WASHINGTON: The American Bankers Association, a trade group for U.S. banks, has been hunting for a marketplace lending platform to help its members ramp up their digital offerings. The ABA has run a formal bidding process to secure a marketplace lending partner, spokesman John Hall confirmed on Friday. He could not say which companies were under consideration because the information was confidential.
Marketplace lenders like LendingClub Corp (LC.N), Prosper Funding and Funding Circle connect borrowers and lenders through their platform and charge an origination fee. They are part of a broader trend of financial-technology companies upending traditional methods of banking, where customers visit brick-and-mortar branches to apply for mortgages, open investment accounts or get small business loans.
To stay competitive, big banks have launched their own digital offerings or sealed individual partnerships with startups. For instance, JPMorgan Chase & Co (JPM.N) partnered with marketplace lender On Deck Capital Inc (ONDK.N) in 2015, while Goldman Sachs Group Inc (GS.N) launched its own online consumer lending service this year. But smaller banks have instead relied on ABA to source vendors for technology and other services. The association mostly represents banks with less than $250 million in assets. Such partnerships give startups access to a large network of customers, while allowing banks to improve digital offerings overnight without having to bear the development costs.
