Wells Fargo Archives - Lend Academy

PeerIQ’s Q4 2018 Lending Earnings Insights Report

PeerIQ's latest Lending Earnings Insights Report points to a strong economy but bank and card issuer CEOs are cautious about being late in the credit cycle.

November 20, 2018 By Todd Anderson 1 Comment

PeerIQ released their Q4 2018 Lending Earnings Insights Report which points to a number of themes showing the economy is strong but CEOs are striking a cautious tone. Delinquencies and defaults continue to be low as consumers have seen their wages rise and taxes drop. Lenders are increasing reserves as they anticipate credit to renormalize in the near future, saying the economy right now was too good to be true.

The report covers earnings reports from big banks and fintech lenders. Stock performance was mixed with the flattening yield curve causing banks and card issuer stocks in particular to suffer. Companies covered include Enova, LendingClub, One Main Financial, OnDeck, GreenSky, Bank of America, Citibank, Goldman Sachs, JP Morgan Chase, Morgan Stanley, Wells Fargo, Capital One, Discover, Synchrony and American Express.

One of the growing trends has been the pull back by banks lending directly to consumers and small businesses. Banks are instead increasing funding lines to non bank lenders, credit facility volume has grown 6x since 2010. The growth in originations from non bank lenders has forced regulators to look at them more closely, while the FDIC is considering granting ILC charters to non banks.

Broadly across the credit spectrum fintech lenders have seen delinquencies and charge offs remain at near record lows. All the companies in this segment saw double digit revenue and origination growth YoY. Lenders have started to raised borrowing rates, though not at the same pace as the Fed Funds Rate. The flattening yield curve has raised the cost of borrowing on credit facilities, causing margins for lenders and investors to be compressed.

Big banks experienced another strong earnings quarter as all covered in the report saw double digit increase in earnings. Revenue drivers vary from bank type to bank type. Big banks covered within the report saw deposits rise due to a better digital banking experience, an integration between wealth and banking products and a retail branch expansion. As a group the banks are growing, albeit slower than in the past, through digital means and are focused on the long term potential of products they are currently building.

Credit card issuers all saw their earnings grow by more than 20 percent YoY. Most card issuers also saw growth in revenue and their loan books. Growth in total allowances for losses outpaced loan growth, pointing to the fact that most card issuers see a credit normalization coming. Card issuers have used the partnership model with stores like Walmart, JC Penney and Lowes to grow revenues.

Overall economic health, low delinquencies and low charge offs show that the credit space is doing quite well. Though the report points out that most of these companies do not expect this environment to last forever, they are in the midst of preparing for a change while they keep growth humming along.

Use Cases and Trends in Artificial Intelligence for Financial Services

A review of where financial services companies are beginning to implement artificial intelligence.

August 15, 2018 By Todd Anderson Leave a Comment

Artificial intelligence (AI) is everywhere these days as more companies look to automate repetitive tasks to save money and reallocate staff to more meaningful work. We wanted to explore some of the current use cases for AI based technologies in financial services and where the industry is heading in the coming years.

Cut through the hype and you will find financial firms have started to implement AI in a few different areas. Back office operations and data management has been the biggest beneficiary as companies can run algorithms across full data sets and cut out repetitive tasks.

[Read more…]

Leading Banks are Embracing Digital Strategies More Than Ever

We take a look at how the major US banks are adopting digital strategies into their business

October 25, 2017 By Todd Anderson 1 Comment

While banks might have initially been slow to act when it came to embracing digital strategies they are now able to offer a comparable product to their fintech competitors. Through building their own technology, partnering with or acquiring emerging fintech companies, banks have received the message that they need to fully embrace the digital age.

The digital strategy at banks is now considered a core part of their business and essential to future growth. We wanted to explore how some of the biggest banks have been integrating digital strategies and making strategic acquisitions to enhance the customer experience or replace falling revenue in other areas of their business.

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Wells Fargo Enters Small Business Lending With FastFlex

The big banks are getting into online lending and Wells Fargo is one of the first with small business lending.

June 2, 2016 By Ryan Lichtenwald 1 Comment

In early May we learned from a press release that Wells Fargo, one of the largest banks in the United States was entering online lending. The new product, dubbed FastFlex is focused on providing loans to small businesses online. Wells Fargo has set a goal which trumps where many of the online lenders are today, aiming to lend $100 billion over five years. They are well on their way, having lent over $40 billion since setting this goal in January, 2014.

Wells Fargo has the opportunity to scale quickly due to two distinct advantages that many online or marketplace lenders simply don’t have: a large established borrower base in the form of small business clients which totals over 3 million and access to significant and stable capital.

We had the chance to speak with a representative from Wells Fargo about the new product and also were able to see how Wells Fargo is offering these loans since Lend Academy and our sister company LendIt are Wells Fargo customers.

The loans are currently only available to Wells Fargo customers who have had a business deposit account for 1 year or longer. Another advantage that Wells Fargo has is that they already have the have transactional data on the small business, allowing them to make a better underwriting decision. [Read more…]

Wells Fargo Has Banned Staff From Investing in P2P Lending

January 20, 2014 By Peter Renton 42 Comments

[Update March 14, 2014: Wells Fargo decided to reverse this ban on employee involvement in p2p lending.]

Really interesting news story today from the Financial Times (free registration required). Their journalists, Tracy Alloway and Arash Massoudi, have discovered that Wells Fargo has put in a policy that bans its employees from investing their own money in p2p lending platforms. Here is the crux of the article:

Wells Fargo has banned its employees from lending their own money through peer-to-peer loan platforms, in a sign of growing tensions between new “P2P” lenders and the largest US bank by market value.

“Ethics administrators” at Wells Fargo decided to forbid staff from P2P lending after concluding “that for-profit peer-to-peer lending is a competitive activity that poses a conflict of interest”.

What does this all mean? If you are a Wells Fargo employee it is very clear. No more new money is allowed to be invested into Lending Club, Prosper or any other online lending platform. For the rest of us it means the first acknowledgement of the impact that this industry could have on traditional banking.

I think this marks another step in the coming of age for p2p lending. It is no longer too small to be ignored. I would love to hear your thoughts on this.