BankTech

Banks & FIs to Alternative Lending Firms: Can't Beat You, so Joining You

MEDICIFounder and Chief Strategy & Innovation Officer

The traditional lending industry has been hit the worst by new startups since there was a lot of scope for improvement within the industry. P2P lending and alternative financing FinTech startups launched products that not only helped borrowers but also helped in lowering operating costs through the use of technology. This model fits borrowers who want quick access to cash and at good interest rates. When the alternative lending industry started to gain popularity, many predicted that it had the potential to disrupt a part of the banking industry. But nobody knew that it would happen so soon and that too, in such a big way. Banks and FIs are feeling left behind and entering online lending services by way of partnerships with established and emerging lending platforms. The lending market is gathering increased interest from established financial institutions.

Given below is the list of such cases:

1. Goldman Sachs:

Goldman sachs

The 146-year-old investment bank is planning to enter the P2P lending space and compete with top platforms like Lending Club and Prosper. The bank plans to offer unsecured personal loans and will also venture into small-business lending.

2.  Blackstone:

Premier global investment and advisory firm Blackstone’s portfolio company, B2R Holdings, is getting into the business of providing loans for consumer purchases of big-ticket items as well as small-business loans. They will be launching their lending services under a name which has been rebranded as “Lending.com.”

3.  ING:

ING

Last month, ING announced its strategic partnership with Kabbage, a leading technology and data platform which enables automated lending to small and medium enterprises (SMEs). The partnership fits ING’s strategy to expand its lending capabilities to SMEs and helps them to get the capital they need to grow. The bank took an equity stake in the US-based FinTech company in a financing round in which Kabbage raised $135 million. As part of their partnership, ING and Kabbage will start a pilot in Spain, offering small and medium enterprises (SMEs) loans up to EUR 100,000.

4.  Barclays:

Barclays Africa has acquired a 49% stake in the leading South African P2P lending platform, RainFin. With this investment, RainFin can take their own scorecard and measure it against the personal loan book of Barclay’s, which will make it easier for the company to convince large investors to come on board with RainFin. 

Barclays The lending company wants to use the money in expanding its business and improving the product.

5.  Westpac:

Westpac Banking Corp’s new venture capital fund has taken an equity stake in Sydney-based peer-to-peer lender ­SocietyOne. The funding came from Reinventure Group, the new Westpac­-funded venture capital manager, which invested $5 million in the Australian lending firm. The lending firm aims to develop new credit products with this funding.

6. Santander:  

Santander

Funding Circle recently announced its partnership with Santander UK. As a result, thousands of small British businesses get greater access to finance. According to the referral arrangement, Santander will proactively refer small business customers looking for a loan to Funding Circle. As part of this relationship, the lending company will also signpost borrowers to Santander where they require day-to-day relationship banking support or other services that the bank can offer, such as international banking expertise, cash management and support for growth.

7. The  Royal Bank of Scotland:

In January, The Royal Bank of Scotland partnered with UK financial technology startups Funding Circle and Assetz Capital to provide alternative sources of finance to small businesses. The pilot for this service began in Scotland and South West England.

8. Metro Bank:

Metro Bank

In May 2015, Metro Bank and peer-to-peer (P2P) lender Zopa made a deal which allows Metro Bank to lend money through Zopa’s platform. P2P platform Zopa directly connects borrowers and lenders.

 

Amit Goel

MEDICIFounder and Chief Strategy & Innovation Officer

“Amit Goel is the Founder & Chief Strategy & Innovation Officer for MEDICI. Amit’s vision is to build a strong FinTech market network that involves financial institutions, banks, startups, investors, analysts & other key stakeholders across the ecosystem – helping each one of them in a meaningful way by removing the asymmetry of information and providing a platform to engage & transact.\ \ Amit is passionate about bringing actionable FinTech-focused insights, innovative products & services for the FinTech ecosystem. Some of his work involves startup scores, bank scores/assessments, predictive viewpoints & other innovations that have helped MEDICI’s customers and the ecosystem. He has been named amongst the Top 100 FinTech thought leaders/influencers in the world & Top 10 in Asia multiple times by reputed agencies, consulting firms as well as financial institutions. Amit has built MEDICI (formerly LTP) as a new-age, tech-enabled advisory/research firm, which is now considered the #1 global research & innovation platform for FinTech in the world.\ \ Amit has been writing pioneering viewpoints on financial technology space that have been ahead of the curve since 2010. His data-driven predictions have helped the customers as well as the ecosystem. His past work experience includes a strong background in strategy & market analysis and advisory to clients (from big business houses to Fortune 500 firms) in payments, commerce, financial services & IT/technology. In the past, Amit had also founded a successful consulting & research practice called GrowthPraxis and has worked at Boston Analytics, Frost & Sullivan, and Daimler Chrysler in strategy & research.”