Banks have loyal customers and the cheapest source of capital in the world. No alternative lender can compete with that. But what banks don’t typically have is the tech, automation, and know-how to get the same underwriting efficiencies that online lenders rely on daily. Thrive solves that problem for thousands of institutions equipped with capital and customers but without fintech efficiencies.
Thrive was started in 2015 as a direct lender by co-founders Kunal Sehgal (CEO) and Ke Zhu (CTO).
“We started as a direct lender focused on prime credit,” Sehgal said. “The small business line of credit was our go-to market since it’s an under-represented product in the marketplace. We spent 6-9 months building the platform to be fully-automated end-to-end. On-deck issues began emerging. We got a bird’s eye view of the structural issues online lenders have and realized that, on the direct side, the ability to attract stable debt capital to lend is very difficult and the cost of customer acquisition has not come down in a meaningful way.”
That’s when Seghal and his team decided to pivot and move into the pure technology space.
Deploying to the Cloud
Since Thrive had no existing customer base, the pivot seemed natural. Thrive began to service loans through a cloud-based platform. From there, it was a natural progression to offering the solution to banks, who need it to compete with online lenders.
“We can push out to a bank in a short amount of time because there’s no onsite or custom coding,” Seghal said. “It’s very quick and efficient. Banks don’t have internal IT teams and don’t know how to build it themselves, so they haven’t.”
One bank customer signed a contract with Thrive in February and had the software up and running by April. Traditional solutions don’t have that kind of speed to deployment.
“This new digital acquisition channel for banks can underwrite a loan in under 20 minutes,” Seghal said. “The system is fully configured for every customer.” The bank maintains control over who to underwrite and what to underwrite. The pricing is transaction- or application-based. “We wanted banks to win, not just charge an arm and a leg up front and say goodbye.”
Not Just Your Ordinary SaaS Platform
Thrive is more than a software-as-a-service platform. Seghal said his company is building the banking infrastructure of the future.
“When the bank makes money, we make money,” he said. “We want to be in partnership with the bank long-term.”
Their first bank customer loved being able to service deals directly on the platform, from origination to servicing. In fact, they were so impressed with Thrive’s product that they invested in the company. Banks are generally conservative and don’t make early-stage investments, so that alone is a testament to Thrive’s innovation capacity.
“We raised close to $800K,” Seghal said, “and there was also personal investment. Our goal now is to scale the customer base, then we’ll have the strength to raise a bigger round.”
The Thrive team witnessed a lot of pent-up demand for their product, but a year-and-a-half ago was too early, Seghal said. Today, the timing is just right. The fact that many banks are partnering with fintech companies and alternative lenders is the evidence that Seghal needs to see the opportunity.
Thrive can drive the banking experience from origination to the ways and means a borrower will interact with payment. It gives a more modern feel to the traditional bank facilitating servicing and a dashboard interface that allows banks to directly monitor loans in real time.
“Because we can automate cashflow, we have a direct link to an originating loan service account,” Seghal said. “ It can be monitored on a daily basis. You can see which loans are performing, which should be more closely monitored, etc.”
Thrive also configures the technology to be modular. They can move to consumer lending, commercial real estate, middle market lending, and more, very easily because they have central components built in. The ultimate goal is to drive efficiently beneath the hood, providing the plumbing of the system. On the front end, the applicant sees the bank’s branding, powered and enabled by Thrive, integrated into the bank’s website.”
What Thrive’s Competition Can’t Do
The depth of the platform separates Thrive from their competitors. They believe they can offer end-to-end origination, services, full experience, and risk management capabilities that their competitors don’t have. By offering pure tech as a service, they are trying to position themselves at the forefront of the game. A few years ago, fintech wasn’t on the radar and small banks didn’t focus on it. Since then, it has become clear that in order to succeed banks need to embrace the young, agile fintech companies as partners to learn from instead of treating them like hostile competitors.
“It’s very clear why they need us,” Seghal said. “Technology can help them. It isn’t a threat.” Thrive isn’t dabbling in tech plus lending. Rather, they are 100% focused on technology and have what is a clear win for both bank and customer. “We’re making banks fintech-enabled so they can provide a better customer experience and drive organizational value through the efficiency gained from technology.”
Authors:
Written with Nicki Jacoby.
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