In this episode
In this chat, Colton Pond, CMO at LoanPro, discusses his company’s journey and the market they serve. Colton explains that LoanPro is a lending and credit platform that helps financial organizations launch, service, and manage various types of loans. Colton then highlights the range of clients they serve, from big companies–like Intuit–to small startups. He discusses how LoanPro enables organizations to modernize their tech stack, drive operational efficiency, and innovate in their lending programs. Finally, Colton provides some thoughts on the future of fintech.
Key takeaways
- LoanPro is a lending and credit platform that helps financial organizations launch, service, and manage various types of loans.
- The platform enables organizations to modernize their tech stack, drive operational efficiency, and innovate in their lending programs.
- They work with a range of clients from big companies, like Intuit, to small startups.
- LoanPro is API-first and offers both API infrastructure and a UI for clients.
- The future of fintech includes embedded finance and embedded lending, where everyday brands can offer financial services.
Transcript
Rory Holland
Well, Colton Pond, it’s so good to have you here.
Colton Pond
Thank you.
Rory Holland
Welcome to Austin. All right. What do you think so far? How’s it going?
Colton Pond
Good. I’ve been here. Get them out over the past like five, six years. Yeah. Good weather. I’m glad it’s not July, August. Boiling hot. But yeah, it’s good to be here.
Rory Holland
It’s a good time of year now. This time of year you don’t want to be here in July. Where’s home for you?
Colton Pond
New York City.
Rory Holland
Is that home home? Like grow up home?
Colton Pond
I’ve been there the past two years. Spent five years before that in Miami. And then before that was in Salt Lake City.
Rory Holland
Awesome. So you’ve lived some different places.
Colton Pond
Utah, I tell people, mountains in Utah to the beach in Miami to the city in New York. Like fundamentally different people live in those different cities.
Rory Holland
Well, I can’t wait to talk to you in a few years. Maybe it’ll be somewhere else or…
Colton Pond
Maybe Hawaii. Somewhere cool.
Rory Holland
That’s right, change it up. And you’re with LoanPro.
Colton Pond
Yes.
Rory Holland
And so, tell us a little bit about LoanPro.
Colton Pond
Yeah. So LoanPro, been around for 14 years. Cool origination story in that three brothers were co-founders and they owned an auto dealership car loans. And what they found is there was this gap between prime and subprime that wasn’t serviced in the market. They said we can sell more cars if we’d lend to these people. They’re like, let’s figure out lending, right? So they started lending, fell in love with lending, but realized a lot of the financial infrastructure within lending was archaic and challenging to be able to drive innovation. So they set off on a journey to create their own lending platform. So we’ve been around 14 years, bootstrapped the business from that day. Today, modern lending and credit platform. So we’re the platform that financial organizations use to launch, service, and manage virtually any class of loans, line of credit, or credit card. So folks like SoFi, Chime, Intuit, Best Egg, run their loan servicing, loan management on LoanPro today.
Rory Holland
Oh wow, that’s great. That’s a cool story. So I started in automotive, but I spent many years in automotive, so I’d love to maybe unpack that at some point. That’s a… the automotive lending business is like a whole crazy business. And when you talk about the split between Prime and that gap between Prime and Subprime, lots there. Sounds super interesting.
Colton Pond
Yeah, there is lots.
Rory Holland
So tell us a little bit about the market you serve. You mentioned a few clients. Is there a spectrum, like earlier stage, major big brands in between?
Colton Pond
So it’s less along org size. It’s more along priorities. So we’ve got big companies like Intuit, one of the biggest companies in the U.S., all Intuit QuickBooks lending goes through LoanPro to small startups. There’s a small startup actually based in LA, Aero Finance, and they do credit cards for folks that have no credit, zero credit, and help them build credit. And they are just starting off. So a good spectrum in between, it’s more around the problems we solve. So it really comes down to two areas, folks that want to modernize their tech stack and drive greater operational efficiency with driving greater automation and their lending processes and folks who want to innovate, folks who want to launch truly differentiated loan credit programs. So an example, we have a credit card that a credit union that we partner with, we’ve been talking about and they service military members. So they came to us with a problem. They said, “hey, we have a problem. We service military members, say it’s husband, wife, two kids, and husband is a military member and he goes on deployment. We have a secondary relationship with wife and kids. And typically when they go on deployment, they leave and go bank somewhere else. And they said how do we make our cards more sticky?” So we’re working with them to launch what we call an active military duty card where when a military member goes on deployment, will geofence a five mile radius around their house back home and any gas and groceries purchased while the military members on deployment is at a 3% interest rate. And we will interest abate emotional wellness purchases for 12 months or for the time period that they’re on deployment. So you can start creating unique credit and lending programs that differentiate and stand out in the market. So really it’s around how do you modernize, drive operational efficiency and how do you innovate and drive growth?
Rory Holland
So can you describe, are you creating that for the clients or is it an API system or the software that they’re?
Colton Pond
It’s both. So we have so LoanPro is API first. So we have some customers that just use our API infrastructure, and they build the front end themselves, and some come to us and say, generally the bigger ones want to do that, they want to own the UI, then we have someone coming to say, hey we want to use your UI and your APIs, and great we have a stack that will let them go from loan servicing collections and payments and yeah tracking all the little lifecycle events and everything there.
Rory Holland
With as fast as fintech is going, how are you guys following that or leading that? And it sounds like you are.
Colton Pond
Yeah.
Rory Holland
And you mentioned a couple of examples like it’s growing so fast. How are you finding yourselves inside of that with LoanPro and the brand?
Colton Pond
I think the superpower of fintech is its nimble ability to be able to move fast and change towards market conditions. And that’s something that banks and credit unions can’t do on purpose because their margin for error is very small. Fintechs can because their margin for error is a lot bigger, and they don’t have much to lose. Where they struggle though is compliance and how to drive compliance. That’s why we’ve seen this tension between sponsor banks and fintechs at a degree. So what we’re trying to do is we have a platform that’s built compliance to the core and won’t let actions outside of compliance happen like Card Act compliant. There’s certain regulations in Card Act compliance and you can’t do an action if you’re using LoanPro that will make you outside of that regulation. But what we’re also doing is enabling fintechs to move fast and innovate and launch new card programs and lending programs. So, a top three neo bank that we partner with today, they launched their first lending product in market within four weeks, signed a contract and four weeks later they had a program in market.
Rory Holland
So they’re launching and deploying fast.
Colton Pond
Fast. And how to test new markets, Intuit came to us for that reason and for that purpose initially. Like how do we test new markets and how do we explore … could be lending in this area in this area and what about this type of lending and see what works and quickly pivot away from what isn’t working towards what’s working.
Rory Holland
What are some of the biggest challenges you guys are up against now as you look towards the future?
Colton Pond
So, I’ll say it’s some of the biggest challenges our customers are facing now that we’re trying to solve. One is cost of capital especially within fintech lending or non-chartered financial institution lending where they don’t have a balance sheet that they’re lending against. Cost of capital has skyrocketed, which has caused some problems on margins and profitability and things like that. And then the other aspect is how to be more efficient, and it ties together with this, but how to be more efficient with less. So, how to do more with less. And a lot of that is there’s a lot of manual processes you’ve done before that you can automate and how to do you automate those processes just make the process end-to-end more efficient.
Rory Holland
Yeah, yeah awesome. What’s something folks don’t know about LoanPro that you’d like them to know?
Colton Pond
Hmm, great question. So, a lot of folks I’ll say traditionally knew LoanPro we’ve been in 14 years as a loan management system, and over the past five years especially, we’ve really transformed it to say no, we’re a modern lending and credit platform. So we have folks that launch a full revolving credit card on LoanPro to small personal loans and anywhere from big commercial loans to small personal to SMB and SBA. But it’s really that one unified platform that helps drive all of your lending credits.
Rory Holland
Yeah, it’s so cool. It sounds like you guys are up to some super interesting stuff.
Colton Pond
We are.
Rory Holland
So for someone like you who’s been in it a bit, learned a ton, I’m sure. I’m learning stuff every day, talking with folks like you. What advice might you give someone that might be thinking about coming into the fintech space?
Colton Pond
Buckle up. Things change so quickly. That’s why I love it, personally, is because a lot of people talk about 2023 with all the change. They’re like, oh, I’m glad that’s over. I’m like, no if you feel that way, you’re in the wrong industry. Fintech is in a unique spot because it’s combining innovation with compliance because financial services are highly regulated, and they’re regulated for a reason and try to merge those two often are at odds, but they don’t need to be. So my advice would be if you like change, if you like things, if you’re good with things changing quickly, great. You’re in the right spot. And if that gets exciting to find opportunities based on the change, that’s what you need to do.
Rory Holland
So what do you think’s next? Like if you look five years down the road, I know we’re magic ball here. What do you see?
Colton Pond
Embedded finance, embedded lending continuing to take off. So you have these brands with captive audiences. Airlines have done this for a really long time. Like Delta has me on my American Express and I run all my spending through Delta. Delta is just the front and face for American Express on a marketing engine. And I believe more and more embedded finance will occur. And you’ll have these brands where it will be the bank on the back end serving financial services products through these brands that have these captive audiences within them. There’s some issues to figure out from a regulatory compliance perspective that we’ve seen over the past year. But especially in five years, I see a lot of that being figured out. And then, yeah, financial services more embedded within everyday brands that we consider part of our identity.
Rory Holland
Yeah, it’s good stuff. Man, it’s been a blast.
Colton Pond
Yeah, thank you.
Rory Holland
So nice to meet you. I know you’re really busy with craziness at SX. Fintech House is always fun.
Colton Pond
Jason always puts on a good time.
Rory Holland
Yes, he does. We’re glad to be part of it. Well, thank you so much, Colton. I appreciate the time.
Colton Pond
Yeah, cool.
Rory Holland
Thank you, my brother.
