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Canadian lending platform LendingArch is accelerating its expansion into the US market amid increasing nationwide demand for loans, per Crowdfund Insider. The planned expansion follows strong growth in Canada since the fintech was first founded in 2015, where it currently serves over 250,000 customers.
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LendingArch’s online comparison platform enables borrowers to compare rates from different lenders for personal and business loans, credit cards, insurance, and car loans. It also provides education tools so that users can learn how to best manage their personal finances. LendingArch earns a referral fee from borrowers for connecting them with loan providers.
LendingArch is well positioned to find uptake in the US market because it already has a foothold through existing partnerships and because demand is rising amid the pandemic.
- Established US-based partnerships and acquisition should make it easier for LendingArch to build a user base. LendingArch enjoys partnerships with large financial institutions (FIs), such as New York-based asset management NewOak, which provides the fintech with advice on capital markets, credit, and business opportunities. The fintech also already runs business operations in the US through its acquisition of California-based Loanz Inc.
- The pandemic is boosting demand for LendingArch’s comprehensive online product suite. US consumers have been hard hit by the economic fallout of the outbreak, leading to increasing demand for financial assistance, such as loans, credit cards, and advice — needs that can all be met on LendingArch’s platform as it compares rates for a wide range of products. Further, the entire loan application can be completed on its digital platform, streamlining the process at a key time when consumers are increasingly moving online.
However, the expansion comes as US marketplace lenders have experienced falling revenue in recent months, which LendingArch should take into account to ensure a successful launch. The economic downturn resulting from the pandemic has led to a rise in borrower defaults and delinquencies, causing some US-based alt lenders to lose revenue, pause lending, or go on sale.
And if LendingArch follows the pricing strategy it has now adopted in Canada for its US operations — it recently announced that it is waiving all platform fees for Canadian consumers — it could further limit its ability to generate revenue in this new market. The suppressed revenue opportunity in Canada could also limit available liquidity to fuel the US expansion. To ensure a successful US launch, LendingArch should create other sources of revenue such as premium accounts with additional features, like regular updates on the latest competitive rates offered on the market and topical personal finance tips straight to users’ inboxes.
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