in consumer applications for financial services
The world of alternative finance has come on strong in recent years, and more and more small businesses have begun turning to it in the search for favorable loan terms and/or alternatives to borrowing from banks. But the world of online lending can be an uneasy transition for many business owners who have always relied on banks for loans. Here’s a breakdown of what alternative finance has to offer startups and other small businesses.
The AltFi Advantage
Marketplace lending is just one new addition within the alternative finance landscape. The lending platforms advertise several major benefits to borrowing money from a marketplace lender versus using traditional banks. The advantages start right at the applications process. Most marketplace lending websites boast quick and easy loan application processes that can be conveniently completed from the comfort of home. Not only does the borrower get to avoid the hassle of going to a bank branch and dealing with bank bureaucracy and long waits, online lending platforms don’t have to pass the inherent costs of operating brick-and-mortar bank branches on to customers. Marketplace lending also promises a fair share for borrowers with less-than-ideal loan applications. For some borrowers, credit scores and credit history may not be up to bank’s restrictive standards. A first-time borrower that is funding his or her startup has likely never applied for a business loan before, and the banks will often penalize borrowers for lack of experience. In addition, many banks limit their underwriting activity to large business loans. It costs banks about the same amount to process a $50,000 loan as it does to process a $1 million loan, but they profit much more off of the larger loan. Therefore, a small business owner in need of a micro-loan (less than $35,000) may be rejected by banks even if he or she has a perfect credit history. This gap is bridged by marketplace lending loans where borrowers enjoy the benefit of not being defined by the rules established by banks. With the ability to take out personal loans ranging from $500-$100,000, a small business now has a resource for overcoming the rejection from banks. A borrower could have their application approved in a matter of hours and money in their account within days. Finally, the marketplace lending process promises to deliver more transparency and more control to the borrower. Both lenders and borrowers, through the online platforms, have clarity into the processes, fees, returns, and other variables associated with this new alternative financing option.
What’s Holding Business Owners Back?
Despite the explosion in popularity, many businesses are not taking advantage of the opportunities that marketplace lending claims to offer. According to a Manta survey of small business, many business owners are not comfortable with the technology involved in this lending process. Thirty percent of those surveyed reported being “unsure” of the risks involved in alternative lending options, 20 percent claim they do not understand the technology involved in the process, and 14 percent reported that they do not trust marketplace lenders.
But lending startups are on the map now...
The appeal of marketplace lending has caught the attention of a growing number of new startups. According to The Lending Mag, P2P loan startups raised $15 billion in funding in 2014. Data from CB Insights indicates that funding for lending companies is continuing to grow dramatically each year. In Q1 of 2015 alone, various lending startups have raised an estimated $385 million combined. It appears as though, for now, many business owners and entrepreneurs are still waiting for marketplace lenders to establish more of a track record before jumping on board, but the numbers prove that it is already making a major impact on the business world.
Disclamer: The material provided on this site is not intended to provide legal, investment, or financial advice or to indicate the suitability of any Even Financial product or service to your unique circumstances. For specific advice about your unique circumstances, you may wish to consult a qualified professional. Any information or statistical data sourced by Even Financial through hyperlinks, from third-party websites, are provided for informational purposes only. Although we promote products and services form our partners, our opinions are our own.
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Goldman Sachs-backed Even Financial, a digital matchmaker between banks and customers, just bought an insurance startup as life insurers are seeing policy applications boom
Even Financial has acquired LeapLife, a leading insurtech platform. The addition of LeapLife allows Even to immediately commence its insurance capabilities, aimed at simplifying and enhancing the way consumers search, compare, and get matched with insurance policies (LeapLife’s existing platform will continue to operate from leaplife.com). Business Insider wrote an article about it, interviewing our CEO and Founder Phill Rosen.
Even Financial Launches Insurance Offerings With Strategic Acquisition of LeapLife, a Leading Insurtech Platform
Pioneering B2B Fintech Expands its Industry-Leading Financial Services Monetization Platform to Help Insurance Carriers Find and Connect with Consumers New York, New York – April 22, 2020 – Even Financial (Even), the leading API for financial services search, acquisition, and monetization, announced today that it will be launching services for the insurance industry through the acquisition of LeapLife, an insurtech platform and digital life insurance agency. The addition of LeapLife allows Even to immediately commence its insurance capabilities, aimed at simplifying and enhancing the way consumers search, compare, and get matched with insurance policies (LeapLife’s existing platform will continue to operate from leaplife.com). Even and LeapLife now offer the only full end-to-end, multi-carrier digital life insurance marketplace experience. Over the coming weeks, Even will further integrate LeapLife’s technology and insurance offering into its industry-leading API, making turnkey insurance marketplaces programmatically available to a vast network of channel partners — when and where their consumers are most in need — while also enabling the company to expand to other insurance sectors, including homeowners, renters and auto insurance. This adds to Even’s peerless breadth of real-time, personalized financial product offers — an expansive suite that already includes loans, savings, credit cards, and more. “Even’s goal to evolve how financial institutions find and connect with consumers is not limited to loans or credit cards, but applicable to all financial products and services, including insurance,” said Phill Rosen, Even Founder and CEO. “Despite its importance, purchasing life insurance is often an overwhelming and inconvenient experience. With more than $600 billion in premiums paid each year, and only 6% of policies sold completely online, we see tremendous opportunities to help modernize the life insurance industry and offer solutions that solve challenges for consumers and carriers alike.” LeapLife is an established insurtech platform and digital life insurance agency that utilizes data science, deep underwriting knowledge, and proprietary technology, enabling consumers to apply for instant-decision life insurance policies with real-time quotes. LeapLife works with many best-in-class insurance carriers to offer consumers a seamless experience from beginning to end. This approach made Even and Leaplife a perfect match. As a digital insurance broker, LeapLife offers personalized life insurance recommendations based on a consumer’s unique needs. Paired with the Even API, which enables customer acquisition for insurance to be native and programmatic, consumers benefit from a more streamlined, transparent, and highly personalized experience when shopping for life insurance. Just as Even’s 2018 acquisition of Birch (the award-winning credit card rewards app) allowed the company to accelerate its expansion into credit cards, the addition of LeapLife will similarly put Even at the forefront of consumer insurance offerings. Charles Svirk of MassMutual Ventures, an investor in Even, said “The Even and LeapLife teams share a vision that the future of insurance acquisition will rely on the power of data-driven, programmatic distribution. We are thrilled to support them as their industry experience, impressive technology, and trusted relationships will help scale Even’s insurance offering and build partnerships to provide these critical innovations in insurance acquisition.” The Even API and platform solve significant, long-standing pain points in financial services acquisition by seamlessly connecting supply and demand. Even has continued its rapid growth trajectory in 2020, surpassing over $1.5 billion in credit issued through its API and expanding its platform to over 400 partners. Even has secured over $55 million in funding from major financial institutions, venture capital firms, and fintechs to back its goal to evolve the financial services acquisition ecosystem. About Even Financial Founded in 2015, Even Financial is a B2B fintech company that is transforming the way financial institutions find and connect with consumers. By seamlessly bridging financial institutions (including American Express, Goldman Sachs, and SoFi) and channel partners (such as TransUnion and The Penny Hoarder) via its industry-leading API, Even turns any consumer touchpoint into an ROI-driven, fully customizable, programmatic acquisition source for financial product offers with full compliance, security, and scale across loans, savings, credit cards, insurance, and more. Even is backed by leading financial services firms and VCs including American Express Ventures, Canaan Partners, Citi Ventures, F-Prime Capital (Fidelity), Greatpoint Ventures, Goldman Sachs, LendingClub, and MassMutual Ventures. Even is the leading search, comparison, and recommendation engine for financial services. Media Contact: firstname.lastname@example.org
Even CEO/Founder Phill Rosen quoted in Protocol Braintrust Newsletter
Our CEO and Founder Phillip Rosen was included in the most recent Protocol Braintrust newsletter along with answers from some thought leaders from Plaid, Slack, and DuckDuckGo!