Disrupting the Banking Industry Starts With Embracing This Reality
Gaby Lapera: There are some people who need
access to loans but, you’re right, they have low credit ratings or they have other risk
factors associated with them. They can’t get loans from a bank. A lot of these people turn
to payday lenders, which a lot of the time, I’m going to say most of the time, are predatory
lenders, right? They end up in much more debt than they with have otherwise.
Jay Jenkins: That’s right. Lapera: This could potentially present an
avenue for these people, but the way it’s being done now is just so risky.
Jenkins: It absolutely is. I’m not smart enough to find the solution to this problem, but
to me, there is an answer in online and in payday lending. I’ll give you an example of
a couple traditional banks doing it right. Wells Fargo has rolled out an online business
application. Wells Fargo is the number one, by number of loans, SBA lender. SBA loans
are government-guaranteed small business loans. The number two SBA lender is a small private
bank in Wilmington, North Carolina. Both of those banks accept SBA applications online,
the user experience is smooth, it’s easy, it’s intuitive. But in both those cases, it’s
not 100% automated. There is a human being that gets routed this information, all the
stuff is verified, human eyes with human instinct and gut make a decision, and they can move
forward on the loan. It’s this nice balance where you get the benefits
of online, the speed, the transparency, plus you get the benefits of a traditional risk
management department who can protect deposit holders and protect investors from all these
undue losses from perhaps unscrupulous borrowers who might try to do something shady.