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PNC, the US regional banking group, is rolling out an online lending platform targeting small businesses across the country, in the latest example of regional lenders using technology to sell services nationally.
The US’s ninth-largest bank by assets will launch online-only SME loans from “early 2019” through a partnership with OnDeck, one of the US’s oldest digital lenders.
OnDeck has worked with JPMorgan Chase on its Quick Capital small business loans since 2015; PNC is the first customer it has signed up since creating a new division called ODX to serve a broader range of banks.
The tie-up comes as banks across the US struggle to grow their loan books despite the economic boom that was once expected to follow this year’s US tax cuts.
PNC’s head of retail lending Lakhbir Lamba said it was “definitely important” to grow the bank’s geographic reach. “We want to grow our client base in small business,” he said. “As we are digitising these products, small business in this example, the notion of footprint becomes less important.”
Pittsburgh-headquartered PNC has a strong presence in eastern states but is absent from most of the Midwest and on the West Coast. PNC and other regionals, including Massachusetts-based SalemFive, have launched online-only savings products that allow them to attract a national customer base.
PNC’s online SME loans will be open to new and existing customers and will be capped at $100,000. The application will take a few minutes and funding will be available within one to three working days.
Mr Lamba said the $100,000 limit reflects PNC’s “risk appetite” and the bank’s lack of experience in online SME lending. It may change as PNC understands the market better, he added.
US Bancorp recently launched online SME loans of up to $250,000, but the product is only available to existing customers in the 25 states where the bank has a physical presence. OnDeck itself has handed out $10bn through its online-only lending platform.
Mr Lamba said PNC’s offering was differentiated because it was open to all customers, not just existing ones. PNC has ambitions to expand the online platform further than just the initiation of a loan.
“With the pace of developments and transformation, we certainly hope in five years we could have . . . (our entire SME) experiences digitised,” Mr Lamba said, stressing that PNC customers would have the option to bank in person if they preferred.
Noah Breslow, chief executive of OnDeck, said PNC did not compete directly with his company and that PNC or Chase’s competitive advantage would not be eroded if OnDeck manages to convert its “strong pipeline” of other inquiries into partnerships.
Mr Breslow would not give detail on how much business it hoped to put through the online platform, or how much it would save the bank. Mr Breslow said OnDeck’s record was evident from Chase’s positive experiences.
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