Banks Eyeing Online Lenders to Offer Small Business Loans
Yesterday we saw one of Canada’s five big banks partnering with a US-based fintech startup to offer small business loans to its customers, as reported in The Star, The Globe and Mail, The Financial Post and other outlets.
This move confirms what we have known to be true for some time – that online lending platforms like Lendified represent a major shift in the way individuals and small business owners borrow and fund their businesses.
It also further verifies our observation that banks are simply not equipped or well positioned to develop this technology in-house; there are too many regulatory barriers and legacy systems for banks to overcome. Having said that, some institutions seem to be building out their own technology platforms in-house, but clearly they are already falling behind customer demand and the offerings of their competitors.
Back at the start of this year, in response to many reports in media portraying online lenders as disruptive and dangerous, highlighting the “threat” of fintech to the banking industry, our executives, Founder and CEO Troy Wright, and President Kevin Clark, stepped up to say that this was, in fact, not a revolution, but rather an evolution.
In an Editorial Kevin Clark and Troy Wright co-penned for The Globe and Mail, our executives said:
“Fintech companies are not disruptive forces for traditional banks. In fact, companies such as ours are providing products and services that simply aren’t offered by the big banks. Indeed, we often feel that we are complementary to their products and services.”
They went on to point out that, “Online lenders do not require the bricks-and-mortar infrastructure to offer safe, affordable financial transactions in specific segments such small business. And in so doing, we’re a growing part of the financial ecosystem.”
Six months later, Lendified is quickly growing and expanding with new partners and new services, such as Mentio which brings Cash Flow Management and Automation to our offering and data capabilities. We’re building out a platform that will allow us to partner with institutions as we saw this week. And, we’re closing the circle, so-to-speak with Vault Circle which will connect accredited, institutional and certain other eligible investors with short-term, high-yield small business loans in the form of investor notes.
Change is constant in business and technology means that small businesses and large banks alike are constantly looking for better, faster and simpler ways to do business. At Lendified, we see the bigger picture.
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About the Author
Lendified is Canada's premier online lender for small businesses. The company was founded by former bank executives dedicated to provide businesses with fast, easy, and affordable financing. The Lendified team regularly produces blogs and guides to help small business owners succeed.