JPMorgan works for fast loan access

US bank teams up with On Deck to speed up process for some of the lender’s 4m small business customers The product will carry the Chase brand and is expected to be rolled out in a pilot next year, she said. Smalldollar credit typically refers to loans of

JPMorgan Chase & Co, the biggest US bank, is collaborating with On Deck Capital Inc to dramatically speed up the process of providing loans to some of the lender’s 4 million small-business customers. On Deck’s stock surged 28 per cent in extended trading.

“We’re working with On Deck to build a new Chase lending product that will be launching in 2016 for smalldollar loans to our smallbusiness clients,” Jennifer Piepszak, JPMorgan’s head of business banking, said Tuesday in a phone interview. “By combining Chase’s relationships and lending experience with On Deck’s technology platform, we’ll be able to offer almost real-time approvals and same- or next-day funding.”

Big financial firms are working with online lending start-ups that less than a decade ago set out to bypass banks by offering so-called peer-to-peer loans, matching borrowers with individuals who wanted to fund them. While some banks use the platforms to make loans cheaper and faster, others just make the ventures’ products available to their customers.

JPMorgan had weighed whether it should build a similar product in-house before ultimately deciding to work with On Deck, Piepszak said. It’s part of a broader discussion among banks’ executives over whether to collaborate or compete with potentially disruptive technology firms.

On Deck, which offers highcost loans to small businesses over the internet, went public in December at an initial price of $20 (Dh73.40) a share. As more start-ups crowded into online lending, it slid to $9.01 by Tuesday’s close of trading. The stock climbed to $11.50 in extended trading at 5:52pm in New York.

Better data

The firm says it uses a proprietary assessment of creditworthiness that pulls in more and better data than banks do.

Small business loans that currently take days or weeks to be funded could be made within hours or a day, Piepszak said.

The product will carry the Chase brand and is expected to be rolled out in a pilot programme next year, she said. Small-dollar credit typically refers to loans of less than $250,000.

“It really originated with a need to remove pain points and just make the process easier,” she said. “We obviously have the lending experience; they have a disruptive customer experience that we’re very interested in.”