Who loses when Upstart becomes its own lender?

Upstart is shifting its business model to become the primary lender for its platform, rather than just acting as a middleman for smaller banks. For retailers and service providers using Upstart, this signals a major shift in how your customer loans are funded and managed. Previously, Upstart relied on a network of small banks to originate loans. Now, their own national bank charter will take the lead. This move is designed to make Upstart's lending capacity more stable. By keeping more loans on their own books, they reduce the risk of credit drying up when partner banks get nervous about the economy. For your business, this could mean more consistent approval rates and a smoother application process for your customers, as there are fewer 'middlemen' involved in the decision-making chain. However, it also means Upstart is taking on more direct risk. The company is betting that its AI-driven underwriting is strong enough to handle the burden without the safety net of outside bank balance sheets. As they transition, keep an eye on their approval tiers to ensure they aren't tightening credit requirements to protect their own capital.

Source: American Banker — Top News

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