National Bank of Canada is partnering with online lender Thinking Capital to expand its small-business loans to Canadian companies.
On Thursday, National Bank became the second major bank to announce a strategic partnership agreement with Montreal-based Thinking Capital, allowing the bank to now offer loans to a wider segment of small to medium-sized businesses in Canada. The partnership permits National Bank to white-label, or rebrand as its own, Thinking Capital’s proprietary fintech platform and process loans directly in-house.
Canadian small businesses can apply for a term loan online, and will receive a lending decision within seven minutes of submitting an application. If approved, applicants will receive the funds within 24 to 72 hours.
“We have been looking at providing digital options to our small-business clients and making the experience easier, faster and more efficient over all,” Mario Desautels, senior vice-president of business solutions at National Bank, said in an interview.
“Rather than reinventing the wheel, we have a clear strategy to provide innovative solutions to the marketplace by partnering with fintech providers and, in doing so, we can make ourselves more available to certain segments of the market.”
Since its inception in 2006, Thinking Capital has provided short-term online loans ranging from $5,000 to $300,000 to more than 15,000 small to mid-sized businesses. Many of the loans Thinking Capital directly processes are below the threshold a typical bank would be able to finance. (National Bank does not have an upper or lower limit on the amount a business can apply for on their application.)
Earlier this year, Purpose Financial, a subsidiary of OMERS Platform Investments, acquired 100 per cent of Thinking Capital, providing the online lender with greater access to capital and the ability to deliver financing to a larger pool of small businesses.
In 2015, Thinking Capital struck a strategic referral agreement with Canadian Imperial Bank of Commerce, a significant development that showed fintech providers were no longer seen as “industry disrupters.”
“That was a really big step forward for the fintech industry,” Thinking Capital chief executive Jeff Mitelman said. “We came together and showed a market that was quite skeptical that a bank would partner with a fintech provider to better serve a customer base.
“Now, that stigma is largely behind us, and everyone now believes that the customer is the focal point and the ability to create a better offering is what we can achieve together.”
Mr. Mitelman says the white-label offering for small-business lending is “largely untapped" and provides a big opportunity going forward. The online lender has been in discussions with several financial institutions regarding similar services.
This isn’t National Bank’s first foray into financial technology platforms.
In June, the bank partnered with Montreal-based Mobeewave, a mobile-payment provider, to launch a point-of-sale tool for small-business clients called Easy Pay. In 2017, the bank’s wealth-management arm National Bank Financial entered into a partnership agreement with online portfolio manager Nest Wealth. Rather than spend money to build an in-house platform, the bank was one of several institutions that obtained the technology required to launch a robo-adviser.
National Bank and CIBC are not the the only large Canadian banks leveraging the services of fintech startups. In 2016, Bank of Nova Scotia collaborated with online lender Kabbage to offer small-business loans. Earlier this week, Toronto Dominion Bank signed a licensing agreement with New York-based Hydrogen Technology Corp. to enhance its discount brokerage, TD WebBroker.
Clare O’Hara