Since the financial crisis, a significant amount of pressure has been put
on larger financial institutions and banks to “do the right thing
on behalf of their customers.” In light of these substantial shifts
in the regulatory environment, banks have fully realized the need to build
Compliance Management Systems (CMS) – or a robust ecosystem of compliance
and control functions – within their already complex operating infrastructure.
During this time of rapid regulatory change, a view has emerged that the
technology-enabled alternative lending industry has built a better underwriting
mousetrap to provide simpler and more customer centric alternatives to
the traditional banking system. However, a question remains largely unanswered
for this segment – when, and to what extent, will the need arise
to build a robust CMS to provide similar levels of compliance and control
to their innovative approach to lending? Since online marketplace lenders
often partner with issuing banks for origination, customer protection
regulations remain fully applicable. At the same time, “safety and
soundness” regulations, such as liquidity ratios and capital requirements,
may be inapplicable to alternative lending marketplaces that do not hold
deposits and operate by perfectly matching liabilities with investor assets.
These variables combine to create a new model for regulators to comprehend.
Download the full white paper
Technology-Enabled Alternative Lending: Innovating in a Compliance Culture to learn how alternative lenders have a unique opportunity to proactively
address challenges by leveraging the hard lessons learned by traditional
financial institutions in recent years.