Analysis Featured

How Community Banks Must Face the New Lending Reality

community bank

Commercial banks have cheap capital and a large loyal customer base, but their inability to execute loan requests in a hassle-free and time-sensitive manner has led to a customer exodus toward online lenders.

Due to marktplace lenders disrupting the lending space, banks are finding it difficult to stop the downward spiral into obsolescence. One software company selling online origination platforms to banks, however, may change that.

Alliance Partners, headquartered in Maryland, launched in 2010 to solve this pain point for traditional banks. In 2012, they secured $150 million from BlackRock, John Delaney, Jason Fish, and Blue Mountain Capital Management LLC. Co-founder Fish is also a director of Congressional Bank and co-founder of Capital Source. Co-founder and Non-Executive Chairman of the Board Lee Sachs has served as counselor to the secretary of the treasury and head of the Crisis Response Team.

The idea behind Alliance Partners is to provide banks with the technology, technical personnel, credit risk management system, regulatory expertise, and other strategic resources for the purpose of better managing bank portfolio strategies.

There are approximately 2,000 mid-size banks with asset holdings between $200 million to $10 Billion. They all share a common challenge, have access to low-cost capital, have established customer relationships based on trust, and maintain robust real estate portfolios. However, their weakness is in dealing with process-intensive funding requirements like C&I and SME lending. Twenty-five years ago, for instance, banks with fewer than $10 billion in assets had approximately 80 percent consumer loan share. Today, it’s more like 7 percent. The huge drop is due to lack of expertise and the personnel required to run a loan department with a comprehensive bouquet of services.

Alliance Partners have a pay-as-you-go business model with no upfront fees. This helps attract community banks that would like to try their services.

BancAlliance Network is a shared lending platform for community banks with more than 200 members in 39 states. Alliance Partners is its asset manager. From loan origination and client handling, Alliance Partners does it all. They’ve also partnered with Personal Capital, Fundation, and Lending Club for some services.

Through Personal Capital, BancAlliance network members are able to offer customers access to a suite of personal finance tools and digital wealth management services. This partnership helps broaden the scope of products and services currently offered by banks and provides sophisticated tools to help customers understand, grow, and manage their net worth.

Lending Club offers members co-branded personal loans. They also purchase certain types of loans. This partnership helps community banks and their customers obtain low capital and operational costs, which lowers the cost of credit for consumers.

Fundation is a leading online business lender. Its partnership with Alliance Partners helps community banks enhance small business lending capabilities with more options and simplicity. They’ve launched an online portal to help small businesses find products that best meet their banking needs.

Alliance Partners have been compared with platforms like LendKey, Cloud Lending Solutions, and Mirador.

Lendkey provides cloud-based technology that enables community financial institutions to deliver loans directly to customers at cheaper rates. There are plenty of companies like CloudLending and Mirador in the market that provide software and SaaS solutions, but today’s banks need more than just software; they need product expertise and a way to market their products to customers. Alliance Partners fills this void.

The community banking market is becoming more customer-oriented as banks struggle to find a digital-first strategy that meets the needs of their customers. It will take more than software, however, to make this pivot. There needs to be a shift in corporate culture. Only technology and a re-alignment with the new lending reality can make this happen for community banks.


Allen Taylor
Allen Taylor
lauren twardy
Lauren Twardy


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