Digital Lending By Banks Wins Over Non Banks

The Federal Reserve Bank of Cleveland has just completed a great study of the booming online digital lending space called, “Alternative Lenders Through the Eyes of Mom and Pop Small Business Owners.”

From its research, it makes three excellent points for banks: 

Small business are increasingly looking for online and digital lending options that cut through the red tape using today’s sound underwriting and automated technology.   A sample focus group comment from the study shows that bank process for small business loans under $50k have historically be burdened by the same process and underwriting as loans ten times larger:

             

If a bank offers automated digital lending, small business customers would prefer it over non- bank lenders.   A sample focus group comment indicates that if a bank provided digital lending, small businesses would first to look to their bank where they have a deposit relationship:

Banks offer much more trusted digital lending options falling under clear and existing regulations compared to non-bank online lenders.   A sample focus group comment discussing alternative lenders as “these companies” states that banks have more standard and trusted loan offerings:

The upshot is that there is huge demand and preference for banks to offer digital, automated lending with sound underwriting to simplify loans under $50k to small business. MinuteLender is a technology platform that allows banks to do just that!