Lending As A Service Changing the SMB Underwriting Game


Community Banks Fight Back Against Marketplace Lenders


When the application process for a small business loan is harder to complete than an IRS tax filing, and your turnaround time can be weeks, filled with repeated requests for information and branch visits, its no wonder marketplace lenders found a market that needed servicing. (note: actual estimated hours is between 28 to 34 hours which includes shopping for banks, filling out forms, due diligence requests, branch visits, etc.)

There are approximately 6,000 community banks and 3,000 credit unions in the U.S. Continuing with the “As-Is” small business lending model is not an option.  Today, technology is in place to work with APIs to pull data from different sources - lien search and UCC search data, KYC databases, social network profiles, etc. tied to advanced underwriting platforms.

Obviously, 9,000 small lending organizations trying to go out and combat the new threats presents an opportunity for fintech. The American Bankers Association, recognizing the challenge, has endorsed its first digital lending solution, Akouba, who describe themselves as a digital end to end platform to enable community banks to lend to small business through an omnichannel experience. Akouba is not a lender, but it collapses the time to decisions, provides data analytics, and gives the bank the technology to compete with Marketplace lenders.

Akouba white labels their platform to banks. Most banks have a website for business credit, but lack a complete online capability. Now, with Akouba, when you go to ABC Community bank, the Apply Now button takes you to their solution.  That integrates the banks own unique credit policies into a convenient, online process from application to documentation and due diligence, all the way to closing and funding.  Akouba uses the bank’s own credit policies and risk rating system to make loan decisions combined with more data and API feeds to the bank.

Akouba use both third party data feeds as well as borrower and banker supplied data to verify income, identity of borrower, revenue, assets, collateral, etc.   When you can tap into banking systems plus publically available information, it gives banks a powerful leg up on marketplace lenders.

The fintech provider partners with both FIS HiPo (High Potential Opportunity) Network and D&H commercial lending solutions.  Akouba can take a borrower from their name and business information all the way to the banks core so the bank can issue funds from their balance sheet all on one platform.

The Lending-as-a-Service model is starting to heat up, and Akouba’s entry, backed by the due diligence done by the ABA, will be interesting to follow.

Jason and I see lots of opportunities here, and the changing dynamics of how credit is formed, underwritten and injected into supply chains is becoming pretty impressive compared to traditional methods. If you like to reach out to us, you can contact me at dgustin(at)globalbanking.com

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