Banking
Entegra Bank Chooses Velocity Solutions to Power Its Small Business Digital Lending
December 18, 2018
Velocity Solutions announced today that its Akouba digital lending platform was selected by Entegra Bank to power the bank’s digital lending for its small and medium-sized business customers. Akouba provides community and regional banks with origination and underwriting services.
“We selected Akouba not only for their cutting-edge technology and willingness to work with us, but for the very positive impact we believe this will have on the bank’s bottom line and on the customer experience,” said Charles Umberger, Executive VP and Chief Lending Officer for the Franklin, NC-based Entegra Bank.
According to the Velocity Solutions statement, Akouba is the only small business digital lending solution endorsed by the American Bankers Association (ABA). Akouba was endorsed by the ABA back in February 2017.
“The ABA’s endorsement will give lending institutions the assurance that Akouba’s solutions meet the highest standards,” said CEO of Akouba Chris Rentner, when they received the endorsement from the ABA. “In a rapidly changing lending environment, and with marketplace lenders disrupting the business lending space, our platform will help banks bring their customers the technology they have been lacking.”
In the same way that OnDeck’s ODX is trying to improve online lending for large banks, like Chase and PNC, Velocity’s Akouba does the same thing for regional banks.
“The small business loan application process is very time-sensitive and costly for banks, and there is a need to simplify and accelerate the process,” said Bryan Luke, chairman of ABA’s Endorsed Solutions Banker Advisory Council.
Velocity Solutions, which operates Akouba, is based in Fort Lauderdale, FL and employs over 100 people, according to Crunchbase. Entegra provides personal and business banking serves at 20 retail branches throughout Georgia, North Carolina and South Carolina.
Cross River Bank Raises $100 Million
December 11, 2018Cross River Bank, which provides banking services to fintech companies, announced last week the completion of a funding round of roughly $100 million. This was comprised of a $75 million equity investment from KKR, along with capital from Andreessen Horowitz, Battery Ventures, Rabbit Capital, and funding from new investors CredEase and Lion Tree. This adds to a $28 million raise a little over two years ago.
Cross River, which originated more than $5 billion in loans as of the end of August 2018, has developed partnerships with fintech leaders to build fully compliant and integrated products within the lending marketplace and payment processing spaces. They have about 15 lending platform partners, including fintech clients Affirm, Best Egg, RocketLoans, Coinbase and TransferWise.
According to the announcement, this new capital will be used to allow Cross River to continue building a complete banking platform where fintech companies can leverage best-in-class banking technology coupled with compliance.
“Cross River offers solutions to fintech companies by giving them access to a full suite of banking solutions and services in a single, fully compliant and innovative platform, making it an increasingly attractive and valuable franchise in a dynamic marketplace,” said Dan Pietrzak, Member and Co-Head of Private Credit at KKR, Cross River’s leading investor.
According to its website, Cross River was named “most innovative bank” by LendIt in 2017 and 2018. Founded in 2008, the Fort Lee, NJ, business-oriented bank has more than 180 employees.
Trump Administration Criticizes Postal Banking Concept
December 9, 2018
Earlier this week, a Trump administration report diminished the idea of having the United States Postal Service take on the role of a bank.
“Given the USPS’s narrow expertise and capital limitations, expanding into sectors where the USPS does not have a comparative advantage or where balance sheet risk might arise, such as postal banking, should not be pursued,” the report states.
This argument – that the USPS has no experience in banking – is the same that many banks presented when the idea was introduced in a 2015 report from the Office of the Inspector General. According to a June 2017 story in Tearsheet, a financial publication, those in favor of the idea of postal banking think that it could be a way for millions of unbanked or underbanked Americans to gain access to financial services. It could also create a new revenue stream for the perennially unprofitable USPS. (The USPS reported a net loss of $3.9 billion in fiscal year 2018, its 12th straight year of net losses.)
To those opposed to the idea, this would place a burden on an already struggling system, and would be unprofitable. While postal banking has the support of a number of high-ranking democrats, including Senator Elizabeth Warren of Massachusetts and Senator Kirsten Gillibrand of New York, postal bank has a surprising opponent: the National Council of Postal Credit Union (NCPCU).
According to a story in the Credit Union Journal, NCPCU board chair and CEO of Signature Federal Credit Union Becca Cuddy said, “Any new competition in the financial field is a threat to postal credit unions.” She suggested that a better strategy might be for third parties – possibly including banks – to partner with postal credit unions or the NCPCU “rather than try to reinvent the wheel.”
It is worth noting that postal banking did exist in the U.S. from 1911 to 1966. And according to the Pew Charitable Trusts, there are currently over 1.6 billion postal bank accounts, many in developed economies such as Japan, Brazil, France and Switzerland.
Signature Bank Partners with trueDigital
December 4, 2018
Today, Signature Bank unveiled a proprietary digital payments platform for its commercial clients, according to a statement released by the bank. The platform, called Signet, is designed to allow Signature Bank’s commercial clients to make real-time payments in U.S. dollars, every hour of the year.
“The ability to transmit funds between approved, fully vetted commercial clients of the bank at all times is very valuable, especially in light of the increasing speed and frequency at which they conduct their business,” said Joseph J. DePaolo, President and Chief Executive Officer at Signature Bank. “Signature Bank has made a commitment to invest in its technology infrastructure, and the Signet Platform is indicative of this investment,”
This commitment by a bank to embrace technology is consistent with other banks of late. Chase and PNC have partnered with OnDeck’s ODX to streamline their online lending processes and other banks have partnered with fintechs recently as well.
“The partnership between trueDigital and Signature Bank will quickly prove to be extremely beneficial and revolutionary for clients globally as they will now be afforded the opportunity to make instantaneous USD payments to one another in real-time at no cost per transaction,” said Sunil Hirani, Founder of trueDigital.
The new Signet platform uses blockchain technology and can be used to make payments across a wide variety of industries, initially focusing on power, shipping, real estate, auto and digital assets where costs, delays, operational risks and counter-party risks are significant, according to a trueDigital statement.
The platform is not designed for a very small company as transactions made on the Signet platform require a minimum account balance of $250,000. Also, the companies exchanging money must both have an account at Signature Bank.
The New York State Department of Financial Services has approved the Signet platform and deposits held on the platform are eligible for FDIC insurance, up to the legal insurable amounts defined by the FDIC.
Signature Bank is a New York-based full-service commercial bank with 30 private client offices throughout the New York metropolitan area. This year, the bank opened a full-service private client banking office in San Francisco. Signature Bank’s specialty finance subsidiary, Signature Financial, LLC, provides equipment finance and leasing. trueDigital is a New York-based fintech company that provides solutions to financial markets by utilizing blockchain-based technologies.
Numerated to Improve Online Lending for Regional Banks
November 30, 2018
On Wednesday, Numerated announced that it had closed $8 million in financing, bringing its total to $17 million. Numerated is a platform that helps banks make automated credit and lending decisions.
“We’ve seen a tipping point in the market, with banks across the U.S. focused on digitally serving their business segments and out-competing national and global lenders,” said Numerated founder and CEO Dan O’Malley. “And we look forward to continuing to develop a platform that drives real growth for them.”
Like the recently launched ODX, which grew out of OnDeck’s success helping Chase with online lending, Numerated was first developed in 2015 by Eastern Bank to improve its online lending capabilities. In 2017, it was spun out as an independent company by O’Malley, who had been Chief Digital Officer at Boston-headquartered Eastern Bank.
A new investor who contributed to Numerated’s latest round is Raj Date, the founding Deputy Director of the Consumer Financial Protection Bureau (CFPB) and the current Managing Director at Fenway Summer Ventures. Date will also join Numerated’s Advisory Board.
“The industry has been sorely lacking a solution designed specifically for community and regional banks to compete and win against giant global banks and alternative lenders in business banking,” Date said. “Numerated has quickly grown to become the market leader in business lending with its real-time fintech platform, and I look forward to advising the company as it continues its growth.”
While OnDeck’s ODX and Numerated have similar offerings and objectives – to help banks become faster and more competitive online lenders – Numerated’s focus seems to be on servicing smaller regional banks. Some of its clients, according to its website, include Seacoast Bank, Franklin Synergy Bank, Eastern Bank and MidFirst bank.
Meanwhile, ODX services Chase and it announced in October that its first client as an independent entity was PNC Bank.
“We’re looking at the top 200 banks first,” OnDeck CEO Noah Breslow told deBanked in October.
Numerated was launched in 2017 by O’Malley and is based in Boston.
Breslow Shows What a Fintech/Bank Partnership Looks Like
October 24, 2018
In the wake of OnDeck’s announcement of ODX, a new subsidiary that will service banks, OnDeck CEO and Money 20/20 veteran Noah Breslow took to the stage for a discussion with his new business partner, Lakhbir Lamba, Head of Retail Lending at PNC Bank. PNC will now be using ODX to originate lines of credit for the bank’s small business customers, while everything will stay on PNC’s balance sheet.
“We’re keeping a laser focus on small business lending,” Breslow said, when asked if OnDeck would begin to serve other segments of the market, like student or auto loans.
“The problems that small businesses face are worldwide,” Breslow said, indicating that the company has interest in expanding service to small businesses internationally. Already, OnDeck operates in Canada and Australia.
The moderator asked if an application that is rejected by PNC would become a lead for OnDeck. Breslow and Lamba said that is not currently the arrangement, but that it may be a possibility.
“Our goal [with ODX] is to service banks,” Breslow said, while acknowledging that banks serve a different kind of small business customer than OnDeck.
“We will make sure that we underwrite based on PNC’s risk appetite,” Breslow said.
Branson Adds Charm, Not Expertise, to Money 20/20
October 23, 2018
Money 20/20’s keynote speaker, serial entrepreneur and philanthropist Sir Richard Branson, delivered inspiration and laughs to a packed audience yesterday. He was interviewed by Nuno Sebastiao, CEO of Feedzai, which fights financial crime.
While over 20 years ago Branson founded Virgin Money, a sizable UK-based bank, he demonstrated clear discomfort and disinterest in talking about banking. When asked about finance, he said, “I brought notes,” and produced what looked like a thick chunk of papers from his pocket. When Sebastiao said, “moving out of the financial space,” Branson said “thank you!” which elicited a wave of laughter.
“I’ve seen situations in life that have frustrated me,” Branson said, and explained that Virgin Money is the result of a contract he was about to sign with a money management firm. He said that when he asked the investment firm what “bid offered 5%” meant, they got quiet. He then learned that it meant that they would take five percent of the amount he gave them before investing anything. Upset by that, he thought he could do better in financial services and he hired a banker to help launch the company.
Similarly, he said Virgin Airlines was born when he couldn’t get a flight from Puerto Rico to the Virgin Islands because the airline said there weren’t enough passengers that day. He thought he could do better.
Since he first saw a man walk on the moon, he said he always imagined that he and his family would go to the moon someday. But when he realized about 14 years ago that it didn’t look like that was going to happen, he created Virgin Galactic Airways, which is the first commercial rocket program to the moon.
“I registered Virgin Galactic Airways and Virgin Intergalactic Airways, because I’m quite an optimist,” Branson said, producing another wave of laughter.
After years of testing, in which one test pilot was killed, Branson said that he plans to go to the moon next year.
“We can’t leave it up to government to solve the world’s problems,” Branson said, conveying that businesses, small and large, must play a role in improving the world, whether it be on a local or international level.
At the close of the interview, to bring the topic back to finance, Branson said, “Hopefully I’ll learn a little more about banking for next time.”
OnDeck (ODX) Adds PNC Bank as Second Bank Client
October 22, 2018
PNC Bank announced today that in 2019 it plans to offer fully digital business lines of credit by using OnDeck’s Platform-as-a-Service solution, ODX, a new subsidiary of the online lender.
Last week, OnDeck announced the creation of ODX, which is an OnDeck subsidiary that will focus soleIy on helping banks become faster, more efficient online lenders to small businesses. A successful partnership with Chase bank in 2016 prompted OnDeck leadership to created a separate entity and PNC Bank is ODX’s first major client.
“We decided strategically this year to really make a big bet… [and be a] company that’s going to support many banks,” OnDeck CEO Noah Breslow told deBanked.
