US bank debuts fresh challenge for On Deck in new digital push

New York • US Bancorp’s small-business customers will be able to apply for loans online, sparking fresh competition in the battle for offering credit to such clients.

As part of the new offering, business owners within US Bancorp’s 25-state footprint will be able to electronically complete an application, review loan details and sign closing documents for loans up to US$250,000 (RM1.03 million), the Minneapolis-based bank said in a statement on Monday. The process can take less than a day, compared to the roughly 11 days it takes when customers come into a branch, said Scott Beyer, group product manager for small-business credit.

The bank’s in-house engineers designed the programme in six months, focusing on making the loan process both fast and simple, said Tim Welsh, the lender’s vice chairman of consumer banking sales and support.

“I thought that what customers would want is speed. My analogy was when my wife orders something from Amazon, she wants it to be here right away,” Welsh said in an interview. “What the customers clearly told us was that speed matters, but ease was most important.”

Banks have had to improve their digital offerings after start-ups such as On Deck Capital Inc put their applications online and sped up the funding process. While small businesses still mostly seek financing from banks, the share of applicants who turn to online lenders has grown steadily, according to data compiled by the US Federal Reserve.

This month, On Deck said it became the first online lender to originate US$10 billion in loans to small businesses. The company has a partnership with JPMorgan Chase & Co to offer online loans to the bank’s four million small-business customers. While originations from that partnership slowed in the second quarter, the company said in July that it expects the volume to ramp up again in the second half of the year.

US Bancorp has been expanding its digital offerings in a bid to sell more products to its existing customers. The firm is searching for a chief digital officer, a new role that will report to CEO Andy Cecere. The bank earlier this month announced it would offer short-term loans to checking account customers through its online and mobile banking applications, and it’s considering expanding into Florida, Texas and North Carolina using a small branch presence along with improvements to its digital line-up.

“We’re trying to make it simpler to do business with us,” Cecere told investors at a conference this month. “We’re in a new era in banking. It’s digital. It’s technology and innovation. And we’re embracing this.” — Bloomberg