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One of the big challenges for community banks and credit unions is that they often have a very concentrated base of customers. The vast majority of their accounts could be with people and businesses within a 100-mile radius. While setting up digital tools can allow these banks and credit unions to expand beyond their home base, this comes with a lot of expense and complexity. When it comes to lending programs there is a much simpler alternative.
My next guest on the Fintech One-on-One podcast is Vince Passione, the CEO and C0-Founder of LendKey. I last had Vince on the show all the way back in 2016, so a lot has changed since then. They have created this new technology they call network lending which solves for the problem of customer concentration for credit unions and banks, at least when it comes to the lending side of the balance sheet.
In this podcast you will learn:
- The highlights of LendKey’s evolution over the last nine years.
- Their long partnership with Navy Credit Union.
- How they have expanded into the home improvement market.
- The impact of the CARES Act on their education financing business.
- How the needs of credit unions have been evolving.
- The changes that will impact the ParentPLUS and GradPLUS lending programs.
- What differentiates those credit unions that can go after the younger generation and those that can’t.
- Why private student loans will have to take up the slack, particularly for graduate student loans.
- How their network lending programs work.
- Why network lending is a great way for credit unions to diversify their portfolio.
- How they decide who becomes the lender of record for these loans.
- Why they launched ALIRO in 2021 to allow others to set up their own lending networks.
- What the next five to ten years look like for LendKey.
Read a transcription of our conversation below.
FINTECH ONE-ON-ONE PODCAST NO. 532 – VINCE PASSIONE
Vince Passione: In order to participate in one of our network lending programs, and today we have three, we have one for in-school, one for education refinance, and one for home improvement lending. You’ve got to join a network, and when you join that network, what you agree to, is to adopt the underwriting and pricing that the network is using. So it’s common underwriting and common pricing.
Peter Renton: This is the Fintech One-on-One Podcast, the show for fintech enthusiasts looking to better understand the leaders shaping fintech and banking today. My name is Peter Renton and since 2013, I’ve been conducting in-depth interviews with fintech founders and banking executives. On the show today, I am delighted to welcome back Vince Passione, the CEO and Co-Founder of LendKey. Now, Vince was last on the show all the way back in February of 2016, so I am long overdue for an update call. As you can imagine, a lot has changed since then. We talk about student financing and the big changes in the student loan landscape that’s coming with this new administration. We also talk about home improvement loans, and we go in-depth into what Vince calls network lending. This is a new technology developed by LendKey that provides a completely new way for credit unions and community banks to deploy capital into personal loans. We explain in detail how it all works. Now let’s get on with the show.
PR: Welcome back to the podcast, Vince.
VP: Thanks for having me, Peter. It’s great to see you again.
PR: Great to see you. I know it’s been a while. I went back and looked, it’s been over nine years since you came on the show last. So a lot has changed in fiintech, a huge amount has changed in fintech in that time and a lot has changed at LendKey as well. So maybe just hit on some of the high points of the last nine years.
VP: Sure, I’ll try to do it quickly. Last time we spoke, let’s compare and contrast. So last time we spoke, I’d say we were strictly focused on community-based lending, lender partnerships, and we were acting as sort of an enabler, not a disruptor. And that was a big thing for us, right? We viewed ourselves as a lending as a service provider, and we had this ability to conduct real-time loan participations as a result. And we had no balance sheet and we had no warehouse line. We just functioned as a platform. And when we spoke back in 2016, we had two education finance programs, one for in-school and one for education refinance. And we had just launched a home improvement program, which is really for green loans — high efficiency residential HVAC installs in the state of New Jersey. We had also, we’re about a year into our relationship with Navy Federal Credit Union, basically providing them with their education financing programs. And our loan participation platform, our ability to do real-time loan participations was really restricted to just the loans that we originated on our platform, education, and home improvement. So that’s sort of where we ended in 2016. If you look at where we are today, as I said, not much has changed. We’re still very focused on being a really good partner for community-based lenders. We have over 400 of them today on the platform. We originated about $7.5 billion of consumer loans for them since we started the business. And we currently service about $3.5 billion of those loans for them actively. Now, when we spoke last time, lending as a service was a critical part of what we delivered. But today, many of our clients are really interested in network lending. This idea that they can come together and agree upon common underwriting, common pricing, and sometimes even common branding allows them to lower the cost of entry, reduce the time to entry into market, but also allows them, because they can syndicate the loans in real-time, Peter, they can distribute the risk of that consumer loan across a network of other financial institutions. And it also allows them to manage their capital better in the process. And we can talk more about network lending in a minute. On the product side, we are still offering education, but with the Department of Education and all these changes now, lots of focus, lots of inbound interest in what that means because there are going to be a lot of customers and members of credit unions who are under stress because of some of the changes and we can talk about that as well. So, lots of inbound interest in education lending. On the home improvement side, it’s really grown. It now represents about 25% of the loans that we service today on the platform. In 2025, we anticipate that about 40% of the loans we will actually originate. And then this year, it’s interesting our timing, we’re celebrating our 10 year anniversary with Navy Federal Credit Union.
PR: Wow.
VP: In this partnership, they have originated over $2.5 billion worth of education loans and have provided an education financing solution for over 100,000 of their military members. So we’re really proud of that. And so is Navy. And then finally, on the loan participation platform, we expanded in 2021. And today we allow fintechs and other financial institutions who want to create their own network lending programs where they’re a subject matter expert, it might be in auto refinance, it might be in HELOCs or mortgages. They can leverage that to create their own network where they can originate and then sell on a regular cadence in a forward flow pattern. So that’s sort of the update and what’s changed since 2016.
PR: Okay, well, a lot to unpack there. Let’s just start with the home improvement loans. Because obviously you just launched it, it’s grown a lot, and you said now, you know, 25 % of your revenue. And you said these are all green loans; are these like PACE loans or what type of loans are these?
VP: No, so they started as they started as green loans back in 2016, but we’ve expanded now into the broader home improvement market. So, we’re doing pools, we’re doing spas, we’re doing replacement windows, we’re doing roofs, doors, remodels. So what happened, I think, is in 2016, there was a need that came to us from our credit unions. The New Jersey Board of Public Utilities wanted to run a HVAC install program. So a homeowner wanted to install a high-efficiency HVAC system, they placed them with a contractor and gave them an interest-free loan that was balance-sheeted by the credit union. The credit union got their interest from the state. The credit unions discovered very quickly that being at the point of sale with these home improvement contractors really helped them expand their business, and it also helped them identify when their members were out there shopping for home improvement financing. They embraced that, and allowed us to start expanding nationally. So today we have 3,500 home improvement contractors doing everything from pools to spas to other replacements and remodeling in homes, who are actively selling our credit union financing program to those homeowners.
PR: Right. So, are most of these credit unions also doing education loans as well or are some of them doing just home improvement?
VP: So it’s a good question, it’s a good mix. So the average customer of ours uses about two of our products and it’s a natural, right? Because they get accustomed to who we are, we are an approved vendor on their platform; they become comfortable with the process, they get to know us. So, the process is very similar whether you’re doing education lending or home improvement lending, how you use the platform, the whole concept of a program manual, and the way we set up our agreements with them. So it makes it a natural upsell for them.
PR: Right. So let’s go back to student loans, because I know that’s been the majority of your business, still is the majority of your business. And it hasn’t been a great business to be in the last five-plus years, I would imagine. So tell us a little bit about how, obviously, pre-pandemic things were humming along nicely, I imagine. What’s the story been like since March of 2020?
VP: Yeah, so around March of 2020 was when the CARES Act hit. And it was interesting the impact it had, right? You know, the government was concerned about the impacts of COVID on the economy. So the Fed dropped rates very, very quickly, almost to zero. And then they also announced this moratorium, right? Trump stood up in the Rose Garden and said, you know, there would be no more payments on federal loans. They would no longer accrue interest. So, two things happened in 2020. The first is there was a big rush, a huge spike in refinancing activity. Our clients responded well, and we helped them. The first thing that they did was they used to allow the consumer to refinance their private loans and their federal loans together. Recognizing that the consumer might be giving up forgiveness, they stopped allowing the consumer to refinance their federal and privates. They were only allowing them to refinance their private loans, which we think was very consumer-friendly. And it made an awful lot of sense from a business perspective. Then the second thing that happened is, because of the moratorium that was on federal loans, many of the private loan borrowers got very confused. They were concerned about the impacts of COVID. So they all launched, came forward, and asked for forbearance. And we saw forbearance levels go from a little over 1% to as high as like 7%. And it slowly trickled down again. And I would say by the end of 2022, things kind of went back to normal again. And we started to see the business just, should it go back to where it was at pre-COVID levels. So certainly, in 2020, the moratorium, as well as the interest rate drops, caused some anomalies to occur, but things kind of normalized after that.
PR: Right. Okay. And then, are you just focused on refinancing? Are you also doing new student loans?
VP: We do both, Peter. So we do in school, and we have an entire program for that. We have custom lenders like Navy that will go out and market to their members and market in the schools. They hold 100% of those loans. And then we have our network lending program, which is a CUSO, where we’ve got credit unions who join that, agree on common underwriting, common pricing. And when they originate those loans, they, in real-time, will syndicate or participate them out, as I said, to mitigate some of the risk and to preserve some of the capital. And then we also have an education refinance program, as you mentioned.
PR: Okay. I do want to dig into that digital network lending that you talked about. But before we do, let’s just talk about, you know, the credit unions that have been on your, you said Navy Federal is a decade now. How are their needs changing? I mean, are you seeing much more demand? What has been kind of the whole, you know, relationship with your credit union base?
VP: Yeah, so I think a couple of things have changed or, as I see, they’re evolving needs. Well, clearly we talked about it, right? With the Department of Education and some of the changes that are happening, we anticipate and are starting to see a lot of interest from credit unions and even some community banks in getting into the education financing space. And if you go over what happened there, right? Obviously, the Department of Education was basically defunded by the Trump administration. It can’t be disbanded because that takes an act of Congress. So there’ll be lots of conversations about that. But in the meantime, what has been done is two things. The first is, that as of July 1st, at least currently, and it’s changing constantly, Grad PLUS and Parent PLUS loans will no longer be offered by the federal government. Now, just to remind you, Grad Plus loans are the loans that a student will take out when they’re going for an advanced degree. So if they’re going for their MBA, they can borrow the full cost of attendance from the U.S. government. Parent PLUS loans are loans that a parent can take out either for a child that’s an undergraduate or a child that’s a graduate. Now, just to give you a sense of size, last year in 2024, between Parent PLUS and Grad PLUS, over $25 billion of those loans were originated by the federal government. That is going away as of July 1st. There will be this new need in the marketplace. Now understand private student loans, annual originations, give or take, in the last 10 years, have been about $12 billion. So we’re saying that today, if we’re originating private student loans in 2025, we anticipate, it’s probably about $12 billion of existing private student loans will get originated. Plus, you’re going to have this new demand, right? For about $25 billion of PLUS loans that are no longer being offered by the US government. So there is going to be this increase. The second thing that’s going to happen is in federal loans, when you borrow as an undergraduate, the government caps you for four years of undergraduate borrowing at $28,000. They’ll probably increase that we think, to about $50,000. That’s the makeup for some of the Parent PLUS that’s going away, but it’s also going to get taken up by some latent demand in the system. So, we think the education side of things will start to grow, as we said, because there’ll be some displacement given the lack of PLUS loans in the market. As far as beyond education lending, just looking at our credit unions and also community banks, there are a couple of things that are happening. The first is, they need deposits, right? We saw with the SVB failure, consumers became very aware of deposit insurance and started really shopping around. And that shopping around for better rates on their deposits really caused what we call deposit betas. That’s how sensitive an institution is to deposit cost changes from the Fed. So you’re starting to see money move very quickly, and deposits aren’t as stable. So whether you’re a community bank or a credit union, you need deposits, and it’s caused their cost of funds to go up. So, for example, the credit unions today, their average cost of funds is about 130 basis points. When I started this business, it was 50.
PR: Wow.
VP: The second is they need to get younger. And it hasn’t changed from when we started, but the problem is the average age of the members has gotten older. If you look at a community banking credit union, the average age of their members is about 53 years old, and every year they keep getting older. So they need to have digital-type experiences made available to their members, or else they just can’t compete, and they can’t go after this younger member.
PR: Interesting, interesting. So what differentiates those that are able to go successfully after the younger generation and those that don’t?
VP: Yeah, so I’d say a couple of things. I’d say first is maintaining their innovation and continually looking for new technology. And for many institutions, it means they have to partner. They’re not going to spend the kind of money that JP Morgan Chase can spend annually on technology. So they’re always going to lose that technology war with some of the larger institutions. So it’s partnering. It’s being cooperative. And that’s where network lending comes in. To us, network lending is a natural for credit unions who embrace this concept of cooperative spirit and use shared resources. So, if you can’t afford to keep up with that technology spend, the best thing to do is to leverage shared resources, and join a network. And that’s where network lending comes in. I’d say the other part of this is really strong balance sheet management. For the longest time, interest rates were so low, they were almost negative. Deposits just hung around, and you didn’t need to worry about them as much. You didn’t need to worry about where your funding was going to be for your auto loans, for your personal and secured loans, for your mortgages. Now, with deposits being much more fluid, spending time and really managing that balance sheet and looking at how you fund the various loans that you’re making is really an important part of how you maintain a stable financial institution going forward.
PR: Right. I mean, imagine another positive with the student financing piece is that these are typically younger people, right? I mean, obviously, there are some graduate students that are in their 50s, 60s, or even 70s, but most of them are young, you know, they’re in their 20s. And is that part of the calculation why you see demand growing?
VP: Absolutely. And it’s been interesting in that there’s always been this misconception in the market that somehow private loans and federal loans are the same, and they’re not. Many times, you get this question: “How can private loans perform much better than federal loans?” Well, private loans are underwritten. We look at ability to pay. We look at willingness to pay. Federal loans are not, right? They’re basically given out based on need. And that’s why they perform the way that they do. So we have seen that the clients that have partnered with us in offering education financing are obtaining younger members, and they’re also seeing really strong upselling cross-sell. Some of our larger clients have told us that six months after providing an education loan, they’re selling a student checking account, they’re selling a credit card. Those who are doing refinancing are finding out that the person who’s refinancing education, there’s some life event. So they’re either going to upsell and cross-sell an auto loan or a mortgage because that consumer is trying to figure out how they reduce their monthly expense because there’s some life event they’re trying to get ready for.
PR: Okay, so I want to go back to the changes in the federal student loan system. And I should point out we’re recording this on March 31st. By the time you’re listening to this, there could be something new on the horizon that we don’t know about right now. But like you said, the Parent PLUS loans, the grad loans, the federal loans are going away as of now. And I imagine with the $28,000 limit, a lot of people were forced into a second loan, right? Because, for a lot of colleges in this country, $28,000 is not going to cut it. So, did you find that there’s more demand for Parent PLUS loans simply because you couldn’t cover the cost of college with a federal student loan?
VP: The answer is Parent PLUS loans are different products, right? This is a parent who wants to take on the responsibility of paying for their child’s college education. You know, typically, what we see and what was happening is you watch a student take out this loan, and then 90 % of these loans were co-signed by a parent. The benefit being that, at the end, the student is ultimately responsible, right? The child is responsible for that loan. So, it is a different product in how it is managed. But you’re right, Parent PLUS loans were supplemental because you can cover the full cost of education. It was an opportunity for that parent to turn around and say, well, if I’m concerned about having a shortfall by having my child just apply for a direct loan, which is the undergraduate loan from the federal government, I can use this Parent PLUS loan to turn around and take out the full cost of attendance.
PR Right. So now, if those are going away, it makes sense that private student loans are going to take up the slack, right?
VP: That’s right. I think there are two things. Private student loans will definitely take up the slack. The federal government is going to expand the limit on their direct loan program, undergraduate program, but that’s also not going to cover graduates. So, the graduate population, which, by the way, is a much better credit risk because the biggest risk of repayment is failure to graduate. These individuals, they’ve all demonstrated that academic discipline, academic excellence, they’re now going for a graduate degree. And I’ll remind you that this is exactly the population that SoFi went after when it first launched.
PR: Right.
VP: The highly educated, not rich yet. So I keep telling my clients, look, if I look at what SoFi has done there today, they’ve got 10 million members over $20 billion of deposits, right? They’ve really kind of demonstrated what a credit union would look like with a modern tech stack going after a much younger customer.
PR: Well, yeah, SoFi, I mean, they’re almost in a category by themselves, how they’ve, you know, with a football stadium now and massive, massive marketing budgets. Okay. I want to turn into this digital network lending. You’ve talked a bit about it. I want to dig into the details of exactly how it works because you’ve sort of explained it, but credit unions, obviously, every credit union is different. Some are going to have different, slightly different credit boxes. Some will have very similar credit boxes. How do they all get together and execute loan trading, how does it work?
VP: So the answer is that in order to participate in one of our network lending programs, and today we have three, we have one for in-school, one for education refinance, and one for home improvement lending. You’ve got to join a network, and when you join that network, what you agree to is to adopt the underwriting and pricing that the network is using. So it’s common underwriting and common pricing. Once they do that, it opens up the following opportunities. The first is, because all of these financial institutions have agreed to common underwriting, common pricing, we can take that loan, because of the size of the balance sheet, their collective balance sheet, and we can make it available on all these various affiliate networks. So, there’s this collective bargaining that goes on. Because if you’re a small institution and you want to do $5 million of education lending, it’s very hard for you to get onto a marketplace. But when you band together with 100 other financial institutions, and now you represent $200, $250 million of lending capacity, a whole bunch of new channels open up for you. So that’s the first thing that happens is channel expansion. The second thing that happens is, as the loans are being originated, the loans are very liquid within the network. So, think about it, Peter. You’re in California, I’m in New York. You’re a lender in California, I’m a lender in New York. I’m limited because I’m a community-based lender. I can only turn around and lend within my geography. It might be limited to the state of New York. It might be a county in New York. You’re in California. You have the same limitations. But because the loans are actually being underwritten and priced the same exact way, we can buy and sell fractions of those loans to each other all the time in real-time. Because the old way of doing it would be you would originate a bunch of loans. I would originate a bunch of loans. And then, at some point in the future, we would go to the market and try to sell some of them. And that process required that I diligence the way you underwrote them, and you diligence the way I underwrote them. Because we both agreed to common underwriting, and common pricing, we can actually sell fractions to each other in real-time. So the market becomes liquid by doing this. Now, why do they want to sell fractions to each other? Because they want geographic diversity, right? The second is, some of the clients will hold 10% of a loan, some will hold 20% of a loan, and some will hold 100% of the loan. So they could manage their liquidity requirements in real-time and we allow them to change those liquidity requirements on demand. So common underwriting and common pricing allows for distribution channel expansion because you’ve got a much larger balance sheet that you’re dealing with collectively. It allows for real-time syndication because there’s no diligencing anymore because we are both underwriting and pricing the same exact loan product. You and I now can geographically diversify our portfolios. Then, finally, what it lets us do, is we can manage our capital more effectively. If we need loans, we hold more of the loans we originate. If we don’t, we’ll sell more of the loans we originate.
PR: So then when this, let’s just say it’s a private student loan, there’s a borrower at the other end. Who is the lender of record on the loan? Is it the network itself, or is it one of the credit unions or community banks?
VP: Great question. The answer is it’s the credit union that they become a member of. So, and the way we run the program, Peter, which is different than a lot of our competitors are, our clients have the ability to market the product to their members, as well as go out and acquire new members. So the credit application itself that we provide them with is embedded, say in a marketplace. When a borrower goes to their credit application and begins filling it out, we’re taking zip code, state, employer. And behind that, we are doing a real-time field of membership evaluation to see what credit unions they can become members of. And then, we do the memberization process as part of the origination process. And for community banks, we do the same exact thing, except now what we understand is their trading areas, right? What cities or states, right? They are chartered to provide banking services, and we will direct future customers to them as well based on eligibility.
PR: Do they then originate the entirety of the loan and off their balance sheet? The second part is, do they then potentially fractionalize and say, you know, we’ve got this new member, this is great, but we only want to keep 20% of this loan on our balance sheet. What happens?
VP: Yep. So, in the origination process, the loan is actually syndicated pre-funding.
PR: Ah, okay.
VP: So, at the point of origination, because you’ve joined the network, every person who joins the network makes a capital commitment. It’s an annual capital commitment. And what that allows them to do is to turn around and say, I’m going to put five million into the network for the year. Let’s say, Peter, you’re going to put $10 million in. And then, we tune the algorithm. You’ll see twice as many loan participations as I will because we’re drawing down all the capital, right? At the same time. The loan, when someone applies for a loan, and let’s say I am going to be the originator for that loan, when I’m ready to originate that loan and prove it, I’ll see nine other financial institutions all have 10% of that loan. And at funding, I fund 10%, and then LendKey goes out and takes 10% from the nine other funders. And if it’s an in-school loan, we fund it into the school. If it’s an education refinance loan, we pay off the old servicer and establish the new loan. And if it’s a home improvement loan, we turn around and pay the contractor based on the installments of that particular home improvement project.
PR: So how do you decide who is the lender of record and who is the one that actually gets to have this new member?
VP: So it’s all based on eligibility. So, as I said to you earlier, we have the field of membership requirements for our credit unions and we have the trading areas for the community banks encoded behind the credit application. So, at the point of application, we ensure that the consumer is aware that they’re either going to have to take this loan from a community bank or join a credit union in order to get the loan. As they’re filling out the credit application, we’re searching for where the eligibility lies. And then just before we pull credit, we show them the institutions they’re eligible to join and they pick one. And then what we’ll do is we have the credit bureaus for those institutions. We will pull credit and they have an institution and the rest of that process now, that institution that the consumer selected is the lender of record.
PR: The credit unions that can participate, they may not have a presence in the state where this borrower is, but they’re getting geographic diversity by participating in the loan. Or do you have to be able to actually have a presence in that particular state?
VP: To buy a loan participation, you don’t need to be in that state. That’s why loan participations allow these clients to diversify their portfolios.
PR: Right, that makes sense. And this is available to both credit unions and state-chartered banks, right?
VP: That’s right.
PR: Will you have a loan that will have some credit unions and some banks syndicated on the loan?
VP: Someday we hope to get that. As of this point, no, but we’re always hopeful.
PR: Is the marketplace really for credit unions right now?
VP So currently the loan participation marketplace is predominantly credit unions, but there is nothing to stop us from providing the same service to community banks if they want to create their own network, or actually at some point, have some of the banks buy some of those loan participations because they can.
PR: Interesting, interesting. So, are we talking about ALIRO?
VP: That’s correct. So in 2021, we launched ALIRO. And what we did was we enabled other institutions, aside from us, to now utilize our loan participation algorithm. So you can use ALIRO in two ways. One is a marketplace. So, if you were a community bank and you wanted to sell 50 million dollars worth of mortgages, you can take those loans, place them in the marketplace, upload all your materials, your loan tape, and then it will immediately alert all the other folks that are registered on ALIRO that there’s an active deal that’s now on the network. Now all those folks can log in, they sign an NDA and they can access the deal room and they can diligence that deal. And that loan might be purchased by one institution or it might be purchased by multiple.
PR: And so that’s available to community banks.
VP: Yes, it is. And then, the second thing that ALIRO can do is, as I said earlier, it allows banks, credit unions, and fintechs to establish their own lending networks. So, for example, we’re just getting ready to launch with Caribou. So Caribou is in the auto refinance business. They do a great job of going out and acquiring consumers who are interested in refinancing their auto loans for all the reasons we understand why. And what we’re doing with Caribou is they will turn around, and we will build them a network, in this case of credit unions, where there’ll be one or two originating lenders on the platform. And then, after the loan is originated, it will be syndicated out to those credit unions. So, for Caribou, it builds out a very, very large balance sheet of like-minded lenders who are all interested in originating the same type of auto refinance loan.
PR: Interesting. So they don’t really need to have a capital markets team now, going out and knocking on doors. They just go to your network that you’ve kind of created to, almost replace the capital markets team, it seems like.
VP: So they can leverage our network or they can continue to build their own networks. That’s the benefit of what we have. So, there are two parts to that relationship. At the same time, it also allows credit unions to become their own sort of fintech, if you would. So, we have a credit union right now that has done a great job of originating auto loans. They’ve got great history in really originating very high-quality prime auto loans. They want to expand their dealer network. So we’ll help them build a network of credit unions behind them so they can continue to grow their auto loan origination business. They’ll be the servicer on the portfolio. But what we will do is allow them to syndicate those loans or participate those loans as they originate them. So, they’ll have a much larger balance sheet as a result. And the benefit to those other credit unions, because many of those credit unions don’t have an auto dealer network, so it’s a way for those credit unions to get access to auto loans. And right now, there’s a pretty large demand for auto loans in the credit union system.
PR: Right. And also, it removes the geographic concentration too, for that credit union, I imagine.
VP: That’s right.
PR: Right. Okay. That’s super interesting. You’ve come a long way since we last chatted. I think this is a really cool concept, Vince. Okay. So last question then, where are you going? What do you think the next five to 10 years looks like for LendKey?
VP: So look, I think the first is that network lending for us, and I think it’s really demonstrated that it has really strong potential, is we will continue to look to expand the products that are available in that format. So that means us turning around and either building out more organic products, so we have three organic, we call them organic products, we have education, we have education refinance, we have home improvement. We will seek to continue to expand the products that we build ourselves and originate ourselves for our clients. We will also build out other fintechs, other credit unions, other banks who want to go into the business of building their own network lending programs. The second is, we’re just going to continue to expand those community financial institutions that we service today. We’re up to 400 now. We think given some of the things that are happening in the Department of Education, we think with ALIRO, will have a much broader reach in the marketplace. And then the third is, the last is, using data, these networks, one of the byproducts of the networks are, just a tremendous amount of data that’s made available about where customers are at the point of sale. And that point-of-sale concept is really important, right? We’ve seen that consumers really expect, especially in lending, to have access to a loan product at the point of sale, whether they’re shopping for furniture, shopping for a car, or putting a pool in. So, really expanding the data that we have that we can make available to all of our community-based financial institutions. So they’re really aware of when their customer or member is shopping for some type of finance product and make them aware of it and bring them back to them.
PR: Interesting. Well, Vince, it really was great to catch up and to learn more about what you’re doing. I think it’s super interesting. Always great to chat with you. Thanks for coming on the show.
VP: Peter, thanks for the opportunity to share the story with you again.
PR: I love this innovation that LendKey has brought to market. It enables credit unions to quickly and easily diversify their capital base while at the same time creating a new marketing funnel for new members. The icing on the cake is that, in the case of student loans, it also brings in younger members. Obviously, there is a cost to this, but it’s going to be far less expensive than trying to execute on and market a new loan program for a credit union. As I see it, there is very little downside for the credit union to participate in network lending.
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