Strategic concerns

With a background in tech, Prospa Group chair Gail Pemberton AO rates the big strategic risks for boards as accessing quality talent, coping with disrupted supply chains and expediting meaningful digital transformation.

It’s been decades since Gail Pemberton AO started her first job as a trainee computer programmer, but she still likes to stay in touch with what she calls her “inner nerd”. “I try to be self-sufficient with technology — I just plug away and solve things myself,” says Pemberton, who has since built a diverse directorial career spanning technology, digital, financial services and infrastructure industries.

Today, Pemberton is independent non-executive chair of listed SME lender Prospa. One of a growing number of new fintech platforms focusing on small business, it was co-founded by Greg Moshal and Beau Bertoli, and floated on the ASX in 2019.

She’s also chair of listed fleet leasing company Eclipx Group, and also a director of HSBC Australia, the ARC Centre for Quantum Computation and Communication Technology and software communications firm Symbio. In addition, Pemberton has non-executive roles with Land Services WA and the Sydney Metro, a NSW government project delivering a $50 billion program to construct and operate a fast, regular metro rail network across Sydney.

“You might look at my background and say, ‘Well, she’s never done it [transport and infrastructure] before, but boards need to have diversity of thought,’” says Pemberton. “When you get people around a board table who bring different insights and genuine diversity of experiences, it’s amazing how it raises the level of discussion.”

Talent challenge

The same tenacious bent that sees Pemberton continue to flex her technological muscle is also apparent in her approach to the challenges facing Australian businesses as they enter a third year of pandemic-related disruption.

Having just spent four weeks in the UK and Europe, Pemberton notes that fear of COVID-19 doesn’t dominate the news there as much as it does in Australia. While mostly empty airports highlight that international travel remains relatively depressed, Europeans are maintaining sensible measures like donning masks, but are otherwise “getting about their business”. She would like to see such confidence grow locally, so Australian businesses and cities can regain their vibrancy and momentum as we adjust to dramatically different ways of working.

“Pre-COVID-19, we used to talk about the war for talent. That seems such a long time ago now because today that war is on a scale we could not have foreseen — and it is impacting almost all sectors,” she says. “It’s so difficult to secure and retain talent. Employers have to offer very flexible working conditions and extend their sourcing of talent to different locations domestically and internationally.”

Other retention tools being used include tenure- based cash or equity incentives, or both. “Incentives like these don’t necessarily need to be decided by the board, but they’re discussed with the board in the context of rising wage inflation and increasing staff turnover,” she says.

The “Great Resignation” is also emerging as a strategic and financial risk, which means boards have had to spend much more time revisiting the whole framework for recruitment, reward and retention, and other ways to mitigate these risks. In certain businesses, supply chain issues have come to the fore — most notably in supermarkets, but also affecting many other businesses including transport and construction. As an example, in the fleet management sector the lack of supply for new motor vehicles has led to inflation in used car prices. “As supply chains revert, we’ll expect to see those prices going down as order backlogs are filled, but we just don’t know at the moment how neatly those two will interweave,” says Pemberton, noting that a broader consideration for boards is whether their organisations have too great a dependence on certain supply chains and whether that exposes them to too great a risk.

SME funding opportunity

However, as government policy shifts to “living with the virus” and local restrictions continue to ease, there are positive signs that the demand for capital and business investment are on the rise, particularly among SMEs seeking to rebuild inventory and drive recovery and growth.

“We’re seeing a really strong and healthy resurgence in the small business economy — and demand for funds,” says Pemberton, referring to her role with Prospa, which provides more flexible funding for SMEs where traditionally, business owners have had to put their house on the line.

“SMEs are a very important sector in our economy, accounting for around 40 per cent of GDP and 65 per cent of employment,” she says. “But our research tells us that around 80 per cent of those businesses have difficulty getting finance.”

In February, Prospa released record half-year results, with new loans up 75 per cent to $315.1m. Revenue also increased by 40 per cent to $78.5m, while earnings increased 134 per cent to $9.6m.

Although the company has seen $2.1b in loans originated since its inception, it‘s estimated that only two per cent of SMEs currently seek financing through Prospa. “We definitely plan to grow our market share,” says Pemberton.

This growth will be achieved by leveraging Prospa’s technology platform to expand existing products and create new ones — including payments, overdrafts, invoicing and expense management — to serve a broader range of small businesses.