Alterna Bank, a subsidiary of the Ontario credit union Alterna Savings, hopes to disrupt the conventional banking system with a $15 million investment in the online lending company Lendful.
In a statement released on January 6, the two companies suggested that online loan providers like Lendful will change the lending business in the same way that Uber and Airbnb changed their industries.
Lendful approved its first loan in September last year and since that time it has received loan applications for $20 million. Borrowers submit their information on the Lendful.ca web site and can obtain a loan of up to $35,000 within 24 hours. The company's co-founder and CEO Alex Benjamin says that the funds from Alterna will help it to offer borrowers greater security and competitive interest rates.
"This deal not only makes Lendful the best online lending option in Canada, but it has also boosted the reputation of the online lending industry as a whole," he comments. "There's a certain level of comfort and security knowing that a major player like Alterna Bank is involved.'
As for Alterna, it does not perceive online lending as a threat but rather as a way to disrupt the conventional banking system. "With Lendful, consumers can refinance their credit card debts quickly and step away from interest rates of 20% or more on their monthly balances," says Alterna Bank CEO Rob Paterson. "It just makes so much sense for Canadians that are already dealing with record level of debt to find alternatives that save them money and time."