Garnet Capital Advisors Blog

October 17, 2017

The FinTech Revolution Continues

Excerpt: As the FinTech revolution continues, banks and traditional lenders are realizing the benefits of partnering with FinTech firms. There are ways that a whole loan broker can facilitate these partnerships.


The structure of the financial services industry has been changing over the past decade. This is in large part due to the influence of FinTech, or financial technology, firms. These mostly Silicon Valley companies that dip their toe into our nation's financial waters are focused on such things as crowdfunding, transaction processing, and payment solutions. At first, FinTech firms were labeled public enemy #1 by traditional banks and lenders. Now, some lucrative partnerships are forming as the FinTech revolution continues.

The FinTech revolution has forced traditional lenders to evolve their practices.

The Continued Growth of FinTech Firms

CB Insights reports that Q2 of this year produced the highest VC funds raised by FinTech companies at $5.2 billion and 251 deals for the quarter. Growth in FinTech deals and funding is on track to increase by 5% and 19% respectively by the end of 2017. One of the biggest trends that we're currently seeing with FinTech is the emerging partnerships with major banks.

Why FinTech and Bank Partnerships Make Sense

Instead of being at odds with each other and competing for customers, many traditional banks and FinTech firms have found that they can form mutually beneficial relationships. In truth, each side has something that the other desperately needs. This creates the perfect formula for collaboration.

FinTech firms have the most advanced transaction processing and payment solutions systems on the market. In contrast, banks have been using antiquated ACH and wire transfer systems since the 1970's, which could use an upgrade. A problem that FinTech firms face is that borrowers don't trust them due to lack of name recognition and fewer Federal protections. Banks, on the other hand, have massive name recognition and client bases, which they can tap to roll out new products. 

When FinTech firms and banks come together to combine their innovative technology with a built-in customer base, the result is a win-win for all involved. Just a few notable partnerships include the deal between JP Morgan Chase and OnDeck Capital as well as Bank of America's partnership with Microsoft and Cardlytics.

Your loan sale advisor can help foster valuable FinTech partnerships.

How a Whole Loan Broker Can Help Banks Form Beneficial FinTech Partnerships

Not only does a partnership between FinTech firms and traditional lenders benefit the institutions, but there are advantages for the borrowers as well. Any client-focused company will be anxious to make this move.

Garnet Capital can help your business foster these types of partnerships for the benefit of both companies and their borrowers. In addition, our loan sale advisory services allow your company to minimize its risk while maximizing your potential bottom line.

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