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Fintech Lender OnDeck Spins Out SaaS Company To Build Small Business Loan Products For Banks

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Fintech Lender OnDeck Spins Out SaaS Company To Build Small Business Loan Products For Banks

Weeks after fintech personal lender Avant launched a business line to help banks build bespoke personal loan products, small business lender On Deck Capital Inc (NYSE: ONDK) announced it will roll out ODX, a separate company dedicated to helping banks build digital small business lending products.

ODX technology could theoretically enable a bank to receive and process a customer's digital loan application and provide capital in the same day, according to the announcement. 

'Blockbuster To Netflix'

“This is a Blockbuster to Netflix, Inc. (NASDAQ: NFLX) moment for us,” OnDeck Chairman and CEO Noah Breslow said in an interview with Benzinga.

“The original thesis of OnDeck is that this technology would provide value to more than just us. All these banks who were skeptical of online lending for many years are now embracing it. It’s not an ‘if’ question, but a ‘when and how’ question, and a culmination of the OnDeck vision of providing capital to small businesses.”

The idea to roll out ODX’s platform business originated within the past year, and the company will announce its first two major bank partners by the end of 2018, Breslow said. 

ODX will be wholly owned by OnDeck. Brian Geary, who led OnDeck’s bank partnerships, will serve as president of the spun-out entity.

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OnDeck And Banks Go Way Back

OnDeck, as one of the first publicly traded fintech companies, notched an early win in the fintech lending space when it secured a partnership with JPMorgan Chase & Co. (NYSE: JPM) in 2015.

The deal saw OnDeck provide the underwriting infrastructure for Chase’s small business loans. Per the terms of that deal, OnDeck received origination and underwriting fees on the loans. The bank also served as an underwriter on OnDeck’s IPO.

“We have one of the few scaled-up fintech-bank relationships,” Breslow said. “It’s more than just the technology, which differentiates us from competitors — we have analytics, marketing and personnel expertise to scale small business lending product lines within our bank partners.”

OnDeck has provided over $10 billion in loans since 2006.

Fintech small business lender Kabbage also offers a tailored loan product development service, Kabbage Platform, used by banks and financial institutions like ING Groep NV ADR (NYSE: ING) and Mastercard Inc (NYSE: MA).

OnDeck's stock closed Monday at $6.76 per share.

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OnDeck CEO Noah Breslow. Courtesy photo.

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