We all knew that FinTech made our lives easier and some entrepreneurs wealthier, but many skeptics still questioned whether doing business online was safe and dependable in times of stress. Well, now we know. FinTech has not only passed the test to date, it has displayed its value in ways that could not have been anticipated: in our view, it has become the clearly superior channel for consumers and businesses looking to borrow, manage payments and gain relief in the most stressed economic environment any of us have ever seen.

While many banks and traditional credit issuers were challenged to deliver relief efforts to their borrowers, consumer lending platforms like LendingClub have mobilized to deliver payment relief quickly. By April 1, LendingClub proactively designed, implemented and informed their millions of customers that they had programs in place to assist individuals experiencing a Covid-related hardship. The process was handled almost exclusively online, providing investors with real-time and transparent portfolio statistics (which we have passed along in our weekly commentary). Contrast this with the frustrating and painful experiences of stressed borrowers dealing with traditional lenders, highlighted in this May 13 WSJ article. Jammed phone lines, unresponsive bots, and lack of clarity made it difficult for borrowers to get relief when they needed it most from traditional lenders.

On the small business front, FinTech leaders like Square, Kabbage, and Paypal demonstrated that the online medium was the most efficient and democratic transmission mechanism of PPP loans from the government to those in need. Locked out of the process until mid-April, FinTechs delivered small business stimulus dollars based on merit and need. They were able to do so efficiently and quickly given streamlined, user friendly processes and simple web- or app-based forms. Once again, traditional lenders saw a breakdown in process, deploying needed funds based on favoritism and judgement. See articles here and here.

 

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