Akouba, the Chicago startup, has been endorsed by the American Bankers Association (ABA) as a technology provider to help its members offer online lending to small businesses.
According to a report by Reuters, in January, the ABA, the trade group for banks in the U.S., held a bidding process to land an online lending partner amid an increasing number of banks that launched their own lending services online or that partnered with FinTech startups. Akouba has a loan origination and underwriting platform that can be integrated with a bank’s credit policies. That, among other things, including the ability to assess and manage risk with the loans, led the American Bankers Association to choose Akouba.
“The small business loan application process is very time-sensitive and costly for banks, and there is a need to simplify and accelerate the process,” Bryan Luke, chairman of ABA’s Endorsed Solutions Banker Advisory Council, said in a statement to Reuters.
For years, the online lending sector was mainly the domain of startups as banks shied away from this type of lending. That has now changed with a slew of banks partnering with online lending companies to get into the game. In the case of smaller banks, Reuters reported they have opted to turn to the American Bankers Association for help. Member banks usually get discounted pricing from American Bankers Association partner vendors, noted Reuters.
While the ABA tapped Akouba as an online lending partner, it does come at a time when investors are falling out of love with digital lending. In August a report by PitchBook Data found equity investments going toward online lending companies fell 44 percent in the first half of 2016 to $2.1 billion. That compares to $3.8 billion in the year-earlier period. What’s more, the report found investments in online lending during the second quarter were the lowest since last year’s second quarter.