BancAlliance and Fundation Form Partnership to Bring Small Business Lending Technology Solution to Community Banks
NEW YORK and CHEVY CHASE, Md., March 1, 2016 /PRNewswire/ -- BancAlliance, a network of more than 200 community banks across 40 states, and Fundation, an online small business direct lender, today announced a partnership that advances the small business lending capabilities of community banks and brings greater choice and simplicity to small businesses seeking credit from their local community bank.
The program includes the introduction of a new financial technology platform, developed and operated by BancAlliance and Fundation, allowing small businesses to access an online portal that will guide each small business customer to the products that best meet its unique needs.
The program will benefit community banks that participate by reducing the costs inherent in small business lending and expanding customer access to a competitive set of credit products offered by the community banks themselves and by Fundation. To maximize the choices available to small businesses throughout the country, BancAlliance and Fundation expect to invite to the program additional lenders that address the credit needs of small businesses outside the banks' and Fundation's capabilities.
The program is designed to allow each community bank to preserve a high level of control over customer experience, credit products offered to their customers and utilization of their balance sheet, directly or indirectly through Fundation.
BancAlliance is a collaborative network of community banks that empowers its members to access growth opportunities that might not otherwise be available to them and to serve their customers in new ways. Community bank members typically range from $100 million to $10 billion in assets. In aggregate, BancAlliance's member base would rank as the fourth-largest U.S. bank in branch count and 13th-largest in total assets.
Leslie Andersen, president and CEO of Bank of Bennington in Nebraska and a member of the BancAlliance Board of Directors, stated: "Small businesses need credit to grow and add jobs, and community banks are the best lenders to serve them but have struggled with the costs of building their own systems and processes. This BancAlliance program gives its community bank members access to the best and latest technology, freeing banks like mine to deliver for our customers and help our local economies thrive."
Brian Graham, CEO of Alliance Partners, the manager for the BancAlliance network, stated: "Community banks have historically been the bedrock on which so many small businesses have been built and flourished, and we are proud that this program will help to continue that tradition. Community bankers have frequently told us about the challenges of operating a small business lending operation in a cost-efficient manner, and this program will begin to change that dynamic."
Sam Graziano, CEO of Fundation, added: "Small businesses are so important to the economy and an extremely diverse market. They have demonstrated that they value the relationships they have with their bank, and continue to prefer to access financial products from their bank when possible. This program will dramatically broaden the number of small business customers that can be served through the community bank system, and we are thrilled to be in a position to enable that."
About BancAlliance
The BancAlliance network is a shared lending platform in service to its community bank members. Our mission is to enable our members, the banks that direct our activities, to prudently diversify into high-quality loans in a manner consistent with the highest commercial and regulatory standards—without changing the nature or mission of the traditional community bank. BancAlliance has member banks located throughout the country. Learn more at www.bancalliance.com.
About Alliance Partners
Alliance Partners is an asset-management and advisory firm focused on helping regulated financial institutions and other investors optimize their asset strategies and build more profitable and more balanced loan and investment portfolios. Learn more at www.alliancepartners.com.
About Fundation
Fundation is a leading online lender to businesses nationwide. Fundation partners with a broad array of financial and nonfinancial institutions that serve the small business market in a variety of capacities to bring value-added credit solutions. Fundation builds customized product offerings and delivery methods to meet the needs of each unique partner and the credit needs of its small commercial customers. Visit http://5kb.f76.myftpupload.com for more information.
Not Worried About Regulation, Marketplace Lenders See More Bank Partnerships
By Nathan Stovall
Even with the prospect of added regulatory scrutiny, marketplace lenders plan to pursue more partnerships with banks.
Marketplace lenders increased partnerships with retail banks in 2015, and many of the lenders have said they expected those relationships to increase in 2016. Alternative lenders like OnDeck Capital Inc., LendingClub Corp., Fundation Group LLC, Prosper Marketplace Inc. and Funding Circle USA Inc. have all partnered with retail banks. Executives from several of those companies and other marketplace lenders said Feb. 11 at the KBW Winter Financial Services Symposium that the partnerships are attractive because traditional banks have access to a larger customer base, while the marketplace lenders help originate loans in a more user-friendly and cost-effective manner.
Sam Graziano, CEO at Fundation Group, an online provider of small business loans, said at the KBW event that banks do not originate small business credit in a very efficient manner, but they have far greater access to customers than alternative lenders. Fundation has partnered with Regions Financial Corp. and serves as the online small business loan origination channel for the Birmingham, Ala.-based bank. Graziano said his firm can improve the customer experience, while lowering the cost of origination for the bank.
Graziano also highlighted the partnership between JPMorgan Chase & Co. and OnDeck, another online small business lender. The Fundation executive said the joint venture between those two companies was interesting and noted that JPMorgan can use OnDeck's scoring program to access more customers.
Andrew Deringer, vice president and head of financial institutions at LendingClub, told a similar story, saying that the partnerships lower the cost of origination for banks while improving the customer experience "dramatically." He said at the conference many customers no longer want to connect with their financial institution through traditional means and would prefer an online option.
Ron Suber, president of Prosper Marketplace, said close relationships with banks are a core part of his firm's operations. He noted that five banks invested in Prosper when it raised $165 million in April 2015. Banks also purchase loans from Prosper and retain those credits on their balance sheets, while in other cases they have packaged and securitized those loans to investors.
"I think you're going to see more and more of us work with banks," Suber said at the event.
Partnering with a bank requires more of a marketplace lender than simply signing a contract. The FDIC recently emphasized that banks need to identify risks when partnering with marketplace lenders. The federal regulator stressed that the banks might lack extensive enough historical credit quality data of loans originated by the marketplace lenders due to their short tenures. The agency further said banks need to take into consideration marketplace lenders' compliance with fair lending laws, anti-money-laundering rules and consumer protection requirements, among other applicable regulations.
The Federal Reserve has highlighted similar risks that the partnerships can present to banks. While the Fed has acknowledged that partnerships can offer an opportunity for banks, it has noted that banks must consider regulatory compliance implications of the joint ventures.
Marketplace lending executives at the KBW event were fully aware of the regulatory risk that comes when partnering with banks. The executives emphasized that they view compliance with bank regulation as a prerequisite for joint ventures.
LendingClub's Deringer said one common misconception about marketplace lenders is that they operate "in the shadows" without regulatory oversight. Deringer said he is familiar with bank regulation, having previously served as a bank examiner for the Federal Reserve. He also noted that he spent more than 16 weeks last year in various examinations with the firm's bank partners. By partnering with banks, LendingClub is effectively inviting all the regulation banks face unto itself, he said.
"You have to get it right. You can't sacrifice the reputation of the bank. You can't sacrifice the reputation of our platform," Deringer said.
Rana Mookherjee, adviser, capital markets at Funding Circle, said he has spent considerable time, money and energy creating a comprehensive regulatory framework for his firm. He said any marketplace lender looking to partner with a bank has to meet the standards of any vendor to a bank, requiring them to adhere to vendor management information security provisions.
Fundation's Graziano views his relationship with banks as "regulation by association." He noted that regulators simply view his firm as an extension of the bank in question.
Nino Fanlo, president and CFO at Social Finance Inc., stressed that his firm sees compliance with bank regulation as an essential part of its business. He noted that the third employee hired at SoFi was its general counsel. He said the firm speaks with Eugene Ludwig, founder and CEO of Promontory Financial Group and former head of the OCC, on a weekly basis. Fanlo added that it is an unusual week where he doesn't speak with representatives from the White House, Congress and the CFPB.
"It's the cost of doing business. You have to get an A in the class or you don't go on," Fanlo said at the event.
CEO Sam Graziano on MSNBC's Your Business
Click the image below to watch the full interview.
More and more small business owners are checking out the online lending space when they need funding. The field is a true alternative to traditional bank loans. Sam Graziano, the co-founder and CEO of Fundation, tells Your Business how and why it’s an option that small business owners might want to consider.
Bank Branches Are Still Good for at Least One Thing
by Robert Barba
Even the kind of consumer who is always connected to the Internet may still crave a human connection when it comes time to open a bank account.
Consider Regions Financial. The Birmingham, Ala., bank recently launched an online tool that helps determine which checking account is best for its customers — or prospective customers — by asking a series of questions: what features they need, how much they receive in direct deposits each month, how many checks they write in a month, and so on.
The interactive tool is meant to recreate the experience someone might have in the branch as they talk to a banker who would go through a similar process in person. At the end of the session, the tool gives the user a recommendation and two options: open the account online or schedule an appointment in the branch. Preliminary results show the branches are still a draw.
"We are less than two months in, but our customers are choosing both options," said Andy Hernandez, head of digital banking for Regions. "For us, it is not about making them choose. It is about simplifying the experience and acknowledging that many customers may want to start the process online but finish it face-to-face."
For the banking industry, consumers' perhaps fickle nature presents a chicken-and-egg problem: Do consumers want a mix of digital and in-person banking, or does the inadequacy of current digital offerings effectively force them to use a second channel?
"Today," opening an account digitally "is a process that is not easy; banks have not made it crystal clear or very easy for consumers to become customers via digital channels," said David Albertazzi, a senior analyst at Aite Group.
His firm published a report last year on checking account trends based on 2014 data. "When we asked consumers why they did not complete an application using a PC, laptop or mobile device, 57% said because they needed to or wanted to talk to someone," Albertazzi said. Not being able to get a question answered was the second-highest reason (39%) for abandonment.
Seventy-three percent of people who opened a checking account in 2013 or 2014 did so in a branch, according to Aite. And don't assume those figures reflect seniors or baby boomers set in their ways; of those who opened a new account, 81% belonged to Generation X or were millennials.
Reducing abandonment, or improving digital sales, is a hot topic in banking. Several banks have made "omnichannel" banking — essentially building a seamless experience across its various channels — a priority.
"We are looking for ways to connect the [digital world and the physical world] and make it frictionless," said Brent Reston, a digital sales and service executive at Bank of America. "And largely, we are just responding to customer behaviors and where they want to interact with us. For instance, 65-70% of those who start their purchase journey online end up opening a product in person or through a call center."
In the fourth quarter, B of A's digital sales rose 31% year over year. The company recently tripled its digital banking budget. Some of the priorities it has set for the sales process include integrating a feature that extracts information from a photo of an identification card and making it easier to save an incomplete application to continue later, Reston said.
According to Albertazzi, the push to allow customers to open accounts on their terms is part of a movement toward making banking customer-centric rather than product-centric.
KeyBank is another bank that has found customers want at least the option to apply online.
"We want to make it easy for our clients to bank with us in the manner they choose," said Matt Lehman, the head of online and mobile at KeyBank. "We made a concerted effort to make applications available digitally in 2013 through online and then added the ability for mobile in 2014."
In 2015, the number of accounts opened digitally at Key was more than three times what it was in 2013.
While banks are looking at ways to make the digital application process easier, the fintech industry has also squarely identified this area as one ripe for partnerships. Regions Financial has been particularly enthusiastic about teaming up with other companies to improve its process. For instance, its tool to determine the best checking account stemmed from a partnership with Ignite Sales.
Also, in October, Regions partnered with the marketplace lender Fundation to offer small-business loans. The partnership was partly driven by the bank's desire to have an easy way for its customers to apply for a small-business loan online.
"It started a few years ago. Based on focus groups it became apparent that small businesses wanted to apply for credit online," said Joe DiNicolantonio, the head of business banking at Regions. "We explored all our options, including building something in-house, but ultimately decided on a partnership."
Such partnerships are likely attractive because of the speed of integration. Banks have to build around legacy systems and silos.
"Compare that to a business like ours — we are built from the ground up for the digital age," said Sam Graziano, Fundation's chief executive. "Because we are flexible and nimble, we can quickly build the interfaces needed to transmit the data."
Regions is also working with Avoka, a startup focused on the digital sales experience, to evaluate some of its retail products. Hernandez would not disclose additional details about the Avoka partnership.
A recent study commissioned by Avoka suggests there is a tremendous opportunity for banking in offering digital applications to small businesses. The survey found that while 58% of personal banking products could be applied for digitally, only 27% of business banking products could be.
"Historically, the focus has been on the consumer because that is where the volume is," said Derek Corcoran, Avoka's chief experience officer. "When you consider that small-business owners are among the busiest people, you see it is a real opportunity being missed."
Fundation Named Finalist In 2016 Stevie® Awards
10th Annual Awards Will Be Presented on March 4 in Las Vegas
New York, NY – February 12, 2016 – Fundation was named a finalist in the Sales & Customer Service category in the 10th annual Stevie® Awards for Sales & Customer Service, and will ultimately be a Gold, Silver or Bronze Stevie Award winner in the program.
The awards are presented by the Stevie Awards, which organizes several of the world’s leading business awards shows, including the prestigious International Business Awards and American Business Awards.
The final results will be announced during a gala banquet on Friday, March 4, at the Paris Las Vegas Hotel in Las Vegas, Nevada. Finalists from the U.S.A. and several other nations are expected to attend.
More than 2,100 nominations from organizations of all sizes and in virtually every industry were evaluated in this year’s competition, an increase of 11% over 2015. Finalists were determined by the average scores of 115 professionals worldwide, acting as preliminary judges. Entries were considered in 59 categories for customer service and contact center achievements, including Contact Center of the Year, Award for Innovation in Customer Service, and Customer Service Department of the Year; 51 categories for sales and business development achievements, ranging from Senior Sales Executive of the Year to Business Development Achievement of the Year; and categories to recognize new products and services and solution providers.
Fundation was nominated for having pioneered the first integrated partnership between an online lender and a traditional bank, Regions Bank. The first of its kind, this agreement combines the strengths of one of the nation’s largest full-service banks with those of a leading online direct lender to provide small businesses with a fully integrated, digitally enabled experience for loan products.
More than 60 members of several specialized judging committees will determine the Gold, Silver and Bronze Stevie Award placements from among the finalists during final judging, to begin January 25.
“The Stevie Awards for Sales & Customer Service continues to be the fastest-growing of our international awards programs,” said Michael Gallagher, president and founder of the Stevie Awards. “The sheer number of nominations is matched by the increasing quality of those nominations. We congratulate all of this year’s finalists and wish them well in the next phase of judging.”
“Fundation is honored to have been selected as a finalist in the Sales & Customer Service category,” said Barry Feierstein, Chief Operating Officer at Fundation. “Our partnership with Regions Bank is designed to provide the bank’s customers with the best possible digitally enabled experience when seeking a small business loan. We built the entire process around serving the customer, and it is terrific that our solution is being recognized as an award finalist in this category.”
Details about the Stevie Awards for Sales & Customer Service and the list of finalists in all categories are available at www.StevieAwards.com/Sales.
About Fundation
Fundation is one of the nation’s leading online direct lenders for loans to small and midsize businesses. Our innovative business model combines the benefits of a bank loan with the ease and efficiency of an online lender. Fundation is a direct lender: we originate loans with our own capital and keep loans on our balance sheet. Because we commit our own money to fund our customers’ business loans, our interests are aligned with those of our customers. We are successful when our customers’ businesses succeed and they are able to repay their loans back to us. As our customers’ long-term partner, we offer the highest level of personalized service and best-in-class products, which is why our customers come back to us when they need advice or additional capital.
About the Stevie Awards
The Stevie Awards are conferred in six programs: the American Business Awards, the German Stevie Awards, the International Business Awards, the Stevie Awards for Women in Business, the Stevie Awards for Sales & Customer Service, and the Asia-Pacific Stevie Awards. Honoring organizations of all types and sizes and the people behind them, the Stevies recognize outstanding performances in the workplace worldwide. Learn more about the Stevie Awards at http://www.StevieAwards.com, and follow the Stevie Awards on Twitter @TheStevieAwards.
Sponsors of the 10th annual Stevie Awards for Sales & Customer Service include Sales Partnerships and ValueSelling Associates.
Fundation Group Appoints Barry Feierstein as Chief Operating Officer
Addition of COO Reflects Company’s Continued Growth & Optimism
New York, NY & Reston, VA – Jan. 11, 2016 – Fundation Group LLC, a leading online direct lender to small businesses, today announced the appointment of Barry Feierstein to the newly created position of Chief Operating Officer (COO). Feierstein will report to Fundation’s CEO, Sam Graziano, and will be responsible for overseeing multiple aspects of the business including: marketing, business development, lending operations, servicing and administration.
Mr. Feierstein is a highly experienced senior executive having spent more than 25 years operating in both financial and non-financial businesses. Prior to joining Fundation, he held executive roles with Apollo Education Group including Chief Commercial Officer and Chief Business Operating Officer. Prior to Apollo, he served as Executive Vice President of Sales & Marketing at Sallie Mae, Inc., reporting to the CEO. Among his responsibilities was the generation of over $26 billion in annual federal and private loan origination volume. Earlier in his career, Mr. Feierstein worked as a management consultant with McKinsey & Company. He holds a B.A. degree from Tufts University and an MBA from Harvard Business School.
Commenting on the appointment, CEO Sam Graziano said Fundation will leverage Mr. Feierstein’s extensive experience in business development, marketing, operations and strategy at a time of rapid growth for the company and rapid evolution of the industry. “We’re extremely bullish on our prospects for 2016 and beyond, and adding a high-caliber, experienced executive like Barry further increases my sense of confidence and optimism about our future,” said Graziano, noting that Fundation’s growth will continue to be fueled by additional partnerships with banks and through other targeted strategic channels.
“I’m excited to be joining Fundation, a dynamic company that is positioning itself as a leading strategic partner to banks and other institutions that serve the financing needs of the SMB market,” noted Mr. Feierstein, “I look forward to joining Sam and the executive team and helping drive Fundation forward as it continues to expand its products offerings and customer base.”
About Fundation
Fundation is a leading online direct lender, providing small businesses with a simple and efficient online borrowing experience that leverages technology to streamline the collection of customer data, expedite the application process and offer customers unprecedented transparency. The company offers conventional term loans to small businesses nationwide for working capital, growth and expansion. The company also develops strategic partnerships that include technology and other service solutions with banks and other large-scale service providers to the small business market. Visit http://5kb.f76.myftpupload.com for more information.