This 2.0 Guide is intended to show the state of personal (and similar) lending in the U.S. It should also offer some perspective about why rising fintech lenders (such as SoFi) 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.
Partnerships with these personal 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.
For the purposes of this guide, we’re focusing primarily on personal and unsecured loans, though we may bring in examples and solutions that address similar needs. With few (if any) exceptions, this guide covers only direct-to-borrower loans made by nontraditional fintech lenders, whether or not those fintech lenders are backed by funding from traditional lenders.
This guide does not cover all kinds of lending, such as home and home improvement lending, auto lending, or lending to small businesses.
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Personal Lending Trends and Statistics
1. A growing personal loan growth market.
In 2024, personal loans reached an all-time high, with 23.9 million Americans holding a collective $246 billion in personal loan debt. This represents a 6% increase from 2023, indicating steady demand for personal loans among U.S. consumers. While personal loans only account for about 1.4% of overall consumer debt, this growth demonstrates their rising popularity, especially as an option for debt consolidation and financing large purchases.
For credit unions, this trend signals a critical opportunity. As more consumers turn to personal loans, credit unions can capture market share by offering competitive rates and flexible loan products. Additionally, personal loans serve as an entry point for attracting new members, especially younger borrowers who may be unfamiliar with the benefits of credit union membership.
2. Loan delinquency rates declined in 2024.
The delinquency rate for personal loans has seen a positive shift, dropping to 3.38% in the second quarter of 2024 from 3.62% a year earlier. This decrease suggests that borrowers are managing their loan obligations better than in previous years.
Lower delinquency rates can indicate a stronger economy or improved lending practices, such as better risk assessment and borrower education. For credit unions, lower delinquency rates can ease concerns around expanding personal loan offerings, as they suggest a more stable borrower base.
While this may suggest opportunity in the short term, changing political tides may shake up the trends established in the last few years.
3. Debt consolidation is a leading loan purpose, especially for personal loans.
Over half (51.3%) of personal loan borrowers in 2024 cited debt consolidation or credit card refinancing as their primary reason for borrowing. This trend highlights a shift in consumer attitudes toward managing high-interest debt, particularly as interest rates fluctuate.
Consumers are increasingly using personal loans to consolidate various forms of debt into a single, lower-interest payment, which can reduce financial stress and save money over time.
For credit unions, this trend opens doors to design tailored loan products that address debt consolidation specifically. Marketing these products as affordable solutions to high-interest debt can resonate strongly with members facing financial challenges.
4. 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.
5. 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.
6. AI-powered lending.
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.
7. Buy now, pay later is still a big draw.
Buy Now, Pay Later allows consumers to make installment payments on large purchases (typically over $100). Payment intervals, interest rates, fees, purchase limits, eligibility, and the mechanisms by which BNPL work differ from provider to provider.
BNPL is a growing payment trend with a high demand across all demographics. Not surprisingly, the average age of BNPL users skews young at 37 years old. More surprisingly, the average income is around $75,000 annually.
Offering BNPL options essentially helps credit unions give credit options to younger, credit-averse consumers. If you’re targeting the under-40 crowd, it’s definitely worth considering.
Evaluation Strategies
Not all account fintech lending solutions offer the same set of benefits. In fact, in our research, we’ve discovered that all solutions are unique in function and features, even if their end results are similar.
Consequently, there are several things to consider when evaluating fintech lending providers:
Account opening
Does the solution allow members to open a new account? Or is it an onboarding-only solution?
Account types
Is the solution geared towards personal accounts? Can it accept new business accounts?
Integration and compatibility
Does the solution require core or digital banking integration? Will other systems have easy access to the solution’s data?
KYC/AML and fraud prevention
How does the solution verify identity? Does the solution have inbuilt KYC/AML and fraud prevention capabilities?
Support and training
How much training will the product/service require? Will the vendor provide ongoing support?
Employee experience
Does the product automate any employee tasks? Will it make anyone’s job easier? Or will it add complexity to someone’s workflow or duties?
Flexibility and scalability
Can the solution grow with the credit union? Are there any modular elements that credit unions can customize for their own strategic goals, or is it plug-and-play?
Fintech Ratings
Rating Methodology
CU 2.0’s rating methodology attempts to score fintechs based on the 4 most important factors for credit unions:
- Income statement: (1) Non-interest income and/or deposits, (2) interest income, (3) both
- Balance sheet: (1) Deposits, (2) loans, (3) both
- Member impact: By members affected: (1) 1–33%, (2) 33 – 66%, (3) 66–100% and/or memberization
- Employee impact: (1) Improves workflows, (2) automates some, (3) automates a lot
We score each category above on a scale of 1 to 3 according to the scale above, with scores of 0 indicating that the solution has no known impact. Additionally, in some guides, providers will have very similar scores.
Our ratings don’t necessarily correlate to quality, nor do they suggest which solution is best for you.
Fintechs with higher scores aren’t automatically better, or a better fit, for your credit union and members. Additionally, please note that these ratings are estimations based on our understanding of the product or service.
Trusted solutions are highlighted with an asterisk—these are providers that CU 2.0 has vetted or worked with personally.
| Fintech | Description | Income | Balance | Member | Employee | |
| Anovaa | Anovaa helps credit unions provide better lending experiences and loan products for their customers. | 2 | 2 | 1 | 1 | |
| Baker Hill | Baker Hill’s NextGen is a credit union loan origination system with risk management, analytics, and marketing. | 2 | 2 | 1 | 2 | |
| Blend | Blend is a digital mortgage, loan, and banking platform with extensive data partnerships | 2 | 2 | 3 | 2 | |
| Equipifi* Learn more | equipifi allows credit unions to curate loan offers and installment lending for their members. | 3 | 2 | 2 | 3 | |
| HES Fintech | HES Fintech gives credit unions loan origination software, loan servicing software, and more. | 3 | 3 | 1 | 2 | |
| LendKey | LendKey enables credit unions to offer automated digital loans with competitive rates. | 2 | 2 | 1 | 1 | |
| Loanpro | Loanpro is a core lending software specializing in loan servicing and management. | 2 | 2 | 2 | 2 | |
| LoanStreet | LoanStreet allows credit unions to access a wide loan participation network. | 2 | 2 | 0 | 1 | |
| MeridianLink | MeridianLink offers digital lending software that improves operations and digital lending processes for credit unions. | 2 | 2 | 2 | 2 | |
| Momnt | Momnt (formerly Artis Technologies) powers POS lending and payment solutions for businesses. | 2 | 2 | 1 | 2 | |
| nCino | nCino offers full lending suites to cover consumer and commercial needs, as well as agricultural and construction. | 2 | 2 | 2 | 2 | |
| Open Lending | Open Lending provides automated lending services to auto lenders and works specifically with CUSOs. | 2 | 2 | 2 | 2 | |
| Origence | Origence powers end-to-end loan and account origination (and other services) for credit unions. | 2 | 2 | 2 | 2 | |
| QCash Financial* Learn more | QCash is a CUSO offering an instant, automated small-dollar lending platform with customizable decisioning. | 2 | 2 | 1 | 2 | |
| Scienaptic* Learn more | 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. | 2 | 2 | 2 | 3 | |
| Sparrow* Learn more | Sparrow lets credit unions offer a student loan marketplace to members and gives the CU a considerable finder’s fee for each loan booked. | 2 | 2 | 1 | 1 | |
| Splash Financial* Learn more | Splash Financial offers student loan refinancing and similar options in addition to personal loans. | 2 | 2 | 3 | 2 | |
| SYFRR | SYFRR offers an AI-powered loan origination and lending platform for credit unions. | 2 | 2 | 3 | 1 | |
| Teslar | Teslar is a portfolio management system that aggregates and automates the loan and deposit process in a single system. | 2 | 2 | 3 | 2 | |
| Turnkey Lender | Turnkey Lender offers an AI-powered loan origination and lending platform. | 2 | 2 | 3 | 1 | |
| Upgrade Learn more | Upgrade sells consumer loans to credit unions, including personal loans, credit cards, and auto refinance loans. | 3 | 3 | 1 | 2 | |
| Upstart* Learn more | Upstart is an AI-powered lender that helps credit unions grow their consumer lending portfolios. | 2 | 2 | 3 | 2 | |
| UPTIQ* Learn more | UPTIQ unlocks the HNW client relationship, allowing lenders to participate in only the loan deals they want. | 2 | 2 | 1 | 1 | |
| Valiify* | Valiify is a unified origination platform for deposits and loans, digital and branch. | 3 | 3 | 3 | 3 | |
| Wolters Kluwer | Wolters Kluwer offers end-to-end digital consumer loans and configurable loan origination and processing. | 2 | 2 | 1 | 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. | 2 | 2 | 2 | 3 | |
Please note that these ratings will be updated regularly and as needed. These ratings are not definite—you may find that a provider impacts your credit union differently than our estimation suggests.
Did we miss a fintech? Please let us know at info@cu-2.com
Recommendations
Choosing the right fintech partners is never as easy of a decision as we’d like. There are no one-size-fits-all solutions.
At CU 2.0, we discover, research, and work with fintechs all day, every day. Often, we’ll have unique insights about a company’s product, team, or operations that won’t show up on a sales sheet.
So, although we can’t give blanket recommendations through a downloadable guide, we can do something even better. Book a 30-minute consultation with us at no cost here:
