Fintech Archives - Lend Academy

SoFi Applies for a National Bank Charter

The leading fintech has filed a de novo bank application with the OCC this week

July 9, 2020 By Peter Renton Leave a Comment

SoFi CEO Anthony Noto speaking at LendIt Fintech USA

SoFi has become the latest fintech to apply for a full national bank charter. They filed a de novo bank application with the OCC on Wednesday.

You may remember that back in 2017, when co-founder Mike Cagney was still CEO, that SoFi applied for an industrial loan charter. They pulled the plug on that application a few months later after Cagney resigned from the company.

The interesting difference is that SoFi has decided to pursue a full bank charter this time rather than the ILC as they did before and as fellow fintech Square has done. Of course, it could be that ILCs are somewhat controversial, with many banks, large and small, opposing their very existence.

I reached out to SoFi today and they responded back with this official statement:

We can confirm that SoFi has formally submitted an application to the OCC for a proposed de novo national bank, SoFi Bank, National Association. We look forward to working closely with the Office of the Comptroller of the Currency, as well as with the Fed and FDIC, as they review our application.

CEO Anthony Noto had this to say:

SoFi is on a mission to help our members achieve financial independence to realize their ambitions. We firmly believe that by pursuing a national bank charter, we will be able to help even more people get their money right with enhanced value and more products and services.

SoFi will no doubt be leaning on the experience of Varo, the digital bank that is three years ahead of SoFi on this journey, having filed with the OCC in the summer of 2017. They are still waiting for final approval from the OCC (the FDIC has given their approval) . Hopefully, SoFi will not have to wait three years before getting their approval as they should be able to follow a similar playbook. The other fintech that has applied for a full banking charter is Robinhood, a company that has been in the news for many of the wrong reasons lately. LendingClub decided to go down the acquisition route as they announced in February that they intend to acquire Radius Bank.

One advantage that SoFi has now is that Brian Brooks, the new Acting head of the OCC, is intimately familiar with fintech, having previously been on the board of Avant. FDIC Chairman Jelena McWilliams is also very innovation minded, so for the first time the heads of both banking regulators are very reform minded and SoFi should receive a more receptive audience for their ideas.

For any non-bank the big advantage of getting a banking license is that it should lead to a cheaper cost of capital. Today, SoFi has to get bank funding lines to finance their loans but a bank charter will allow them to offer deposits directly. Right now, anyone can open a SoFi Money account which accepts deposits but that account is officially a cash management account with deposits being held with SoFi’s partner banks. This obviously has a cost involved and SoFi cannot lend this capital directly.

Another benefit is lending licenses. SoFi does not work with a partner bank to originate loans, instead it has obtained consumer and mortgage lending licenses separately in every state where it is required. National banks can lend with just one license simplifying the licensing process. Now, there is obviously a much bigger compliance burden overall when becoming a national bank.

The entire industry will be watching SoFi’s progress here with great interest. It is clear that fintech leaders are moving towards offering more bank-like features and many will likely end up becoming banks themselves (or be acquired by a bank). By applying to become a bank SoFi is cementing their position as a fintech leader and one that will continue to blaze their own trail as fintech goes mainstream.

Industry Pioneer Larry Chiavaro of Vervent Calls it a Day

Larry helped build First Associates, now Vervent, into the leading loan servicing company in fintech

July 7, 2020 By Peter Renton 4 Comments

It was back in 2013, when LendIt was just getting under way, that I first connected with Larry Chiavaro. I had been hearing the First Associates name around and I wanted to learn more about them. I was immediately impressed by how well Larry knew the online lending space, he already knew every lender and had established a business relationship with many of them.

In fact, I would say that Larry quickly became one of the most well-connected and well-liked people in the space. Soon, I saw the First Associates name everywhere and I began running into Larry at pretty much every industry event or meetup. And whenever I wanted some background on a lending platform or an investor Larry was always quick to give me the unvarnished truth.

A few months before every LendIt I would give Larry a call to get his ideas on the topics we needed to cover and the companies that were doing the most interesting work. He helped put together at least one panel session every year and his advice was invaluable when deciding who was a compelling speaker and who we could skip.

First Associates has become one of the real success stories in all of fintech. David Johnson, CEO, along with Larry and one other partner bought a struggling loan servicing company with six employees back during the financial crisis. They saw an opportunity to disrupt an industry that had been run inefficiently and where incentives were often not aligned. [Read more…]

Upcoming Webinars Will Cover Mortgage Financing and Innovative Loan Offerings

Webinars from LendIt Fintech early next week will take a look at mortgage relief & refinancing and the technology that helps to make loan offerings more efficient.

June 26, 2020 By Todd Anderson Leave a Comment

We’ve been hosting virtual content sessions for the past few months in order to help our community stay ahead of the rapidly changing environment. The webinars have informed and engaged our audience each week. Next week is no different, we have put together some really compelling sessions that will examine the mortgage financing market and the underlying technology that is help to change the way loans are originated.

These webinars are happening outside LendIt Fintech Digital and are open to everyone.

How to Accelerate Mortgage Relief and Refinance Volume for Borrowers

Tuesday, June 30 • 2:00 PM ET

Lenders today are under a massive amount of stress as many borrowers are feeling economic pain. Lenders are immediately discerning who might need a loan to bridge a gap, or who is most at risk of becoming delinquent on a loan. Also, historically low interest rates have caused a massive demand for refinancing and new mortgages.

In this webinar, you will hear from industry leaders at Salesforce and Truist on how they are managing demand volumes, relief requests and production operations in our new normal. Learn how lenders are leveraging technology to solve for the challenges of today through:

Streamlining the application process
Connecting all borrower information
Analyzing risk areas
Putting borrowers on an education journey
Enabling self-service for volume deflection
Providing servicing for complicated forgiveness and restructuring cases

Innovative Loan Offerings and the Tech That Drives Them

Monday, June 29 • 1:00 PM ET

Innovative fintech lenders and traditional financial institutions are growing their lending portfolios by offering specialty consumer and small business loan programs that address specific customer needs. Learn how lenders are utilizing a cloud based core banking system and services as a fully integrated lending platform, or extending their existing systems to quickly launch niche lending programs. Topics covered include:

Trends in Consumer and Small Business Lending
Challenges to offering specialty / personal loans
Technology strategies for specialty / personal loans

Early Bird Price for LendIt Fintech USA Virtual Ends June 30

LendIt Fintech USA is happening on September 29 through October 1 but early bird pricing ends very soon

June 25, 2020 By Peter Renton Leave a Comment

LendIt Fintech USA 2020 is coming to your desktop on September 29 – October 1. It is everything that you love about LendIt without any of the travel.

Our keynote roster is looking stronger than ever. Here are just some of the speakers you will learn from this year:

Stephanie Cohen – Chief Strategy Officer of Goldman Sachs
Zach Perret – CEO and co-founder of Plaid
Peter Hazlehurst – Head of Uber Money
Jelena McWilliams – Chairman of the FDIC

Of course, as we do with every event we will be covering the most important topics of the day in our afternoon breakout sessions. Each afternoon we will be running three concurrent tracks of content focused around a particular topic. This year, more than ever, our agenda will attempt to answer today’s biggest challenges.

Now, networking is going to be front and center at LendIt Fintech USA 2020. Early feedback from initial tests we have been doing suggest that the virtual format of networking may even be superior to the in-person variety. So, rest assured we will be putting a great deal of effort into delivering the best online networking event you have ever experienced. You come to LendIt to meet the right people and this year that will be easier than ever before.

The Best Price Ever for a LendIt Event

The price to attend LendIt Fintech USA 2020 is only $495. This is the best price ever for a LendIt event and will likely never be repeated. This price only lasts until June 30, so you should register today.

The great thing about hosting a virtual event is that we can reach a much broader audience of bank, fintech and investment leaders from not just around the country but around the world. We expect our audience to grow in size and diversity, as attending a LendIt Fintech event is no longer a luxury and much more a necessity.

As you know, the LendIt team will be working tirelessly over the next 3+ months to make this virtual 2020 event the best LendIt ever.

With the PPP Fintech Comes of Age

Fintech lenders reacted quickly to the PPP and helped save millions of jobs

June 24, 2020 By Peter Renton Leave a Comment

For the general population fintech has mostly flown under the radar. When it has popped up into the conversation of the day it was often for negative reasons. But the Paycheck Protection Program (PPP) has given fintech a national voice like never before.

Exhibit A is this New York Times story from yesterday featuring Cross River Bank. While those of us in fintech have known Cross River for years as they have been an industry pioneer, particularly in consumer lending. What many people did not realize is that they are an SBA lender, doing a modest amount of lending each year. I have had several conversations with senior executives at Cross River over the last couple of months and pretty much the entire company dropped what they were doing and pivoted to focus on the PPP.

Cross River is unusual because, while a being a community bank, they are very much a fintech first. They took advantage of their positioning and were up and running with the SBA within 24 hours of the launch of the PPP and they started processing loans. They were the bank of choice for dozens of fintech lenders which is how they came to do so much volume. Cross River has ended up being the number four bank in the country (after JPMorgan Chase, Bank of America and Wells Fargo) in terms of number of PPP loans issued with 106,000 loans worth $4.7 billion (average loan size: $44,000) as of June 12.

Kabbage is another company that pivoted aggressively to focus on the PPP. The company shut down their regular lending program before the launch of the PPP and focused on helping small businesses get the money they needed for this program. While initially Kabbage was only able to act as an agent, partnering with Cross River Bank, by phase two they were approved by the SBA to lend directly and they ramped up the volume, referring borrowers to banks and also funding many loans themselves.

According to Kabbage as of today they have processed 168,000 applications worth $4.6 billion (average loan size: $27,000). Now, there was some overlap in the Kabbage and Cross River numbers (Kabbage indicated to me that CR represented around 20% of their volume) but Kabbage was the direct lender for over 50% of its PPP volume, a stunning achievement. Interestingly, most PPP borrowers had never done business with Kabbage before. Also, they were the first fintech lender to access the Fed’s lending facility which allowed them to ramp up volume. [Read more…]

LendIt Fintech Launches Industry Job Board for Job Seekers and Employers

Search fintech jobs or source fintech talent on the new industry job board

June 16, 2020 By Peter Renton 2 Comments

With tens of millions of people losing their jobs in the last three months, here at LendIt Fintech we decided we should do something to help. So we have launched a Jobs Board to connect financial institutions to fintech talent.

LendIt Fintech was founded on the idea of community. The job board is one more way LendIt can leverage the strength of this community to help during uncertain times.

The job board currently features open roles from organizations like Cross River, FIS and R3. It is free for job seekers. Job posting is free for employers through July 15th after which there will be a modest fee. Go and check it out now at jobs.lendit.com.

The Global Covid-19 Fintech Market Rapid Assessment Survey Launches

The Cambridge Centre for Alternative Finance, the World Bank and the World Economic Forum launch a new survey to analyze the impact on fintech of Covid-19

June 15, 2020 By Peter Renton Leave a Comment

The most ambitious survey in the history of fintech is getting under way today. The Cambridge Centre for Alternative Finance (CCAF), in partnership with the World Bank and the World Economic Forum, is releasing the Global Covid-19 Fintech Market Rapid Assessment Survey.

It is a massive undertaking that will draw on the resources of these leading research institutions. They aim to reach more than 15,000 fintech companies in 190 countries to discover the impact of the pandemic on the fintech market.

LendIt Fintech is proud to be an official Global Industry Survey Partner and we will be helping to promote this survey over the coming weeks. It is really important that every fintech company responds to the survey so we can get an accurate assessment of where we are right now as an industry that will inform policymakers around the world.

Fintech plays a vital role in providing financial services to consumers and small businesses throughout the world. Governments are beginning to recognize the importance of fintech and one of the goals of this survey is to see what policy responses might be needed to support fintech in helping to stimulate the economy in these uncertain times.

The executive director of the CCAF, Bryan Zhang, had this to say about this survey:

Global challenges require global solutions, this survey is a collective effort to bring the global FinTech ecosystem together to share their insights, express their views and voice their concerns in light of Covid-19. In turn, the rapid assessment survey findings will inform market participants, regulators and policymakers to take swift, appropriate and evidence-based actions.

Take the Survey Today

On to the survey itself. It was just launched today and is available for all fintech firms to complete. It should take around 30 minutes to fill out and there are two versions:

Global Alternative Finance Benchmarking & Covid-19 Rapid Assessment Survey
For marketplace lending and crowdfunding platforms this combines the annual benchmarking study along with the Covid-19 survey.
Global Covid-19 FinTech Market Rapid Assessment Survey
For all other fintech companies, the above link with take you to the Covid-19 survey.

It is very important that you complete this survey in a timely manner. The goal of the CCAF, the World Bank and the World Economic Forum is to have the results for this survey published before the end of Q3. There will be a great deal of work to do to make this happen, so it is imperative that you complete the survey as soon as possible.

LendIt is a Long Time Collaborator With CCAF

LendIt Fintech has been collaborating with CCAF since 2014, even before the Centre was formally established. We have partnered on many surveys, the leadership there has spoken at LendIt in both Europe and the USA and I have spoken at their excellent event in Cambridge.

We partner with them because their work is important. While there are many universities around the world doing good research, no other institution has the global reach to take the pulse of fintech in every important region in the world. Their reports have become a must read for serious industry participants.

Please support their work and complete the survey right away. We will all be stronger because of it.

Experian Goes All In On Fighting Synthetic ID Fraud With Sure Profile

Experian is so confident in the ability of its new Sure Profile tool to detect synthetic identities it is putting real skin in the game

June 11, 2020 By Peter Renton Leave a Comment

Synthetic identity fraud has been on the rise for many years. As fraudsters become ever more sophisticated it is becoming more difficult to identify legitimate consumers. At the same time consumers are demanding a more frictionless borrowing experience putting lenders in a difficult spot. Enter Experian’s new Sure Profile offering that was released just last month.

First let’s try to define synthetic identity fraud. As the name implies it is the creation of a false identity but typically done using pieces of valid information. So, there is a real social security number but with false personally identifying information. Often this other information is actually valid, as in a real address, real name and real phone number but the combination does not match with any one person.

There have been many efforts to fight synthetic identity fraud over the last decade, but I don’t think any initiative is more aggressive than Experian’s new Sure Profile. I spoke with Alex Lintner, Group President for Consumer Information Services at Experian, to find out more about this new program.

Sure Profile is a New Approach to Synthetic Identity Fraud

The first point Alex made is that synthetic fraud has seen a significant increase during the pandemic but Sure Profile actually predates the crisis. It began life about eighteen months ago driven by lender demand for a better solution given the rise in the level of fraud sophistication. Nobody had really solved the issue of synthetic fraud yet and the problem was growing for most online lenders. While Sure Profile entered beta in January they accelerated the public release because of demand from lenders for a better solution now.

[Read more…]

LendIt Fintech Moves to All Virtual Events for 2020

LendIt Fintech USA, Europe and LatAm will be held as virtual events in 2020

June 9, 2020 By Peter Renton 4 Comments

After much deliberation over the past several weeks, the leadership team at LendIt Fintech have made the decision to move all of our major events in 2020 to an all-virtual format.

While many cities throughout this country and the world continue to open, we are still a long way from being able to host business events in convention centers with thousands of people. The reality is that we don’t know when exactly it will be safe to have live events like LendIt Fintech USA.

We all want certainty as we start to plan the second half of the year. And there is only one way we at LendIt Fintech can provide certainty for our USA, Europe and LatAm events in 2020, and that is to move to an all-virtual format.

The reason events like LendIt Fintech are so popular is that we can learn the very latest trends from the experts, meet with the people who matter most to us, and create new connections. At our live events, these three goals are met very efficiently in a compressed time period with thousands of like minded people.

However, with this apparently slow and uncertain reopening of commerce that we are now experiencing, it is not clear that we can successfully host a LendIt-quality event in 2020.

Now, with more than seven years of history as a leader in content production, networking innovation and journalism, and after receiving glowing reviews about LendIt Fintech Digital, we are confident that our virtual events will provide excellent value for our audience. You see, we aren’t trying to digitally replicate a live event, we are reimagining the best components of our live events within a virtual world. We will provide an experience that is as good or even better than what we can offer at our live events, all without the expense of travel.

We will have:

The highest quality speaker roster in the industry.
Interactive breakout rooms.
1-on-1 networking with Brella
All sessions available on demand
A huge and diverse audience

We will be launching our virtual events next week with some really special deals. We will also be cooking up some surprises for all of you that we will share at a later date.

If you have already bought a ticket or sponsorship for LendIt Fintech USA you should have received an email earlier today telling you about the benefits you will receive for your early support of us. If you are a confirmed speaker we will be reaching out to you over the next week or so.

We look forward to returning to live events in 2021. In the meantime, we understand you need to stay ahead on your fintech news, knowledge and relationships, and we are here to help you do just that.

Get ready to grow. Look for the launch of LendIt Fintech Virtual events next week.

Vervent and Finitive Working Together to Promote Fintech Best Practices

The leading fintech companies are creating a new kind of partnership focused on education and inclusion in underserved markets

June 2, 2020 By Peter Renton Leave a Comment

Fintech industry pioneers David Johnson, CEO of Vervent (formerly First Associates) and Jon Barlow, CEO of Finitive, have worked on lending deals together for many years. Both of their companies have been instrumental in educating lending platforms on industry best practices.

Vervent has become the industry leader in loan servicing for fintech lenders as well as in a number of lending verticals. Finitive is a fintech platform bringing together institutional investors and non-bank lending platforms (listen to my podcast last month with Jon Barlow). Together, they are quite complementary, with Finitive working on setting up and closing deals while Vervent helps on the back office making sure the loan servicing is set up and running optimally.

Today, they announced they are formalizing their partnership to “further promote collaboration and inclusion within the Fintech industry”. What does this mean exactly? In an email sent by David Johnson yesterday they provide some clues:

There is so much knowledge in this industry. We want to share and use our collective resources and experience to open up alternative lending to new players and opportunities that will enhance our industry. With the combined power of Vervent’s advanced portfolio servicing and Finitive’s network and data expertise in private credit transactions, we can do that.

I reached out to Vervent for more color on exactly what they have planned. What they are going to be doing is focusing on those areas of fintech that are less developed and help industry participants with best practices. The first niche they will be focusing on is solar lending. They will be creating an educational white paper and publishing some case studies. From there they are going to move to the Canadian market and then on to Latin America.

Obviously, the ultimate goal here is for both companies to gain new clients but they also recognize that the more these markets develop the right way the more they will flourish. This will lead to more opportunities for both companies.

My Take

This is a great example of fintech companies working together in a new kind of partnership. These companies are experienced in working on complex deals and have each developed a great deal of domain expertise. They are obviously complementary, as every lender needs investor capital as well as servicing, and they have a lot to gain in bringing their expertise into less developed markets. I am looking forward to seeing how this partnership develops.