Warning to Canada’s Big Five Banks: Startups are Coming

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In his annual letter to shareholders this week, JP Morgan CEO Jamie Dimon warned investors and those in the banking industry that “Silicon Valley is coming.”

“There are hundreds of startups with a lot of brains and money working on various alternatives to traditional banking,” Dimon wrote in the letter.

“The ones you read about most are in the lending business, whereby the firms can lend to individuals and small businesses very quickly and — these entities believe — effectively by using Big Data to enhance credit underwriting.”

But not all of those startups will be founded in Silicon Valley.

Launching today at the LendIt USA Conference in New York City, Vancouver’s Lendful is hoping to change the Canadian credit landscape by directly connecting investors and borrowers.

Lendful is a a marketplace consumer lending company similar to uber succesful Lending Club and Prosper in the United States.

“For years, Canadians have faced high fees and slow responses when seeking to borrow to help meet their needs,” says Alex Benjamin, Lendful’s CEO and co-founder. “Canadians are some of the most trustworthy borrowers in the world, so why is it so difficult and expensive to get credit? And, at a time when people are transacting online more than ever, shouldn’t it be easier for responsible Canadians to get a loan?”

Benjamin says that Lendful will change this, offering rates that can save borrowers on average 30% when refinancing, and dramatically improving response times for borrowers. “This will include online loan approval and money in the borrower’s bank account in as little as 24 hours from the time of application.”

That’s because Lendful customers won’t run up against a complicated application process. Borrowers will apply online, from the privacy of their own computers or hand-held devices. The credit algorithm Lendful uses to create a complete picture of applicants, is innovative—it will look to a wide range of factors from employment to bank and credit card histories and even social media profiles.

Mike Benna a partner of Stanley Park Ventures, one of two Vancouver-based investors backing Lendful, concurs. “We think Lendful is great for Canadians. Most banks have complex, time-consuming approval processes and the approach hasn’t changed in decades. Stanley Park likes the idea that Lendful can instantly make meaningful and insightful credit decisions so that customers don’t have to wait days or weeks for a response.”

With 12 years of investment and banking experience, much of it with Macquarie Bank, Benjamin has seen the concept of marketplace lending take off in a big way around the world. “Canadians have been waiting for this for too long. It’s time for an on-demand mobile lending solution.”

Lendful will offer loans of up to $35,000, an amount often used for credit card debt consolidation, home renovations and car-buying. To be considered, customers must have a credit score of at least 690, be an employed permanent resident of Canada and at least 19 years old with three or more years of credit history.

Banking disruption is nothing new to Stanley Park Ventures’ Foundry – they launched bank account replacement Koho late last year.

Lendful will be offering loans by mid-2015.

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