Defacto advances European expansion plans

By Milan Rojan

Defacto has filed an application for a European banking licence with the Autorité de Contrôle Prudentiel et de Résolution (ACPR) and the European Central Bank (ECB) as it prepares to expand its working capital financing business across Europe from 2027.

Jordane Giuly, Co-founder and Chief Executive Officer of Defacto, said: “A banking model is not a constraint on growth. It’s one of its conditions. AI is at the heart of our credit model, our scoring, the way we build products. But AI does not replace a licence, or the years of work it takes to build a sound framework.”

Defacto said the application builds on its existing status as a specialised finance company regulated by the ACPR. Subject to regulatory approval, the FinTech plans to expand into Germany and Belgium, targeting demand for digital working capital financing solutions.

Charlotte Gounot, Deputy Chief Executive Officer of Defacto, said the licence application marked an important milestone as the company prepares to extend its technology, lending infrastructure and embedded finance capabilities to additional European markets.

Since launching in 2021, Defacto has developed a multi-channel lending platform that combines direct SME lending with embedded finance capabilities for FinTechs, B2B software providers and financial institutions. The company has financed more than $1.8 billion in cumulative loans to over 20,000 SMEs, offering businesses access to working capital within minutes.

Defacto has also reported that it is approaching profitability after investing in proprietary data and artificial intelligence-driven credit assessment models. According to the company, automation across its lending operations and a lean operating structure have enabled it to achieve significantly greater cost efficiency than traditional banks. It has also secured funding through securitisation markets to support loan origination.