Financial technology companies, also known as FinTech companies, are firms that use software to provide financial services. These companies are easing payment processes, reducing fraud, saving users money, promoting financial planning and in short reshaping the financial sector.
While FinTech companies like LendingClub Corporation LC are gaining immense popularity due to peer-to-peer models, crowdfunding, and contactless payments, traditional companies have started collaborating with these virtual start-up firms in a bid to capitalize on the online boom.
One such strategic partnership has evolved between banking behemoth JPMorgan Chase & Co. JPM and an alternative small business lender, On Deck Capital, Inc. ONDK. Through this collaboration, JPMorgan looks forward to build its small-business unit and add more revenues by using On Deck’s small business lending platform to serve its small business customers.
Under the agreement, JPMorgan will offer loans of up to $250,000 to its around 4 million small-business customers using OnDeck’s platform, which is offering faster almost real-time approvals and same or next-day funding as well as uses a proprietary method to evaluate creditworthiness that works better than the personal credit check that banks rely on.
The product, which is set to launch in 2016, will be offered under JPMorgan’s brand name and remain on the bank’s balance sheet. Following the partnership news, OnDeck’s shares gained nearly 28% in the after-trading session yesterday.
In another similar deal, KeyBank, which operates under KeyCorp. KEY, entered into a strategic partnership with Aptexx, a provider of payment and property management software. This collaboration is the latest in a series of partnerships Key has established with emerging fintech providers.
Under the affiliation, Aptexx's Resident Anywhere service will be combined with KeyCorp’s real estate industry expertise and payment capabilities. This will help provide property owners and managers with a centralized, mobile-first solution to collect rent payments, receive maintenance requests, deliver resident communications and administer one-click micro-surveys.
"This partnership with Aptexx exemplifies our strategy to leverage leading-edge fintech innovations and couple them with our deep industry expertise to deliver solutions that address our clients' specific needs," said Group Head of KeyBank Enterprise Commercial Payments Clark Khayat. "A simplified resident experience improves electronic payment adoption, which helps our real estate clients run their businesses better every day."
Forming partnerships with fintech companies will help JPMorgan and KeyCorp offer enhanced services to their clients. Also, the partnerships will mark a step forward by these traditional companies to adopt the new online technology.
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