In a deal that highlights the rising influence of Silicon Valley on finance, Regions Financial, which operate bank branches across 16 states, plans to partner with lending start-up Fundation to provide online loans to small businesses.
The partnership, due to be announced Monday, will give the publicly traded Regions, valued at $11 billion, a new online banking presence. It will give Fundation access to Regions’ small-business customers in a deal that could double the start-up’s revenue.
“We expect it will at least double (loan) originations and revenue” as a result of the partnership, CEO Sam Graziano told USA TODAY. He declined to provide revenue numbers for the privately held company, which is backed by private equity firm Garrison Investment Group.
The union comes as banks of all sizes — including Wall Street behemoth Goldman Sachs — look for ways to compete with the rise of online lenders — an increasingly crowded field that now includes LendingClub, OnDeck, Fundation and FundingCircle.
Online lenders present a threat to traditional banking because they face less cost and regulation. They can also provide loan guarantees faster than brick-and-mortar lenders.
Goldman Sachs predicts that the emerging financial technology industry, dubbed fintech, threatens to grab $4.7 trillion in revenue and $470 billion in profits from traditional Wall Street firms. That includes not just lending, but also payment transactions and even investment advice.
It’s not just talk, either. Goldman CEO Lloyd Blankfein in May told staff that the behemoth investment bank is working on its own online lending product for consumers. “The firm has identified digitally led banking services to consumers and small businesses as an area of opportunity,” Blankfein’s letter said.
For Regions, the quest to find an online partner started last year after it conducted a survey of customers and found close to 20% “were using online alternatives other than Regions,” said Joe DiNicolantonio, head of Regions business banking unit.
After talking with dozens of start-ups, Regions settled on Fundation, which underwrites its own loans, as opposed to LendingClub, which matches borrowers to lenders.
Small-business customers who go to the new co-branded website will fill out a single loan application. The site, powered by Fundation, will then direct borrowers to either Fundation or Regions, depending on their needs.
Customers seeking what is known as a fixed-rate installment loan, which is repaid over time with a set schedule of payments, will have their loans underwritten by Fundation up to $1 million. Borrowers seeking installment loans valued at more than $1 million, or other types of loan, such as a line of credit, will have their loans underwritten by Regions.
Fundation’s Graziano said he expects to win similar partnerships with other banks. “We lend on a national basis so I could very well see us being a partner to another regional bank in the Northeast or Midwest,” Graziano said.
Source: USA Today
More News
Visa boasts of fintech Fast Track success
May 14, 2020
New York City Credit Program Aims to Help Female Entrepreneurs
November 14, 2019
Import/Export SMBs Introduced to Fintech Lending Options
August 7, 2019
Online Loans You Can Take To The Bank
April 23, 2019
Case study: Citizens Bank – fintech friendly
February 19, 2019
2018 Best of FinXTech Awards Finalists Announced
March 29, 2018
Citizens Digitizes SMB Lending Process With Fundation
November 6, 2017
Park Bank Announces Expansion of Small Business Lending Efforts
November 2, 2017
Defining, Adopting and Executing on Fintech
September 5, 2017
Fundation CEO Talks Partnership Strategy
August 4, 2017
Fundation works with, not in place of, banks
April 3, 2017
Fundation Secures Credit Facility from MidCap Financial
March 21, 2017
Where the money is: A small business lending gap
March 3, 2017
Q&A Break with Sam Graziano, CEO of Fundation
January 18, 2017
Fintech Ideas Festival Rapid Fire Emerging Tech Panel
January 17, 2017
Citizens Bank Next To Take The Leap With Alt-Lender
December 21, 2016
Regions Eyes Small Business Loans in Latest Tech Deal
September 22, 2016
Is The Future Of Alt-Lending Playing Well With Others?
August 30, 2016
Best Alternative Small Business Loans 2016
May 27, 2016
Frenemies In the Marketplace
April 29, 2016
Bigger Bang In Small Biz
April 1, 2016
How To Get A Small Business Loan (Webinar)
March 29, 2016
Fundation Expands Small Business Lending
March 4, 2016
Top 25 Financial Blogs for Small Businesses – 2016
February 22, 2016
CEO Sam Graziano on MSNBC’s Your Business
February 18, 2016
Bank Branches Are Still Good for at Least One Thing
February 17, 2016
Fundation Named Finalist In 2016 Stevie® Awards
February 12, 2016
A “Meaningful” Platform-Bank Partnership?
January 6, 2016
Late on a Loan Payment? How To Do Damage Control
October 21, 2015
Regions Inks Unique Deal to Tap Booming Fintech Industry
October 13, 2015
Best Alternative Small Business Loans – 2015
October 6, 2015
Investing in Alternative Lending?
May 1, 2015