Fintech Partnerships: What Stops Fintech from Leveraging Compliance to Increase Profits?

Fintech Partnerships Takeaways from Compliance Expert

As a regulatory compliance expert my goal is to help fintech companies maximize their business potential in highly regulated markets. There are two points that cause me concern as I read this article.

• First, according to Breslow it took 4 years “to take the partnership from idea to market” with “a million different hurdles” to overcome.

• Second, this is a partial stack business model where OnDeck earns only “a small payment for each loan”, and they don’t share transactional revenue like interest payments or servicing fees.

A few months ago we posted a 2-part report exploring the pros-and-cons of the full stack vs. partial stack business model for fintech developers.

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When you use a partial stack model your technology becomes an ingredient in a big bank’s overall lending program.

• You gain access to the bank’s client list; and you avoid credit risk, because the bank uses their own capital to fund the loans.

• You earn a small licensing fee for each loan application you process, but the bank keeps all the interest and fee revenue. Which means you’ve just left the lion’s share of profit potential on the table.