Online lenders looking for growth turn to credit unions for funding

Credit unions and fintech lenders may seem strange, but in recent years they have formed successful partnerships. Online lenders have grown like wildfire and along the way have sold their loans to many credit unions who see the value in diversifying their balance sheets and gaining access to loan products and programs. which could be expensive to set up from scratch. These relationships provide mutual benefits – the online lender has access to the capital it needs to fuel growth, while the credit union opens up the opportunity to acquire new members and grow existing member deposits.

It is important that fintechs approach partnership discussions with their business goals in mind. If growth is the priority, fintech can find great value in partnering with a larger institution with a larger balance sheet. Still, not all credit unions are the same, so it helps to understand the additional regulatory compliance requirements related to the size of the credit union’s assets.

For example, institutions with at least $10 billion in assets are subject to the CFPB’s vigilant enforcement of consumer protection laws and regulations. As a result, fintech operators that partner with large credit unions will also be asked to adhere to more stringent compliance, reporting, underwriting, data security and privacy requirements, and must be staff prepared. and the processes needed to meet those expectations. A successful partnership requires major financial institutions and fintechs to work together to understand these requirements, creating a win-win situation for all parties, especially considering recent CFPB consent orders involving fintechs.

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