Partnering with FinTech With the emergence of the COVID-19 pandemic and the onset of faster digitization in banking, banks, other depositories and institutional investors have expanded their ALM strategy to include purchasing third-party consumer loans for a variety of reasons. Through a fintech partnership, banks may find a more flexible and agile path to managing the balance sheet, interest income, and technological capabilities. A partnership between a bank and a fintech company can be structured to be a successful and mutually beneficial relationship. Upgrade, Inc. has helped bring about a digital transition in the consumer lending experience. Today, Upgrade offers personal loans, personal credit lines, and auto loans to mainstream consumers. In turn, these loan products are funded by a growing number of financial institutions. Upgrade also recently launched a deposit program; loan buying partners can participate in the deposit sweep program and receive ultra-low-cost deposits in exchange for loan purchases. Partnering with Upgrade Has Benefits Upgrade can offer banks several benefits as a fintech partner: • Reputation— years of fintech experience including previous periods of tight credit • Best-in-Class digital consumer credit platform • Prime and super prime consumer assets through custom credit overlays (custom buy box) • Robust regulatory compliance processes and procedures • Multi-product approach with volume across multiple yielding assets • Track record with 150 (and counting) bank/credit union loan buying partners FEATURED ASSOCIATE MEMBER, UPGRADE, INC. • Average onboarding timeline ~30 days • Dedicated account management team • No account minimums or term commitment Upgrade’s Asset Purchase Program Upgrade facilitates consumer loans, more than $15 billion to date, which are in turn purchased by loan buying partners through a flexible asset purchase program, structured to work with a bank’s existing ALM strategy. Upgrade has chosen to partner long-term with stable funding partners such as banks and credit unions to focus on longevity versus an auction-style trading desk or securitization focus. While many loan buyers buy loans for balance sheet diversification goals, other buyers find the flexibility of Upgrade’s program meets liquidity management needs or declines in fee income. Flexibility means purchasing as needed, stopping, and restarting as needed. There are no minimums or purchase commitments with Upgrade. One of the more popular benefits to loan buyers is that Upgrade’s asset purchase program utilizes a multiproduct approach, with facilitated personal loans, personal credit lines and auto refinance loan volume available to institutional buyers. Personal Loans Upgrade’s personal loans, which are fully amortizing, fixed-rate loans, are one type of loan buyers can fund. As part of the digitization trend in banking, consumers can complete an application, check rate estimates, view a sample loan payment, and find answers online, with Continued on page 16 By Upgrade Inc. The Community Banker 15
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