Author: Julie Muhn (@julieschicktanz)

Gusto Taps Nav to Help Clients Build Business Credit and Access Financing

Gusto Taps Nav to Help Clients Build Business Credit and Access Financing
By Julie Muhn (@julieschicktanz) Posted on
Categories: Alumni News, Daily news, Gusto
  • Payroll, benefits and HR management solutions company Gusto and B2B credit and financing expert Nav are partnering this week.
  • Under the agreement, Gusto’s small business clients will have access to Nav’s financial health insights as well as its network of financing options.
  • Originally founded as ZenPayroll in 2012, Gusto has raised a total of $746 million.

Payroll, benefits, and HR management solutions company Gusto has selected B2B credit and financing expert Nav to help its small business customers build business credit and access Nav’s network of financing options.

With 300,000 customers, Gusto processes payroll and provides HR services such as employee benefits, health insurance, and 401(k) plans. Following today’s announcement, those businesses will also benefit from Nav’s personalized financial health insights that offer visibility into cash flow, credit insights, and suggested financing options. Additionally, Gusto’s business clients will have access to Nav’s network of 160 different financing options, which include loans, credit cards, and banking.

Gusto anticipates the funding services will help small businesses overcome obstacles such as finding available funding, improving cash flow stability, and managing their expenses.

“At Gusto, our mission is to help small and mid-sized businesses take care of their teams, while accelerating their growth. But these businesses can’t grow without having a full picture of their finances and the funding options available to them,” said Gusto Head of Partnerships Sonya Jamula. “That’s why we’re excited to join forces with Nav to bring them a broader range of options for funding and financial services – and to help more small and mid-sized businesses succeed.”

Nav was founded in 2012. Together with its network of financial providers, the Utah-based company helps its 350,000+ small business customers improve borrowing power and access working capital.

“Nav’s platform makes the path to funding less opaque and limits exposure to painful rejections and predatory lending. Small businesses need to have a transparent view into what options are available to them,” said Nav VP of Revenue Walt Levengood. “Our partnership with Gusto helps small businesses to have more control of their capital and to better manage their costs.”

Headquartered in San Francisco, Gusto has raised a total of $746 million since it was founded in 2012 as ZenPayroll. Co-founder Joshua Reeves is CEO.

Photo by Yan Krukau

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Dwolla Launches Open Banking Integrations

Dwolla Launches Open Banking Integrations
By Julie Muhn (@julieschicktanz) Posted on
Categories: Alumni News, Alumni profile, Dwolla

If you have your ear to the ground in the payments space, you have probably heard that pay-by-bank is the latest craze. Operating in the account-to-account (A2A) payments space since 2008, Dwolla is launching a new offering that echoes that trend.

To bring its A2A payments offering into the new era, the Iowa-based fintech announced the launch of Open Banking Services today. The new open banking integrations will expand on Dwolla’s existing API, adding instant account verification, balance checks, and fraud mitigation to the services offered to the company’s mid- to enterprise-sized business clients.

Dwolla’s Open Banking Services are available through a single API that allows businesses to integrate the entire payment experience– from identity verification to exchanging account credentials– into their existing application. The company has pre-integrated with leading open banking service providers to ensure a smoother implementation process for businesses, reduce complexity, and accelerate time-to-market for A2A payment solutions.

Overall, Dwolla eliminates the need for businesses to use multiple vendors. The company’s white-label API streamlines transactions, leveraging The Clearing House’s RTP Network to allow users to send and settle funds in real-time. Dwolla also offers lower transaction fees, improved accuracy, and enhanced security.

“Our vision with Dwolla’s Open Banking Services is to empower businesses with a seamless, all-in-one solution for A2A payments,” said Dwolla CEO Dave Glaser. “By consolidating essential A2A payment functionalities under one roof, we aim to simplify the payment landscape for businesses, enabling faster time-to-market and improved operational efficiency.”

Dwolla is a three-time Finovate alum and most recently demoed at FinovateSpring 2015 where it debuted FiSync. The company has raised $72.4 million across nine rounds of funding.

Photo by Pixabay

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A Preview of FinovateEurope: Trends and What to Expect

A Preview of FinovateEurope: Trends and What to Expect
By Julie Muhn (@julieschicktanz) Posted on
Categories: FinovateEurope 2024, Podcasting

The first Finovate event of the year, FinovateEurope, is set to begin tomorrow. Taking place at the O2 Intercontinental in London, FinovateEurope is a great way to hear discussion on the latest trends and see the newest fintech tools and solutions.

I had the opportunity this month to sit down with podcast host and Finovate VP Greg Palmer to discuss some of the trends we expect to see unfold on stage at FinovateEurope. You can tune into the podcast to hear our conversation, or take a look at some of the sessions and metrics I highlighted during our chat.

What I’m excited about

I’m eager to listen to sessions on generative AI that filter out the hype of what’s really going on and what is actually possible. I’m also curious to listen in on the buy vs. build conversation and to hear from Jillian Godsil, Author and Broadcaster at CoinTelegraph, about the potential of a crypto spring.

Spotlighted sessions

The new Finovate Hot or Not Gameshow takes the idea of what’s hot and what’s not in fintech to gauge what the industry has its sights on. As in years past, we’ll also host the Analyst All Stars and Investors All Stars panels.

Demo company highlights

FinovateEurope 2024 will host 36 demo companies, coming from 15 different countries, on stage this year. Of the 36 demoing, 90% are demoing on the Finovate stage for the first time and 75% are either debuting a new technology or are a new company.

Demo themes

  • Security/ Fraud/ Risk/Authentication/ Compliance: 7 companies
  • Wealth management/ Investing: 6 companies
  • Payments: 4 companies
  • Digital banking: 4 companies

Other demo themes– including lending, sustainability, customer experience, life insurance, pure play generative AI solution, mortgagetech, and financial education– have three companies or fewer.

Tune in to Finovate podcast episode 203 to hear more.

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Fintech Rundown: A Rapid Review of Weekly News

Fintech Rundown: A Rapid Review of Weekly News
By Julie Muhn (@julieschicktanz) Posted on
Categories: Fintech Rundown

It’s a leap year, which means we have an extra day in the month of February. How will the financial services industry Use the extra 24 hours this year? Check back for real-time updates on how the fintech landscape evolves this week.

Traditional banking

Legacy Bank & Trust reports it has doubled its assets after employing Jack Henry’s technology.

VyStar Credit Union selects NCR Atleos‘ Allpoint ATM Network to support growth.

Payments

In-person payment orchestration company Aevi partners with global card processing firm Silverflow.

Emirates and flydubai select Valuedynamx to power Emirates Skywards loyalty program.

Backbase and Alacriti partner to provide instant payment solutions for financial institutions.

Finix launches its business payments solution in the Canadian market.

AffiniPay selects Marqeta to power its SMB spend management solution for law firms.

AP automation and invoice processing company Basware appoints Head of AI and CIO to lead the company’s innovation drive.

PayU GPO launches a new suite of payment solutions to offer more payment options for merchants, offers Peruvian SMEs self-onboarding. 

Wedge launches Programmable Payment Solution for banking associations and credit unions.

Lending

Magnati and Biz2X announce embedded finance partnership in UAE.

Visa launches Working Capital Performance Benchmark to allow mid-market businesses to see how their utilization of working capital solutions compares to other mid-market businesses across industries and regions around the world. 

Security, fraud, and identity

DataVisor launches fraud and risk solution for sponsor banks to ensure compliance with new Banking-as-a-Service regulations.

AU10TIX launches Know Your Business solution to help companies know exactly who they are doing business with and avoid potential financial and reputational losses. 

Equifax introduces Business Verification Solution.

Financial wellness and wealth management

SaveAway earns finalist spot in the TechImpact Startup Competition sponsored by the NYC Economic Development Corporation and Community Development Financial Institutions Fund.

TIFIN AG announces collaboration with RBC Wealth Management U.S. to deepen advisor-client relationships.

Cetera partners with Wealth Access to help its bank and advisor clients deliver a more personalized experience to their end users.

T. Rowe Price taps Clearwater Analytics to power stable value investment operations.

Customer experience

NLX raises $12 million in Series A funding for its conversational AI technology.

DeFi

Ripple and Axelar Foundation partner to enhance XRP ledger’s interoperability across blockchains.

ClearJunction joins U.K. Cryptoasset Business Council to empower crypto ecosystem growth.

Insurtech

Atlantic Global Risk selects Novidea for insurance management.

Photo by SHVETS production

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Cross River Bank Launches Investment Banking Division

Cross River Bank Launches Investment Banking Division
By Julie Muhn (@julieschicktanz) Posted on
Categories: Daily news
  • Cross River Bank’s parent company CRB Group is launching an investment banking strategy.
  • The new division, which falls under CRB Securities, will be co-led by Benjamin Samuels and Henry Pinnell.
  • The new launch is sure to disrupt FT Partners, which has dominated the fintech investment banking scene since it was founded in 2001.

Banking-as-a-Service institution Cross River Bank announced its parent company CRB Group has launched an investment banking division.

Benjamin Samuels, who was formerly the Co-Head of Alternative Capital Solutions for Morgan Stanley’s Global Capital Markets Group; and Henry Pinnell, former Co-Head of Investment Banking from SVB Securities; have been tapped to lead the new investment banking team, which will fall under CRB Securities. CRB Securities, which has previously focused on assisting clients with privately placed credit transactions such as asset-backed securities, will advise clients on mergers and acquisitions, capital markets transactions, and other corporate finance decisions.

Cross River Bank has been building its network and banking expertise since it was founded in 2008. Today, the company offers marketplace lending, capital solutions, card and account programs, a wide range of payment tools, and solutions for loan financing. Cross River Bank plans to leverage its history and connections to offer its investment banking clients a comprehensive suite of investment banking services.

“We are proud to launch our investment banking division of our broker-dealer with two well-respected professionals in the industry, combining decades of experience in both the fintech industry and capital markets,” said Cross River Founder and CEO Gilles Gade. “Ben and Henry are tasked with enhancing even further our product offering to our fintech partners and beyond, enabling us to solve the distinct needs of each and every client.”

While the launch isn’t likely have a major effect on the fintech industry as a whole, it will certainly impact one player in particular: FT Partners. Founded by Steve McLaughlin, FT Partners has been one of the top fintech deal-makers since the firm’s 2001 launch. Cross River Bank is coming to the investment banking game with long-standing relationships from its vast network of fintech clients. This makes the new firm a formidable competitor to FT Partners.

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Google to Shutter Standalone Google Pay App

Google to Shutter Standalone Google Pay App
By Julie Muhn (@julieschicktanz) Posted on
Categories: Daily news, Google
  • Google is shutting down its Google Pay app in the U.S. on June 4, 2024. The payment infrastructure will still be available for ecommerce transactions and in-store tap-to-pay capabilities.
  • The app will still be available in India and Singapore.
  • Google is funneling users to Google Wallet, which U.S. consumers use 5x more than Google Pay.

Take a second to think about the last time you opened up the Google Pay app on your phone to make a payment or manage your digital payment cards…..

That may be the reason Google plans to shut down the U.S. version of its standalone Google Pay app. Starting June 4, 2024, users in the U.S. will no longer be able to access Google Pay. Instead, Google is funneling users to Google Wallet, which in the U.S. is used 5x more than Google Pay.

This move won’t impact the infrastructure of Google Pay– users will still be able to use the online payment system to checkout online or tap-to-pay in a physical brick-and-mortar store. Additionally, Google Pay will still be available to users in India and Singapore. In fact, Google said it will continue to build for the “unique needs” in those countries.

For now, here’s what U.S. users need to know:

  • Users can view and transfer their Google Pay balance to their bank account using the app until June 4. After that time, users can transfer their funds using the Google Pay website.
  • Users can access the offers and deals search capabilities within a new deals destination via Google Search.
  • After June 4, users will no longer have the ability to send, request, or receive peer-to-peer money transfers from the U.S. Google Pay app.

Google made clear that just because the app is dissolving, Google Pay isn’t going away. In fact, the company says it has “invested in making payments as fast and seamless as possible — like improving Google Pay autofill in Chrome, making it easy to pay for public transit and expanding the types of passes you can store in Wallet.”

Google Pay last made fintech headlines in December of 2023, when the company announced it was partnering with Affirm and Zip to add BNPL options for users in the online checkout flow.

Photo by Deepanker Verma

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Zūm Rails Raises $7.8 Million to Merge Open Banking and Instant Payments

Zūm Rails Raises $7.8 Million to Merge Open Banking and Instant Payments
By Julie Muhn (@julieschicktanz) Posted on
Categories: Daily news, Funding
  • Zūm Rails landed $7.78 million (CAD $10.5 million) in a Series A funding round led by Arthur Ventures.
  • The company will use the funds to scale its U.S. growth and to further expand its payments offerings, including the launch of new banking-as-a-service features.
  • Zūm Rails currently processes more than $1 billion in payments through its platform every month.

Canadian fintech Zūm Rails (pronounced zoom rails) brought in $7.78 million (CAD $10.5 million) in funding this week. The Series A round, which was led by U.S.-based Arthur Ventures, marks the company’s first VC funding round.

Founded in 2019, Zūm Rails seeks to make the payments experience less disjointed by integrating open banking and instant payments into a single gateway. This removes the need to stack technologies on top of one another and ultimately creates a better and more secure customer experience. The company launched in the U.S. market late last year, leveraging partnerships with Visa Direct, Mastercard, and MX.

Zūm Rails will use today’s funds to scale its U.S. growth and to further expand its payments offerings. Specifically, the company plans to launch new banking-as-a-service features for merchants and has plans to unveil a FedNow offering in the U.S. that will enable businesses to send and receive FDIC-insured payments in near-real-time. FedNow, the U.S. government’s real time payment service, launched last July.

“We’ve brought open banking and instant payments together in an omni-rail solution that enables companies to check off all of their payments needs from a single gateway,” said Zūm Rails Co-founder and CEO Marc Milewski. “With Arthur Ventures’ investment, we’re positioned for further expansion of our solution through the addition of banking-as-a-service and other new capabilities.”

As part of building out its U.S. operations, Zūm Rails has been working with financial service providers such as Fiserv to democratize access to open banking capabilities and real-time, FDIC-insured payments for businesses. “Having already transformed the Canadian payments landscape, the company is well-positioned to increase this growth with the investments it’s making in its product and scaling its presence across all of North America,” said Arthur Ventures Vice President Jake Olson.

As for what’s next, company Co-founder and Chief Sales Officer Miles Schwartz said that the company’s long-term vision transcends its individual capabilities. “Integrating these capabilities into a single solution that makes businesses’ lives easier will continue to be our focus as we double down on our expansion in the U.S.,” explained.

Zūm Rails, which up until now has been self-funded, currently processes more than $1 billion in payments through its platform every month. Among the company’s clients are Questrade, Coinsquare, and Desjardins.

Photo by Jonathan Petersson

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5 Lessons the U.S. Can Learn from India’s UPI

5 Lessons the U.S. Can Learn from India’s UPI
By Julie Muhn (@julieschicktanz) Posted on
Categories: List series, Thought Leadership

The National Payments Corporation of India (NPCI) launched the country’s Unified Payments Interface (UPI) in 2016 to serve as a real-time payments system to facilitate peer-to-peer and person-to-merchant transactions via mobile phones. Since then, the payments infrastructure has seen massive growth, having reached its peak in December of last year, when it surpassed 12 billion transactions worth $220 billion (Rs 18.23 trillion) in the single month.

The U.S. launched its real time payments initiative, FedNow, last July and has a lot to learn from India’s UPI. As the U.S. seeks to modernize its own banking infrastructure, here are five key lessons that can be learned from India’s experience with UPI.

Simplicity and accessibility

One reason for UPI’s growth is its simplicity and accessibility. The payments system allows users to transact using their smartphones with just a few taps. Notably, UPI doesn’t require the user to remember long bank account numbers or Indian Financial System Codes (IFSC). By simplifying the user experience in this way, UPI has helped drive adoption, especially among the unbanked and underbanked populations.

U.S. financial services can learn from this focus on the user experience that ultimately makes digital payments more intuitive and easy to use. When friction is reduced for end users–especially with underbanked populations in mind– adoption has the potential to skyrocket.

Interoperability

With a lack of open banking regulation in the U.S., the banking system severely lacks interoperability. UPI, on the other hand, is built on the principle of interoperability, allowing users to make payments across different banks and payment platforms. Facilitating payments among all players has helped create a level playing field for consumers and merchants alike and has contributed to UPI’s rapid growth.

In the U.S., interoperability among banks and payment platforms is still a challenge because many systems operate in silos. Many fear that cooperating will lead to a loss in competitive advantage. However, adopting a standardized, open, and interoperable approach as outlined in the proposed Section 1033 of the Consumer Financial Protection Act has the potential to not only drive innovation but also improve the overall user experience.

Security and fraud prevention

The NPCI built UPI on a robust security framework to ensure that transactions are safe and secure. The payments systems’ security has earned consumer trust and has therefore been a critical factor in driving adoption.

Security concerns surrounding digital financial services abound in the U.S., however, where many consumers worry about the safety of their financial information and are concerned for their own privacy. Established financial services firms and fintechs alike should prioritize security and adopt best practices from UPI in order to improve trust and confidence in their digital payments operations.

Low transaction costs

One things UPI transactions are known for is the low cost per transaction, which makes them an attractive alternative to cash payments. The cost savings has been a key driver of adoption, especially among small businesses and consumers.

Many digital payments solutions in the U.S., however, still carry high transaction fees, thanks to the large number of middlemen involved. The costs associated with digital payments stifle adoption, and incentivize cash usage or even paper check payments. Reducing transaction costs would change the incentives, driving more people and businesses toward digital payments.

Government intervention

One of the biggest lessons the U.S. banking system can learn from UPI is the role of government support in driving innovation. UPI was developed and rolled out by the NPCI with the support of the Indian government, as part of the country’s push towards a cashless economy. The government’s proactive approach has been key to the success of UPI and has helped create a culture that fosters innovation.

In the U.S., greater government support and collaboration with the private sector could help drive similar advancements in digital payments. This idea carries significant challenges, however, as many Americans shy away from governmental intervention, especially when it comes to their finances.

Photo by rupixen.com on Unsplash

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Bits of Stock Now Available in Q2’s Digital Banking Platform

Bits of Stock Now Available in Q2’s Digital Banking Platform
By Julie Muhn (@julieschicktanz) Posted on
Categories: Alumni News, Bits of Stock, Daily news, Q2
  • Q2 is leveraging Bits of Stock’s technology to help its financial institution clients reward their customers with fractional shares of stock.
  • The partnership was made possible through the Q2 Partner Accelerator Program, which makes it easy for fintechs to reach Q2’s financial institution clients.
  • Bits of Stock showcased its rewards platform alongside its client OMB Bank at FinovateFall last year.

Q2’s financial services clients have a new way to reward their consumers. That’s because fractional stock rewards platform Bits of Stock has teamed up with the digital banking and lending solutions company.

With Q2’s Digital Banking Platform, Q2’s financial services clients can offer their customers fractional stock when they redeem loyalty points or as a reward for certain activities like making a transaction with their debit or credit card, opening an account, applying for a loan, or making a deposit.

“We are pleased to welcome Bits of Stock to the Q2 Partner Accelerator program,” said Q2 Innovation Studio Managing Director Johnny Ola. “Financial Institutions now can offer fractional stocks as rewards on account spend and activity.”

Bits of Stock aims to help community financial institutions and credit unions engage their accountholders by rewarding them with fractional shares of their choice of stock. This enables younger users to build up their stock portfolios by microinvesting. In addition to today’s partnership with Q2, the New York-based company also has partnerships with Jack Henry, OMB Bank, Strata Credit Union, Gravy Stack, and others.

“This partnership is a value multiplier for customers, Q2, and Bits of Stock,” said Bits of Stock CEO Arash Asady. “Both companies are committed to finding innovative ways to empower financial services for consumers at scale.”

The partnership was made possible through the Q2 Partner Accelerator Program, an initiative within the Q2 Innovation Studio that allows financial services companies like Bits of Stock to leverage Q2’s SDK to integrate their technology into the Q2 Digital Banking Platform. The program not only creates an easy way for third party fintechs to integrate into Q2’s platform, but it also helps Q2’s bank clients leverage a wide range of new solutions that they can quickly deploy to their customers.

Founded in 2004 and headquartered in Austin, Texas, Q2 claims more than 40% of the top 10 banks in the U.S. as customers. The company’s platform reaches one out of 10 digital banking customers in America. Q2 went public in 2014 and is now traded on the New York Stock Exchange under the ticker QTWO, and has a market capitalization of more than $2.43 billion.

Bits of Stock showcased its rewards platform alongside its client OMB Bank at FinovateFall last year. The two demoed OMB Bank’s Stock Rewards Checking Account that rewards cardholders in the fractional stock of their choice every time they swipe their card. Bits of Stock was founded in 2016 and has received $5.9 million in funding.

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Xalts Buys Contour Network to Fuel Trade Finance Solutions

Xalts Buys Contour Network to Fuel Trade Finance Solutions
By Julie Muhn (@julieschicktanz) Posted on
Categories: Daily news, Mergers & Acquisitions
  • Financial infrastructure platform Xalts is acquiring Contour Network.
  • Xalts will leverage the purchase to create embedded solutions for trade and supply chain finance.
  • Financial terms of the deal were not disclosed.

Singapore-based financial infrastructure platform Xalts announced this week it is buying Contour Network with an aim to enhance global trade finance. Financial terms of the deal were undisclosed.

Contour Network was built in 2017 by a consortium of eight global banks to create an open trade finance network. Today, more than 22 banks and 100+ global businesses use Contour’s network for digital trade finance.

Xalts helps banks streamline global trade, receivables, and supply chain financing operations with tools that facilitate everything from origination to multiparty workflows. The company will leverage Contour’s processes and integrations to facilitate communication and transactions between businesses and financial institutions in its network. Once the deal is complete, Xalts will initially focus on creating solutions that banks, logistics companies, and fintechs can embed within their own applications for their business customers.

Xalts CEO Ashutosh Goel said the company aims to create a “Plaid for Trade.” He explained, “Our vision is to expand the scope of Contour’s network which is trusted by banks and corporates, and build it into a rail that enables businesses to access digital solutions for trade and supply chain finance offered by banks, fintechs and technology partners. Combining our platform with Contour’s Network will allow participants to develop and deploy customized solutions quickly.”

Xalts, which leverages the blockchain to help its clients build tokenization applications, was founded in 2022 and currently has a team of more than 50 employees spread across offices in Singapore, Hong Kong, India, the U.A.E., and U.K.

“Citi has long been a leader in driving innovation in financial services. We invested in Contour in 2020 and led the seed round for Xalts in 2022,” said Citi Ventures Director Everett Leonidas. “The combination of these two companies into one firm with an expanded vision and a great leadership team will accelerate innovation in global trade finance.”

With Xalts aiming to become the “Plaid for Trade,” the partnership opens up new potential for businesses to access digital solutions for trade and supply chain finance. This move, combined with the company’s use of the blockchain, offers the potential to create more accessible and efficient solutions to a wider range of businesses.

Photo by Kurt Cotoaga on Unsplash

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Navigating the Future of Fintech Trends: Insights on Customer Experience, Disruptive Technology, and AI

Navigating the Future of Fintech Trends: Insights on Customer Experience, Disruptive Technology, and AI
By Julie Muhn (@julieschicktanz) Posted on
Categories: Streamly

In the landscape of financial services, fintech trends are always evolving and keeping up with competitors requires embracing change and innovation.

In this blog post, we’ve curated a selection of videos that delve into key areas shaping the industry’s future: customer experience, disruptive technology, and the strategic implementation of AI. Whether you’re a banking executive looking to enhance customer engagement or a fintech professional exploring new avenues for growth, these insights offer valuable perspectives on navigating the challenges and opportunities ahead.

Customer experience

Disruptive technology

Revolutionizing finance with AI

 

Photo by Pixabay

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Pagaya Uses AI to Help U.S. Bank Customers Qualify for Unsecured Loans

Pagaya Uses AI to Help U.S. Bank Customers Qualify for Unsecured Loans
By Julie Muhn (@julieschicktanz) Posted on
Categories: Alumni News, Daily news, US Bank
  • U.S. Bank is using technology from Pagaya to help underwrite unsecured personal loans.
  • Pagaya’s AI model generates underwriting recommendations and completes a secondary credit decisioning review of borrowers who were originally rejected.
  • The partnership, which has the potential to expand U.S. Bank’s borrower pool, has already led to the approval of more than 2,000 personal loans over the past few months.

U.S. Bank announced today it has tapped alternative underwriting solutions company Pagaya to help more borrowers qualify for loans.

U.S. Bank initiated the partnership to help more clients access personal loans, which often pose more risk for lenders because they are unsecured. Pagaya leverages AI to complete a secondary credit decisioning review of borrowers who are initially rejected. If Pagaya approves the borrower, U.S. Bank will originate and service the loan.

Key to the solution is Pagaya’s AI model that analyzes thousands of data points to generate tailored underwriting recommendations. Because the model uses more data than a traditional regression model, U.S. Bank can more efficiently find applicants who are responsible borrowers, but who don’t fit into the bank’s FICO score cutoff.

As interest rates remain high, banks will continue to face challenges in managing their lending operations. When higher interest rates lead to increased borrowing costs, some customers are unable to afford previously attainable loans. Also contributing to the smaller borrower pool, banks have become more selective in their lending practices by focusing on borrowers with strong credit profiles and stable financial histories.

“We know that we have many clients who don’t fall within our traditional credit parameters,” said U.S. Bank Head of Consumer Lending Partnerships Mike Shepard. “By expanding access to responsible credit solutions, we are giving clients access to funds when they need it the most, through their existing and trusted banking relationship with us.”

Ultimately, using Pagaya helps U.S. Bank extend loans to more clients by delivering credit to individuals who would otherwise be rejected. Since U.S. Bank began working with Pagaya for underwriting a few months ago, the bank has been able to approve more than 2,000 clients for personal loans.

New York-based Pagaya was founded in 2016 and has raised $1.6 billion in combined debt and equity across ten funding rounds. The company went public via a SPAC merger in 2021 and currently trades on the NASDAQ under the ticker PGY with a market capitalization of $8.95 million.

“We share U.S. Bank’s commitment to increasing access to life-changing financial products and services,” said Pagaya Chief Growth Officer Leslie Gillin. “With Pagaya’s integrated and seamlessly embedded lending technology, our lending partners can expand and deepen their client relationships to a more diverse group of borrowers.”

Photo by Ketut Subiyanto

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