The online lending movement to date has been focused on consumers and small businesses seeking simple applications and quick approvals.
But Bremer Bank in St. Paul, Minn., is set to announce Thursday morning that it’s signed a contract to use Numerated Growth Technology’s online lending software to make fast, automated loans to farmers.
Numerated is the tech spinoff from Eastern Bank that’s run by Dan O’Malley, who was head of Eastern Labs and the bank’s chief digital officer. It built the new agricultural loan software in collaboration with the $12 billion-asset Bremer, the 11th-largest ag lender in the country.
“We see this as a gap in the market which we think by working with Numerated we can provide that small-business solution to the ag community,” said Dan Flaningan, strategy director at Bremer Bank. “At the end of the day, that’s what a farmer or someone running an ag business is, a business owner.”
Bremer’s ag customers tend to be smaller family-owned farms. Farmers who are out in the fields during the day have limited time to go to a bank branch.
“Our ag clients are the ones that are more digitally savvy," Flaningan said. "They’re more apt to use mobile deposit functionality, because obviously time is important to them. Making a potentially big commitment to drive into town to a branch to deposit a check is not advantageous to them as a business owner.”
The bank plans to test the new software in the fourth quarter and launch it next year.
Neither Flaningan nor O’Malley would discuss contract details, how the Numerated software has been revised to accommodate ag loans or what new types of data are being pulled in to underwrite the loans.
“I think this speaks to how quickly digital and online lending is spreading to be able to do it in such a conservative category as ag lending,” O’Malley said. “But at heart the engine is the same.”
Next year, Numerated plans to add credit card origination to its platform. The software is also being used to make larger commercial loans, O’Malley said.
O'Malley says banks that just offer an online loan application rarely increase their loan volume.
“We learned that at Eastern — if all you do is put up an online application, you will not do more loans,” he said. “You have to transform how your employees and your marketing are talking about the bank and selling loans if you want to make money and grow.”
Numerated provides training and technology to make loan sales a natural part of helping customers.
“Most bankers are service driven,” O’Malley said. “When a customer calls them up, they want to help. We allow bankers to have the tools to sell a business loan as part of the service experience.”
The Numerated software prequalifies all the prospects in a bank’s footprint. When a local businessperson calls, a banker can tell them they’re eligible for a type of loan and what the terms would be.
“The banker is not required to go through credit training in taking the application; they can be not credit-trained and still be able to sell loans because the system is doing the credit work for them,” O’Malley said. The software makes loan decisions within about 45 seconds, he said.
