By Guglielmo de Stefano on Tuesday 1 December 2015
For the first time, a partnership has been struck between a fintech firm and a major Canadian bank.
Last month, Canadian peer-to-peer lending platform Thinking Capital announced a partnership with the Canadian Imperial Bank of Commerce (CIBC), one of the most influential Canadian financial institutions globally. The new lending solution – called Rapid Financing – aims to dramatically shorten the typical lending process, allowing small businesses to apply for a loan online, receive a credit decision in real time, and have funds in their account in just a few clicks.
I caught up with Jeff Mitelman, CEO of Thinking Capital, who provided me with more colour around the agreement. According to Jeff, CIBC will represent a referral channel for the platform. In other words, CIBC will offer small businesses traditional forms of financing as well as a new set of loan products that are funded by Thinking Capital. The key feature of the programme is speed. Users will be able to complete applications in under 10 minutes; they’ll enjoy instant decisions, since completed applications will receive a credit decision almost immediately; and faster funding, because funds from approved loans are deposited after a few days, rather than a few weeks.
"Our new partnership with CIBC represents a big step forward in transforming the way small businesses access credit, and is a big win for small business owners across Canada.”
Through its new partner, Thinking Capital will in theory be able to expand its customer base, thus increasing loan origination volumes. CIBC is a first-in-class institution, which has been operating for 150 years and has developed a customer base of approximately 11 million individuals and businesses.
The Thinking Capital boss also focused on the importance of agreements with other companies, naming a few of his partners, including the like of Moneris and Merchant Services. The platform is keen on forging new large-scale partnerships with comapanies that have large small business customer bases. Thinking Capital’s pipeline is said to be full of other big names, which will be confirmed in the near future, thanks in part to the momentum effect of the partnership with CIBC.
“Apart form our partnership with the Canadian Imperial Bank of Commerce (CIBC), we have also recently signed partnerships with Moneris and MaRS Discovery District's FinTech Cluster. We're always looking for strategic partnerships with companies that can benefit from our best-in-class lending platform.”
According to Jeff, partnering with other companies is the only way to survive in the Canadian credit market, which is reasonably similar to the Australian space. Indeed, 6 banks in Canada dominate the credit scene in Canada (4 in Australia), and their customers appear have invested a good deal of loyalty in them. So, rather than competing, Jeff is keen on collaboration.
“Our collaboration represents an industry first and an opportunity to demonstrate how banks and financial technology companies can work together to offer the best possible solutions to their clients."
Lastly, Jeff highlighted that his business is completely focused on the Canadian market and expansion plans are not on the radar at present. This choice is due to the fact that the Canadian market offers many exciting opportunities that are still to be exploited.
“The lending gap in Canada shows roughly 65 per cent of Canadian businesses carrying some form of debt. However, only about 30 per cent of that financing comes from banks, according to Statistics Canada. This creates opportunity for Thinking Capital to help Canada's approximately 1.1 million small business access capital not readily available to them through traditional financial institutions.”