Loan aggregators act as the middlemen of the online lending world, and they play a very different role in the personal loan and small business segments of the online loan market, said OnDeck COO James Hobson, speaking on stage at CB Insights’ Future of Fintech Conference.
Hobson explained that small businesses have been badly served by banks and online loan aggregators in the past. He explained how some aggregators will present three options for loan products to small businesses, only to reject approval to the business once that option is selected. Small business owners will rarely go through the process again to try with another option.
These small business owners have traditionally had trouble securing conventional loans from banks and when they are rejected for a loan that they applied for through an aggregator, they see it as the same pattern playing out.
“So there’s skepticism that is definitely inherent within small business owners,” he said.
The solution that OnDeck tries to put forward, Hobson explained, is to use the customer’s data to help them get the right loan products for them. Think of it as an inversion of the “pick one” model described earlier. Hobson detailed the process:
“What we look to do is … use data to very quickly let them know with a high degree of confidence, ‘yes we can get you something and you should feel really good about going down this path’ because we’ve used data to actually make that decision, we’re not just giving you a range of something that’s just standard off the shelf.”
There’s probably still a place for aggregators, he said. “Some people want that experience,” he said. OnDeck even has relationships with some aggregators, but in those cases OnDeck tries to work with them to make the process efficient.