OnDeck wants to become ‘mom and pop’ bank of the future

Small business lender OnDeck is making a pitch to Main Street.

The company, which has been outspoken about its pursuit of a bank charter, is trying to move beyond loans and become a digital bank for small businesses. CEO Noah Breslow called the target customers “mom and pop, main street small businesses” with less than $5 million in revenue. 

OnDeck CEO Noah Breslow

“This is a forgotten segment in traditional banking,” Breslow said. “Traditional banking has largely focused on large commercial enterprises or consumers. Small businesses are often stuck in the middle.”

Breslow added that savings and checking accounts are potential new products for OnDeck, building on the company’s credit lines and loan offerings. A bank license would give OnDeck new autonomy, lower costs, and more latitude to build its product suite, according to Breslow. It would also help the company gain a leg up on competitors like Kabbage and BlueVine.

As part of its moves to become a small business bank, the company over the past year has poached executives from major banks to build its team and fill positions on its board, including former CIT executive Ken Brause; Manolo Sánchez, former CEO of BBVA Compass; and Chandra Dhandapani, former chief information officer at Capital One. 

See also: SMB lender OnDeck ‘actively pursuing’ bank charter

OnDeck offers loans from between $5,000 and $500,000 and lines of credit from between $6,000 and $100,000. According to the company, the application process takes less than 10 minutes. OnDeck delivered $12 billion to businesses since its establishment in 2007. The company went public on the New York Stock Exchange in 2014.

In addition to its direct offerings, OnDeck launched a white-label service to banks last year through a subsidiary called ODX. Through ODX, OnDeck’s technology simplifies the lending process for banks. It launched a partnership in October with Investors Bank, and Breslow said OnDeck plans to ink partnerships with additional bank clients by the end of the year.

Breslow did not offer specifics on where OnDeck stands in its charter application process, but he said the company would have updates in three to six months. In support of this effort, he noted that the company made upgrades to its finance, legal, audit and compliance functions. OnDeck currently partners with the Salt Lake City, UT.-based Celtic Bank. 

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