JPMorgan Chase and OnDeck Capital are joining forces in an old financial services meets new financial services type of moment.
“It is not a question of friend or foe,” said Jenn Piepszak, chief executive for business banking at Chase. “We clearly bring scale and customer acquisition to the table; what they offer is a disruptive customer experience that is very complementary with our existing services.”
JPMC is not alone in pursuing an “if you can’t beat ’em, join ’em” attitude towards the emerging online lenders, which Morgan Stanley estimates will own 8 percent of unsecured consumer loans and 16 percent of SMB loans within the next half-decade.
Vince Passione, CEO and founder of LendKey, an online lender that deals mainly in auto and personal loans, notes that Chase’s decision is the right move because “it is very difficult for a big bank to turn around small-dollar loans for business owners. Having a partnership with an online lender makes all the sense in the world.”
OnDeck originated $1.3 billion in loans in the first nine months of this year — up almost 70 percent from the same point a year earlier. The market very much liked the mainstream stamp of approval Chase laid on OnDeck; OnDeck stock went up 28 percent to $11.50 on the news.
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