Lendio & Bankwell Partnership

Bankwell Financial Group, Inc. has teamed up with Lendio in a strategic move to enhance its small business lending services. This partnership is set to transform the SBA 7(a) loan process using Lendio's Intelligent Lending platform, offering significant improvements in efficiency and accessibility.

Key Features of the Partnership:

• Instant Loan Offers: Bankwell will now provide immediate SBA 7(a) loan approvals utilizing automated underwriting technology. This modern approach drastically shortens the traditional 30-60 day loan origination period.

• Digital Loan Application System: Loans will be accessible to existing depositors, new applicants, and select partner-sourced customers through a seamless digital interface.

• Enhanced Risk Assessment: The use of advanced, transaction-driven analysis allows for quicker and more cost-effective risk evaluations.

Primary Benefits of the Collaboration:

• Enhanced Customer Experience: According to Ryan Hildebrand, Chief Innovation Officer at Bankwell, this partnership streamlines the borrowing process, enabling quicker fund access for small business clients.

• Meeting Consumer Demand: Reflecting the preferences of the market, the digital-first strategy meets the needs of 85% of small business owners who value speed, and 77% who prefer online or mobile application processes.

• Modernizing Lending Practices: Brock Blake, CEO and Co-Founder of Lendio, notes that this initiative redefines small business lending by equating the quick processing times of SBA loans with other financial products.

The Trend of Hybrid Lending Models

There is a growing trend of partnerships between alternative lenders and traditional banks:

• Banks are leveraging the fintech capabilities of alternative lenders to expand their small business loan offerings.

• Some alternative lenders are licensing their technology platforms or white-labeling their services to banks.

• Examples include partnerships between Kabbage and banks like ScotiaBank and Santander, as well as JPMorgan Chase partnering with On Deck Capital.

Recent years have seen a surge in strategic alliances between banks and alternative lenders. Notable examples include:

• JPMorgan Chase's discussions with FS Investments and Octagon Credit Investors to expand private credit offerings

• Citigroup's launch of Cinergy, a $2 billion private lending venture with LuminArx Capital

• Wells Fargo's partnership with Centerbridge Partners for direct lending to midsize and family-owned companies

These partnerships aim to combine the established infrastructure of traditional banks with the technological innovation of alternative lenders.

Our Opinion

Banks adopting fintech capabilities may erode the competitive edge of alternative lenders. Alternative lenders may need to accelerate innovation to maintain their market position. Such partnerships could lead to a more concentrated market, potentially squeezing out smaller players.

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