The COVID-19 pandemic accelerated the digital transformation in lending. That’s according to Tom Burnside, CEO at LendingPoint, a fintech balance sheet lender unlocking access to financial independence.
Burnside co-founded LendingPoint in 2014 after a long career in data, technology and credit.
“I retired from small business lending about eight years ago," he said, "and I was enticed to come back because my founders and I saw an opportunity to tell the credit story of a customer that was underserved.”
LendingPoint leverages big data, machine learning and best-in-class algorithms to look beyond traditional credit when measuring the willingness and ability to repay debt.
“We take data and technology, make very quick decisions, and help the customer get a fair and equitable transaction for financial needs they have,” Burnside said.
Methodology: LendingPoint discounts traditional creditworthiness factors like FICO scores, DTIs and PTIs.
“We’re focused on where the person is, ... and trying to make sure we can give them the benefit of the doubt.”
LendingPoint’s methods, which require no manual intervention in granting personal loans of up to $25,000, are tailored to the new generation of consumers that transact mostly in digital markets.
“A lot of times, the millennial, or younger generations, tends to be very light on credit." Burnside said. "They don’t want to have a lot of the obligations, or the recurring debt,” Burnside said in reference to basing lending decisions on factors like the cost of living.
“To tell their story is a bit different. If they live in California, we just know they have a different disposable income than somebody living in Atlanta, Georgia. We also look at things like cell phones and rent payments, also.”
In determining the willingness and ability to pay, LendingPoint only puts a 5% weight on FICO. Instead, factors like maintaining the same phone number or e-mail address for long periods of time take precedence.
The development comes after the COVID-19 pandemic dealt a heavy blow to small businesses. eBay sellers can now obtain quick lending decisions and access to installment loans as high as $25,000, in as little as one business day.
Additionally, LendingPoint amped up its efforts around Point of Sale (PoS) lending.
“We’re doing a lot with companies like Invisalign where we have a virtual card and app that is pre-approved," Burnside said, "so when they show up at the dentist office, all they have to do is present their virtual card and the transaction is complete.”
Innovation Outlook: Early profitability and recognition by firms like Deloitte is a proof of concept.
“At the end of the day, the things where the customer feels that -- you know -- they’ve had an unbelievable experience, they will come back and use us again.”
Going forward, LendingPoint is looking to grow across new markets and amp up innovation around mobile delivery.
“People aren’t showing up to the bank branch to transact anymore,” he said. “The mobile adoption for our customers is going to be a big piece -- we call it money on demand -- and so, we’re really focused on the delivery and ubiquity of the transaction itself.”
Adding, LendingPoint closed its first revolving and largest ever ABS issuance at $328.5 million, an event that demonstrates the receptivity of its predictive modeling and consistently profitable enterprise.
“As a fintech, we really need to create that ubiquity in the delivery of the platform itself, that it can be used anywhere and that the money is there on demand.”
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