It was back in December of 2015 that we first learned about OnDeck’s partnership with JPMorgan Chase. This was the first significant partnership between a large American bank and an online lending platform and it caused a lot of excitement in the industry back then.
A couple of times this year we have heard OnDeck CEO Noah Breslow hint that a second major bank was coming on as a partner soon. Today, we learned who that partner will be: PNC Bank. They are the ninth largest bank in the country, so this gives OnDeck two of the top ten largest banks as clients.
I caught up with Noah and Brian Geary, who heads up OnDeck’s new ODX division (we covered the story of ODX just last week) to talk about this new deal.
Noah started out by saying that the response to the ODX announcement has been very positive. Banks are excited to see OnDeck’s commitment to the banking channel and so that is helping conversations there. He also reminded me that OnDeck’s deal with Chase was renewed last year for another four years so Chase is clearly happy with their partnership with OnDeck.
As a reminder the Chase partnership is for term loans and only for existing Chase clients. Brian Geary said that the new deal with PNC is going to be different in two key ways. First, PNC will be offering an unsecured line of credit, not a term loan. Second, PNC will be offering this to existing as well as prospective clients.
ODX and PNC are still in the testing phase right now. They don’t expect to officially launch the offering until Q1 of next year. A quick look around the PNC website reveals they do currently offer an unsecured line of credit they call Choice Credit with lines up to $100,000. This is the product that ODX will be powering and when they launch it will have a completely different look than the somewhat dated offering on the PNC website today.
Speaking of user experience ODX will be providing the look and feel for PNC’s new offering. This will be a fully white labeled product with a mobile first design built within PNC’s branding guidelines. The bank is not changing their credit risk appetite so all loans will be made within PNC’s existing credit box.
Noah pointed out that what they are offering is not just the technology but the insights they have learned from lending over $10 billion. Not only that but OnDeck and ODX have people with deep expertise who can run this entire lending program for the bank.
My Take
When Chase came on board with OnDeck almost three years I would have expected that by now they would have had several large bank clients. In fact, I would have thought most banks by the end of 2018 would have online offerings for both consumers and small businesses. That has not been the case.
Eventually this will happen and all of the top 50 banks will have a broad product suite of online offerings. But when you look at bank websites today opening a new account (other than a credit card) still requires a trip to the branch in most instances. Moving to a 100% online customer onboarding process is inevitable for all bank products but the change is not happening as quickly as I expected.
I joked with Noah that I hope it is not almost three years before we see the third client for ODX’s lending as a service product. He is highly confident that won’t be the case as banks are now much more receptive to partnering with companies like ODX. Banks know they need to move online or they will be left behind by their competitors.
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