically. Why is this the case? What about all the high-value transactions out there like finance agreements, mortgages, mobile phone contracts and leases? Why is it that these invariably gravitate back to a “print and sign” approach that is wasteful, costly and inefficient?
Benefits and adoption
There are enormous benefits to conducting ALL commerce electronically, in terms of speed, cost, consistency, adherence to process and actually, if done correctly, customer experience and satisfaction. So what is preventing adoption? Obviously there are the usual fears about fraud and regulatory compliance – but again, if done correctly, these can actually be improved and streamlined online. So the biggest barrier is that it’s very hard to do. Until now a corporate that wanted to implement this kind of process needed to assemble a lot of different technology components, build a complex workflow process and take the risk that some element of their process might not meet regulatory requirements or could inhibit legal enforceability.
The key ingredients
There are several different ingredients required: Dealflo (e-Application, e-ID, credit checking, e-Signature and vaulting); Process Orchestration – transaction management to automate the ways in which inter-contracting parties wish to conduct business with each other and with their end-customers; and Management Information / Evidence – gathering and process transaction data and evidence to optimise workflow and create legal enforceability. There are technology providers out there that do a good job of some of the individual components, for example DocuSign and Silanis for e-Signature or the bureaus for e-ID and credit checking. But you have all the usual cost, time and risk barriers associated with any large scale IT project as well as additional challenges arising from a changing regulatory and enforceability environment (requiring flexibility, track record and legal insight).
Unlocking the value for customers
The team behind Dealflo identified this enormous market opportunity in 2009 and has prospered from the inherent complexity. The individual components above are commoditising. It is the integration of them all together and delivery as a scalable and extensible SaaS model that really delivers the value for customers. That is not to say IOCS is just integrating disparate technologies. Far from it, IOCS has over a million lines of proprietary code and an amazingly astute tech team. It is just that IOCS has recognised that to really unlock value for its customers and for itself it needs to make the whole end-to-end process efficient, scalable and greater than the sum of its parts whilst optimising enforceability and regulatory compliance. That’s what IOCS does – and does well. And its long-term vision is as a platform where customers can plug in certain components from existing or preferred suppliers as they wish.
Bootstrapped to strong traction
Bootstrapped to date IOCS has already established a commanding position in the point-of-sale vehicle finance market in the UK where it has 7 digit revenues. It is now primed to extend its offering into other sectors (wider consumer finance, banking and insurance) as well as new geographical markets. IOCS’s customers seem very happy and very sticky (they haven’t lost one yet) – and they include some of the world’s largest automotive and other asset-based lenders, such as Hitachi, BNP Paribas & Close Bros as well other high-value commerce offerings such as Diners Club, Next, John Lewis and B&Q.
Great tech, massive market and impressive team
So there is a lot to like from Notion’s perspective – a massive market opportunity, with compelling and genuinely differentiated technology and an impressive team. Founder CEO Abe Smith is well-known to us and is an ideal leader for the business, with huge domain knowledge and always balancing ambition with pragmatism. There are also several possible extensions from the core business, for example acting as a market place for finance providers who all integrate with the IOCS platform.
We are very excited to be involved and looking forward to the ride. Now it has some money, the company needs to scale the team without compromising quality and execute as well in other markets as it has in vehicle finance in the UK. Provided it does, then I believe it can be a very big and valuable business. We will try our best to help them on that journey.
In other news, Notion invests $9m into the rocket driving the Direct Booking Movement.