This 2.0 Guide is intended to show the state of fintech lending in the U.S. It should also offer some perspective about why outside fintech lenders represents a clear threat to credit unions, as well as how credit unions can leverage partnering fintechs to fight back.
Credit unions rely on loans for revenue. That’s no secret. They’ve remained competitive in the lending space by offering lower rates and better service. However, fintech lenders have introduced a third factor on which credit unions must now compete: convenience. By design, fintech lenders are more convenient and consumers are apparently willing to pay for that convenience.
For the purpose of this guide, we define fintech lending as direct-to-borrower loans made by nontraditional fintech lenders, whether or not those fintech lenders are backed by funding from traditional lenders.
Partnerships with fintech lenders can give credit unions that elusive third factor of convenience. Whether it be from automation, leveraging AI underwriting, accessing a new and untapped source of borrowers, or simply providing a new lending option that credit unions typically avoid, fintech lending partners help credit unions expand their loan portfolios—especially within certain niches.
Check out our new downloadable Credit Union Provider Guides here!
Fintech Lending Trends and Analysis
- Fintech lending is experiencing significant growth.
According to Allied Market Research, the fintech direct lending market was valued at about $450 billion in 2020 and is expected to grow to $4.9 trillion by 2030. What’s more, according to the Federal Reserve, at the end of that same year, 2020, credit unions held $505 billion in consumer debt.
The threat to credit unions is clear. In barely 15 years, starting with companies like Zopa, Prosper, and LendingClub, fintech lending has nearly grown to levels that took credit unions decades to achieve.
- More fintechs are pursuing lending.
At first glance, it might appear that most fintechs are devoted to payments and money movement. The idea is simple:
Grab a fractional piece of every payment that passes by and make money on the volume. However, according to Balancing Everything, 28% of the top 50 fintechs in the world are dedicated to lending.
This leads us to conclude that fintech lenders represent a double threat. First, consumers are increasingly attracted to the convenience of fintech lending. Second, more and more fintechs are turning to lending as a source of revenue, opting for the big payday of making a loan rather than the incremental payout from a payments focus.
- Credit cards represent an emerging “hot” area for fintechs.
In no area of lending does the fintech convenience factor play a bigger role than with credit cards. The Apple credit card is the oft-noted example. Borrowers can apply for a card through their Apple wallet, have a decision returned, and have a new digital card provisioned and ready to use online in just a few minutes. The card also offers no fees, as well as financial tracking, an “Apple Card Family” feature, and a wide range of other consumer conveniences.
The net result: In August of 2022, JD Powers ranked the Apple credit card as number one in customer satisfaction for the second year in a row. Other major fintechs like Venmo and Divvy have also entered the credit card space.
How will your credit union respond? Your legacy lending system providers may or may not be able to help. (Of course, check with them first.) But if your legacy provider can’t give you what you need, the situation may call for a new partnership with a credit union-friendly lending fintech.
- AI-powered lending is quickly becoming a key part of fintech lenders’ strategy.
Artificial intelligence (AI) exploded in the cultural consciousness with the public debut of generative AI tools like ChatGPT and Midjourney. However, AI has been a key part of many products in the financial realm for nearly 5 years now.
And although AI can power everything from fraud detection and prevention to self-driving finance, nowhere is AI more present than in lending.
AI-powered lending dramatically improves speed and decreases risk. Credit unions can approve more loans, safely, and much faster than before. Many of the fintech lenders below use AI in some part of their lending process—often, but not limited to—the underwriting process. CU 2.0 also has a guide on AI lending for credit unions here.
CU 2.0’s rating methodology for our early guides is very simple. We measure the potential impact of working with each fintech on two variables: Potential ROI (resources required vs payoff) and Member Experience (ease of application, banking experience, etc.).
0: N/A or no impact. Competes with or disintermediates credit unions; doesn’t offer relevant services.
1: Minimal impact. Limited partnership opportunities; limited or narrow use cases for members.
2: Moderate impact. Partners with credit unions but may require more resources; meets at least one or several common member needs/desires.
3: Major impact. Partners well credit unions and doesn’t require much resource or investment; meets or exceeds most member needs/desires seamlessly.
Our impact ratings don’t necessarily correlate to the quality of a given solution. Fintechs with higher potential impact scores aren’t automatically better, or a better fit, for your credit union and members.
The following fintechs are listed alphabetically. These ratings correspond only to the two listed variables (Potential ROI and Member Experience). These aren’t ranking of quality, nor are they recommendations—they’re meant only to serve as a starting point in your research to improve your credit union’s checking account.
Trusted solutions are highlighted with an asterisk—these are fintechs that CU 2.0 has vetted personally.
See more ways to evaluate fintech lending providers in our downloadable 2.0 Guide here.
Fintech Lending Vendor Guide
|Fintech||Description||Credit Union ROI||Member Experience|
|Abrigo||Abrigo’s Sageworks lending software automates loan origination to help credit unions scale their processes.||2||2|
|ACES Quality Management||ACES Quality Management helps lenders review and audit loans more efficiently.||1||0|
|AdvantEdge||AdvantEdge provides a variety of consumer lending products including personal, auto, credit cards, and more.||2||3|
|Anovaa||Anovaa helps credit unions provide better lending experiences and loan products for their customers.||2||3|
|Baker Hill||Baker Hill’s NextGen is a credit union loan origination system with risk management, analytics, and marketing.||2||2|
|Blend||Blend is a digital mortgage, loan, and banking platform with extensive data partnerships||2||3|
|Bravient Holdings||Bravient Holdings’ digital lending platform uses AI to offer credit according to a borrower’s ability to repay.||0||2|
|CUDL||CUDL is an integrated financing platform that connects dealerships to a large network of credit union lenders.||2||1|
|Credit Union Lending Systems (CULS)||Credit union lending systems is a full-service indirect lending provider for vehicles and mortgages.||2||1|
|CuneXus||CuneXus allows credit unions to find qualified borrowers and present them with relevant loan offers.||2||2|
|Corporate Spending Innovations (CSI)||CSI offers a full lending suite to complement their core and digital banking products.||2||2|
|defi solutions||defi solutions provides an end-to-end lending technology suite for credit unions.||2||3|
|Earnest||Earnest’s engine uses personal and financial data to individualize loan offers and terms for consumers.||0||3|
|equipifi*||equipifi allows credit unions to curate loan offers and installment lending for their members.||3||2|
|Finastra||Finastra provides a wide variety of lending capabilities, products, and platforms for credit unions.||1||3|
|FIS||FIS is an industry leading fintech that offers full lending suites among many other key (and core) products.||1||3|
|Fiserv||Fiserv offers lending solutions, processing, and management in addition to its full-spectrum financial ecosystem.||1||3|
|HES Fintech||HES Fintech gives credit unions loan origination software, loan servicing software, and more.||2||2|
|Jack Henry & Associates (JHA)||JHA is a full-service provider that offers consumer and commercial lending and servicing among other things.||1||3|
|Kabbage||Kabbage provides automated loans and other banking services primarily to small businesses.||0||1|
|Keystone Lending Alliance (KLA)||KLA improves indirect lending reach for credit unions and allows them to compete at point of finance.||2||1|
|Lending Arts*||Lending Arts lets credit unions offer flexible and competitive loans refinancing options for autos, motorcycles, and RVs.||2||1|
|Lendingfront||Lendingfront gives credit unions the ability to originate, underwrite, and service small business loans.||2||1|
|LendKey||LendKey enables credit unions to offer automated digital loans with competitive rates.||2||2|
|Lendsys||Lendsys is an automated loan decisioning software platform that can be used by credit unions or CUSOs.||2||1|
|Loanify*||Loanify enables credit unions to nurture auto buyers and offer loans at point of sale.||2||1|
|Loanpro||Loanpro is a core lending software specializing in loan servicing and management.||2||1|
|LoanStar Technologies||LoanStar Technologies allows lenders to diversify lending with point-of-sale and home improvement loans.||2||2|
|LoanStreet||LoanStreet allows credit unions to access a wide loan participation network.||2||1|
|MeridianLink||MeridianLink offers digital lending software that improves operations and digital lending processes for credit unions.||2||1|
|Momnt||Momnt (formerly Artis Technologies) powers POS lending and payment solutions for businesses.||2||2|
|nCino||nCino offers full lending suites to cover consumer and commercial needs, as well as agricultural and construction.||2||3|
|Numerated||Numerated’s digital loan origination system uses data to reduce business banking workload for credit unions.||1||1|
|Open Lending||Open Lending provides automated lending services to auto lenders and works specifically with CUSOs.||2||1|
|OppFi||OppFi extends loans to consumers, especially those with debt, bad credit, and with limited access to opportunity.||0||2|
|Origence||Origence powers end-to-end loan and account origination (and other services) for credit unions.||2||3|
|Q2||Q2 provides end-to-end lending capabilities for credit unions plus additional opportunities in its greater ecosystem.||1||3|
|QCash Financial*||QCash is a CUSO offering an instant, automated small-dollar lending platform with customizable decisioning.||3||1|
|Quilo*||Quilo’s platform allows credit unions to offer installment loans and point-of-sale lending for credit unions.||3||3|
|Scienaptic*||Scienaptic is in the business of helping credit unions say yes to more loans with confidence using artificial intelligence (AI). Their AI-powered lending platform is a leading credit union option.||3||3|
|SoFi||SoFi is a major fintech lender with a wide variety of consumer loans and refinance options.||0||3|
|Sparrow*||Sparrow lets credit unions offer a student loan marketplace to members and gives the CU a considerable finder’s fee for each loan booked.||3||2|
|Splash Financial||Splash Financial offers student loan refinancing and similar options in addition to personal loans.||0||2|
|SYFRR*||SYFRR offers an AI-powered loan origination and lending platform for credit unions.||3||3|
|TCI DecisionLender||TCI DecisionLender automates loan origination spanning multiple products and across many devices.||2||2|
|Teslar||Teslar is a portfolio management system that aggregates and automates the loan and deposit process in a single system.||1||0|
|Turnkey Lender||Turnkey Lender offers an AI-powered loan origination and lending platform.||2||3|
|Upgrade||Upgrade sells consumer loans to credit unions, including personal loans, credit cards, and auto refinance loans.||1||0|
|Upstart||Upstart is an AI-powered lender that helps credit unions grow their consumer lending portfolios.||2||1|
|WithClutch*||WithClutch offers auto loan refinancing and auto loan recapture solutions for credit unions.||3||1|
|Wolters Kluwer||Wolters Kluwer offers end-to-end digital consumer loans and configurable loan origination and processing.||2||2|
|Zest*||Zest’s AI offers better, faster, fairer lending across the credit spectrum, helping you safely say “yes” to more members without increasing risk. Their AI-powered lending platform is a leading credit union option.||3||3|
Please note that these ratings are in their early stages and will be updated as we include more data and more complex variables. The ratings are not definite—your credit union could see a different level of impact than listed in this guide.
Did we miss a fintech? Please let us know at [email protected]
Choosing the right partners to leverage fintech lending capabilities and efficiencies will depend on your goals, budget, timeline, and other factors. CU 2.0 can help in the following ways:
- Join our Fintech Call Program. In quarterly 30-minute calls, we’ll discuss in depth new and innovative fintech solutions that fit your credit union’s needs. We can also help you review other solutions you’re looking at.
- Ask for an introduction. We maintain relationships with most or all of the vendors rated above. We would be happy to give you a warm introduction to any we can on the list.
- Book a consultation. CU 2.0 offers technology and fintech consultations and reviews to identify best-fit solutions for your credit union.