OnDeck Spinoff Company to Create FinTech Lending Solutions for Banks

This week FinTech lender OnDeck announced that it was spinning off a new company that will bring online small business lending solutions to banks. Known as ODX, the software as a service (or “SaaS”) operation will partner with institutions in order to offer their customers small business loans. This includes allowing the banks to accept online applications and issue capital in as little as one day.

In a statement announcing the formation of ODX, OnDeck said, “For many small businesses, the conventional bank lending process remains labor intensive and paper-based, requiring on average 26 hours over the course of several weeks to complete. The rise of digital lenders like OnDeck over the last decade has demonstrated that the originations process for small business borrowers can be simplified and accelerated by taking it online.” Given the company’s own experience building a digital lending platform that works — having lent more than $10 billion —  it makes sense that they’d be able to take what they’ve already built and bring it to others looking to expand their loan offerings.

Speaking to Benzinga, OnDeck Chairman and CEO Noah Breslow offered an interesting comparison for the path his company was taking, saying, “This is a Blockbuster to Netflix moment for us.” Breslow went on to note how the company had proven the online lending concept over the years, stating, “The original thesis of OnDeck is that this technology would provide value to more than just us. All these banks who were skeptical of online lending for many years are now embracing it. It’s not an ‘if’ question, but a ‘when and how’ question, and a culmination of the OnDeck vision of providing capital to small businesses.” As for whether or not banks will embrace ODX and their product, Breslow says the company will announce two major banking partners by the year’s end.

While the partnership displayed in OnDeck’s ODX play is no doubt a positive, one can’t help but wonder why else the company would go in this direction now. One obvious theory is that the company is looking to diversify its revenue after a few hard years on the market. Although the company saw a successful initial public offering in late 2014, the stock has floundered since, falling from more than $24 a share back then to around $7 today.

It should also be noted that this is far from the first time OnDeck has partnered with a major bank in order to expand their reach. In fact it was way back in 2015 when the company announced a deal with JPMorgan Chase to help process loan applications for Chase customers. That partnership was later extended in 2017, with Chase’s Julie Kimmerling saying at the time, “Over 18 months ago, we set out to simplify the conventional originations processes, which can take weeks to months …  Today, our digital lending product allows us to provide superior client experience, and we’ve been pleased with customer feedback.”

Make no mistake that the launch of ODX could very well prove to be a big moment for FinTech. OnDeck’s latest move shows a potential path forward for startups that have proven their financial concepts but, at their core, are really technology companies. As many have hypothesized for some time now, the best path forward for FinTech seems to be for these disruptors to partner with more established entities in order to expand these great offerings to everyone. Now, that’s exactly what OnDeck and ODX are looking to do.


Jonathan Dyer

I'm a small town guy living in Los Angeles looking to make solid financial decisions. I write for a number of finance websites, including HuffingtonPost and Business2Community. I founded DyerNews.com in 2015 to focus on personal finance and the emerging FinTech markets.

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