Thought Leaders in Financial Technology: Brock Blake, CEO of Lendio (Part 4)

Sramana Mitra: What are the trends in the industry? One of the trends that I’m starting to see is that what started more as a FinTech phenomenon is starting to come into the mainstream. One of the companies you’ve mentioned earlier is American Express.

I actually did a story last year with American Express’ FinTech offerings for small business lending. They basically said that they’ve been observing all these companies like OnDeck. They’ve just brought that whole functionality of lending against what they see in their data as a lending practice.

To what extent is that a trend that you’re seeing – that mainstream banks are starting to bring in FinTech capabilities into small business lending?

Brock Blake: There’s no question that’s the trend right now. You see banks that are looking at new ways to underwrite loans. They’re trying to be more efficient with their loans and create similar products to some of these FinTech or non-bank lenders. But they’re going about it in three ways. One, they’re either building it on their own like American Express has done.

Two, they might be partnering with a non-bank lender similar to the way Chase has partnered with OnDeck. Chase is the customer and OnDeck is providing the technology in the underwriting and servicing. Chase is essentially white-labelling the whole service.

Three, they’re licensing the technology. There’s a company out there called Mirador. The bank says, “I already have the underwriting and servicing capabilities. I already have the customers and the team. I just need the technology to make it faster.” Then they go out to license that technology.

Banks are doing some of these things that’re exciting to see. It’s just slow. The most innovative banks are doing that but are just now starting to adopt some of these things. I kind of wish and thought that they would’ve adopted some of these things two or three years ago. The ones that are adopting it now are the early movers. So mainstream banking is still, in my opinion, probably three years away from doing some of this stuff.

Sramana Mitra: I think it’s going to take another five years for this to become mainstream. But I think in the five to ten-year time frame, this becomes mainstream. Don’t you agree?

Brock Blake: No question.

Sramana Mitra: That’s a really good thing though. In the grand scheme of things, three to five years is not that long. My next question is a variation on data feeds. We’re talking about the kind of signals against which banks or FinTech companies are lending whether it’s cash, transactions, or receivables.

What are some of the popular data feeds that you’re seeing out there that are being used to do this kind of rapid-fire loan application evaluation? I’ll just start you out with some of these topics and companies that we’ve covered like both Kabbage and OnDeck use eBay sellers’ data, transaction data, or Amazon transaction data. Intuit is using their own QuickBooks online data. What are some of the popular ones out there?

Brock Blake: Everyone uses it. The standard baseline is everyone pulling credit and bank data. Every type of lender out there is trying to find proprietary source of data and you’ve mentioned a few of them. Kabbage is using eBay seller data and Intuit is using their own QuickBooks data. We’ve partnered with Heartland Payment Systems and it’s a very large merchant account provider with millions of small business owners. We have access to all of their data on how much credit cards they’re accepting every month and how much in revenue is coming from their credit card volume.

This segment is part 4 in the series : Thought Leaders in Financial Technology: Brock Blake, CEO of Lendio
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