First West partners with online lending startup Grow
Kevin Sandhu, Founder and Managing Director of Grow Financial Inc. Grow has partnered with First West Credit Union.Ben Nelms/Bloomberg
First West Credit Union is stepping into the world of fintech by partnering with online lending provider Grow.
Fintech companies, such as online lenders, robo-advisors and mobile payment processors, have generally been seen as disruptors to traditional financial services companies. But the announcement between Grow and First West has swung the pendulum for retail banking and shows that large financial institutions could benefit from adopting start-up services.
“The way Canadians access and use financial services is changing rapidly,” Launi Skinner, CEO of First West, said in a statement. “We want to lead these changes to ensure that we provide our members with the services they want and need.”
Grow, formerly known as Grouplend, is known as a marketplace lender and connects accredited investors with individuals looking to borrow. Loans are usually approved within 24 hours and funds are deposited directly into the applicant’s bank account without clients having to leave their homes. For borrowers, Grow’s interest rates range from 5% to 17% (with the average rate hovering around 10%).
The partnership with First West is just one of many in the works for Grow, which plans to announce several more partnership deals in the coming weeks. The lender says it will partner with several financial services companies in various industries, including insurance, investment and wealth management, and retail banking.
Last year, Grow raised $10.2 million in funding led by Markus Frind, founder of dating site Plenty of Fish, and Lance Tracey, founder of cloud services company Peer 1 Hosting. Since its launch 16 months ago, the lender has processed nearly $1 billion in loan applications.
The partnership with First West will offer credit union members a faster and potentially cheaper loan product, while Grow will have access to more customers – one of the biggest challenges for fintech companies in the world. Canada.
“The biggest struggle we have is broad awareness,” says Kevin Sandhu, CEO and Founder of Grow. “Our target customers don’t necessarily know that we exist, and more than that, our target customers don’t necessarily feel they want to move away from traditional financial services where they enjoyed a reliable and trusting relationship.”
Mr Sandhu says not all partnerships will include their loan offer. Some institutions want to take advantage of Grow’s analytics, which can identify possible sales opportunities for certain customer segments. For example, customers who have insurance needs or overspend on ATM fees could benefit from a better banking package.
Over the past six months, many of the big five banks have been watching emerging fintech players closely.
Recently, the Canadian Imperial Bank of Commerce and the Bank of Nova Scotia appointed technology talent to their boards, and the Royal Bank of Canada appointed a chief innovation and technology officer, while the Bank of Montreal has brought in an American executive who will be responsible for leading BMO’s digital business. program, including online and mobile capabilities.
During the same period, Mr. Sandhu was contacted by interested buyers, both in Canada and abroad.
“Big banks are not just looking to buy the technology being developed, but they’re also looking to pick up the start-up teams that developed the technology,” Sandhu said. “For us, that’s not an option we would consider – we’re more than open to partnering with these players, but we’re not for sale at the moment.”
CIBC was the first bank to gain momentum in fintech last fall with the announcement of its partnership with Thinking Capital, an online lender for small business loans.