Articles by deBanked Staff
Upstart: 91% of loans fully automated
February 19, 2025AI-based online consumer lending company Upstart just wrapped up a strong year, generating a tiny $2.8M net loss on $219M in revenue. Upstart was known for AI in the fintech industry before AI became the buzzword it is now. Ninety-one percent of the company’s loans in 2024 were fully automated with no human involvement, and 93% of instant approvals converted to funded loans.
Notably, a significant amount of their loan volume is generated by direct mail.
“Whenever our models get better, we tend to get more volume from partners, DM — direct mail converts better so that we can actually increase the amount of direct mail we send,” said CEO David Girouard.
While the company halted its earlier plans to add small business loans to its product mix, it still estimates the size of the market in its quarterly presentations. And according to that it’s an $895 billion market annually.
Analysts on the call liked what they heard about Upstart’s 2024 performance.
“2024 was a year of rapid quarter by quarter improvement for Upstart, and the fourth quarter clearly took the cake,” said Girouard. “Considering the weak environment we faced at the beginning of the year, we couldn’t have asked for a stronger finish. In Q4, our business grew dramatically across all our product categories on a sequential basis, delivered Adjusted EBITDA at levels not seen since the first quarter of 2022, and came within a whisker of returning to GAAP profitability.”
Industry Event Schedule at a Glance
February 17, 2025Here’s what in store for 2025:
2/20/25: deBanked CONNECT MIAMI – Miami Beach, FL
5/19/25: Broker Fair – New York, NY
10/28 & 10/29/25: B2B Finance Expo – Las Vegas, NV
What to Look Out For in Back-up Servicing
February 17, 2025
“There is a misconception that back-up servicing is merely an Insurance Policy,” states Larry Chiavaro, Chairman of Paramount Servicing Group, in a recently released White Paper on the subject. “That is not the case in today’s rapidly changing markets. Fluctuating interest rates, the creation of many new asset classes, and emerging technology have created many new opportunities for all.”
The 12-page paper on back-up servicing dispels many myths while educating lenders about what to look out for when choosing a servicer. It is clear that the selection process should not be an afterthought and can be very consequential for one’s business. Chiavaro breaks it down well. You can download the paper here.
The CFPB is Now Investigating the CFPB
February 13, 2025The new CFPB, one in which the office is closed and its workers can’t work, has now refocused its attention to investigating itself. A new tip line has been set up for people being pursued by CFPB enforcement or supervision staff to report them as being in violation of a stand down order. That’s because Acting Director Russell Vought has ordered its employees not to work while an audit conducted by the Department of Government Efficiency takes place. This tip line is designed to root out employees ignoring the order.
Vought confirmed the tip line on Thursday.
Shopify Capital Originates ~$3 Billion in Merchant Funding in 2024
February 11, 2025
Shopify Capital originated ~$3 billion worth of MCAs and business loans in 2024, up by 50% over the prior year. For the sake of comparison, online small business lender Enova originated $4 billion in 2024. Shopify is an e-commerce platform first, however, and is growing on all fronts
“2024 was a stand-out year for Shopify,” said Shopify President Harley Finkelstein. “We seized every opportunity to fuel our growth and it showed in the results quarter after quarter. Heading into 2025, we are committed to making entrepreneurship more common and further establishing Shopify as the go-to commerce platform for businesses of all sizes. With our proven track record, the agility of our platform, and our relentless focus on merchant success, we like our odds in this evolving technology landscape, and are excited about the opportunities it brings for Shopify and our merchants.”
Trump: We got rid of the CFPB
February 10, 2025
The one week closure of the CFPB may last longer than previously suggested. The President on Monday talked about the CFPB’s existence in the past tense. While speaking rather candidly on his feelings about Senator Warren, he said of the recent orders freezing the CFPB’s operations: “We did the right thing. [The CFPB] was a very important thing to get rid of.”
When a reporter requesting clarification asked him: “Your goal is to get it totally eliminated?” Trump responded by saying “Yeah because we’re trying to get rid of waste, fraud, and abuse.”
Just days earlier Acting Director Russell Vought ordered the agency’s offices be closed for a week and that all employees refrain from work of any kind.
Small business lenders and MCA funders were scheduled to begin collecting data in accordance with the CFPB’s 888-page rule book starting this July.
CFPB HQ Temporarily Closed, Operations Frozen
February 10, 2025The CFPB’s headquarters in Washington DC will be closed this week as the agency undergoes an audit from the Department of Government Efficiency. The audit coincides with the arrival of yet another new Acting Director, Russell Vought, who is also serving officially as the Director of OMB. At the CFPB this weekend, Vought told employees not to “approve or issue any proposed or final rules or formal or informal guidance” and to “suspend the effective dates of all final rules that have been issued or published but that have not yet become effective.” He also told the Federal Reserve that the agency does not need funding at this time due to having too much on hand already.
Pursuant to the Consumer Financial Protection Act, I have notified the Federal Reserve that CFPB will not be taking its next draw of unappropriated funding because it is not "reasonably necessary" to carry out its duties. The Bureau's current balance of $711.6 million is in fact…
— Russ Vought (@russvought) February 9, 2025
While he has ordered all final rules that have been issued or published but not yet effective be suspended, some legal observers have indicated that the small business data collection process overseen by the CFPB (pursuant to Section 1071 of Dodd-Frank) that is scheduled to start on July 18 is technically bound by rules already in effect and that the deadline is merely the start date for compliance. However, that interpretation may be at odds with the spirit and intent of the suspension.
The Independent Community Bankers Association (ICBA) welcomed Vought into the role. “We look forward to working closely with Director Vought, the Trump administration, and the 119th Congress to implement needed CFPB regulatory reforms to help community banks meet the needs of local communities,” they said. The statement included a link in which they call for the small business lending data collection rules to be repealed.
“Intrusive data collection will compromise the privacy of small business applicants, effectively ‘commoditize’ small business lending, and increase the cost of credit,” they say. “ICBA urges the 119th Congress to promptly repeal or substantially revise Section 1071 to limit the implementation of a destructive rule.”
Lightspeed Accelerates Growth of its MCA Business
February 9, 2025Lightspeed Capital accelerated the growth of its principal issued for its merchant cash advance program, the company shared in its latest quarterly earnings report. Normally the company has more to say about this division but its attention was focused on an “executing a full transformation plan.”
As part of its previously-announced strategic review, the Company conducted an in-depth evaluation of its portfolio, including market attractiveness, competitive dynamics, and its right-to-win as well as evaluating the best ownership structure to navigate Lightspeed through a transformation. The Company has already set its transformation plan in motion, focusing on growth in retail in North America and hospitality in Europe, both leading growth engines, with a strategic focus on expanding locations and increasing software and payments ARPU, with the other business areas optimized for efficiency and aimed at driving a maximum profitability for the whole business.
The Company-wide transformation to deliver on the new strategy will focus on:
- Go-to-market: enhancing Lightspeed’s go-to-market strategy with targeted outbound efforts, field sales and local marketing expansion, and verticalized execution to maximize efficiency and improve win rates, including deepening supplier integration in focus verticals and deploying AI-driven customer acquisition across retail in North America;
- Product & Technology: investments focused on key growth areas—enhancing inventory management, forecasting, and supplier integration for retail in North America, while optimizing operations, guest experience, and analytics for hospitality in Europe;
- Capital Allocation: transformation initiatives to free up capital for investment in growth areas; and
- Share Repurchase: a share repurchase program to return up to $400 million in cash to shareholders, including the immediate execution of approximately $100 million3 under our current authorization, plus an additional $300 million, in each case subject to market conditions.
