Hoosier Banker 39 1 The emergence of both cloud and high-speed computing has also been a boon to technology-enabled lending. 2 “Marketplace Lending: Fintech in Consumer and Small-Business Lending (PDF)”. Congressional Research Service, Sept. 4, 2018. Despite growth in this market, it is important to note that marketplace loans outstanding represent less than 1% of the total consumer and small business loan market. Knowing the Risks Bank participation in this area carries a number of risks, some of which are inherent to banking and thus familiar, and some that are new. Risks include: • Traditional credit risks; • Risk that the underlying technology model might not work as expected, also called “model risk”; • Outsourcing and vendor management risks, when depending on models developed by third parties; • Consumer compliance risks arising from the use of nontraditional data, including fair lending risk, unfair and deceptive acts and practices, and fair credit reporting; • State law issues, such as caps on interest rates (usury laws); • Uncertain performance of the models in provisioning of credit during economic downturns; • Cyber risks resulting from an extended technology footprint. What’s Next? Technology-enabled lending is growing. The pace of future growth will depend on the demands of consumers and small businesses for convenience and speed. While technology-enabled lending is promising, its risks to the consumer and small business must be properly managed. HB Association members and staff to submit names of IBA employees who perform acts of exemplary service. Nominations are read at monthly staff meetings, and a drawing determines the winner. To nominate an IBA employee for the High Five Award, call 317-387-9380 or email HB@indianabankers.org. HB Congratulations to Paul W. Freeman and Elizabeth DeHaven, who were honored with the Indiana Bankers Association High Five Award in August and September, respectively. Paul is IBA’s executive vice president, and Liz serves as education meeting coordinator. IBA’s High Five Award supports professional development by inviting HI 5 Paul W. Freeman Liz DeHaven A communications toolkit created by the Indiana Bankers Association helps member banks share good-news stories with media outlets. View the toolkit at: indianabankers. org/communications-toolkit HB Tell the Story of Banking
RkJQdWJsaXNoZXIy MTg3NDExNQ==