Funding-as-a-Service: Alternatives for Managing the Balance Sheet

Consumer lending can become more capital-efficient, enabling business expansion and contraction with economic cycles.

As banks and credit unions address high funding costs, they need to consider alternatives to funding from the balance sheet or traditional whole loan sales. A Funding-as-a-Service (FaaS) strategy allows consumer lenders to optimize their capital structures and execute asset and liability management operations more efficiently.

This report analyzes alternative funding strategies for consumer lending, specifically the FaaS model. It is based on market intelligence and insights developed by Datos Insights from interviews with seven executives from credit unions, community banks, loan brokers, and providers of single investor and loan-level fractional asset services, in addition to previous and ongoing research. It also leveraged existing research and expertise, as well as publicly available information from reliable sources.

Clients of Datos Insights’ Retail Banking & Payments service can download this report.

This report mentions BHG Loan Hub, Funding Circle, LendingClub, Loan Street, Pagaya, Performance Trust, Prosper, Quillo, SoFi, The Baker Group, and Upstart.

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