25% of Canadians are either unserved or underserved in the credit market, according to TransUnion’s “Empowering Credit Inclusion Global Report.” In some cases this is due to a lack of access to credit through traditional financial institutions.
An emerging development between a US national bank and a Canadian fintech is poised help shape this shifting financial landscape in Canada.
Pathward is set to launch a new line of credit that promises to reshape the consumer credit market. The intent is to offer an accessible line of credit for those consumers whose opportunities have been unduly limited.
Propel will service the loans through its lending-as-a-service platform. This AI-powered tech takes on an array of tasks including customer service, collections, and applications— allowing Pathward to deliver a new line of credit while mitigating credit risk.
“Creating financial access for individuals who often get overlooked by more traditional lenders by offering the Pathward Line of Credit aligns with our purpose,” stated Pathward President Anthony Sharett. “Working together, we can provide eligible borrowers with year-round access to credit through a better alternative to high interest programs.”
“Propel and Pathward are driven by a common mission to expand financial access to consumers,” agreed Clive Kinross, chief executive of Propel.
For Propel, this partnership “marks the launch of our lending as a service product offering, a natural and critical evolution of our business,” according to Kinross.
“When we founded Propel, we saw the limitations of existing technology and service to the tens of millions of underserved consumers and have met our goal of building out a best-in-class AI-powered solution,” he explains. “We believe that this is the beginning of a strong partnership that will have real impact for consumers overlooked by traditional lenders.”
The line of credit will be available through Pathward’s existing distribution channels, with zero fees associated with the product. It’s designed to provide consumers with year-round access to credit where borrowers only pay interest on the amount they draw.
As of late 2022, Toronto fintech Propel operates in Canada through Fora Credit, a “convenient online credit solution for underserved Canadian consumers.”
“We fully expect that Fora will become a leading solution for the 25 per cent of Canadians who are unable to access credit through traditional financial institutions,” said Kinross in November.