We recently announced our new platform, Credit Hub, and now I’m excited to share an overview and the product details with you in this blog post.
What is Credit Hub?
Credit Hub enables you to offer various loan products to individuals or businesses with the ease of an API Call without having to worry about finding a bank partner or a lender of record. Watch the new Credit Hub Introductory Video for product details and demonstrations.
Why Credit and Why Now?
Not that long ago, it took a year or more to take deposit products to market. To solve that pain point we launched Deposit Hub. This accelerated the pace and enabled developers to take deposit products (including debit cards) to market in just a few weeks.
Today credit is in a similar place. There is a lot of will among developers to build on the credit infrastructure, but no easy way to do it. With Credit Hub our goal is to be an accelerant so developers can take these products live within weeks, run experiments, and scale as quickly as possible.
To add to this, existing credit products provided by banks have failed to come up with creative ways to enable access to credit for Americans from all walks of life. Currently, about 31% of Americans have either a poor credit score or no credit score¹. This problem is not isolated to Americans themselves. US Immigrants — about 14% of the US population² — face the same issue where having no credit history makes it extremely hard, if not impossible for them to be able to adopt and benefit from mainstream financial products.
All this makes unlocking access to credit for everyday Americans a meaningful problem to solve. We believe opening up this infrastructure to developers will act as a catalyst to creativity and level the playing field, where all Americans can get access to responsible credit.
Credit Hub is our newest white-label platform along with Deposit Hub and Crypto Hub. We are excited to see how developers use it to bring innovative credit products to market. If you’re interested in learning more, please contact firstname.lastname@example.org or go to synapsefi.com.
¹Experian 2020 Consumer Credit Review
²Consumer Financial Protection Bureau, July 2020
Transcript of the Video “Intro to Credit Hub”:
I’m Matt Freeland, Engineering Manager at Synapse. Welcome to our Introduction to Synapse Credit Hub video. Credit Hub is a feature-complete, credit platform that enables developers to build various credit product experiences, including Open loans, Revolving loans, One-time loans, and Cash advances. Synapse Credit Hub allows you to launch credit and loan products to individuals and businesses in weeks, with the ease of API Calls, with Synapse as your built-in lender of record.
In this video, we will cover:
The greater purpose for launching applications on Credit Hub
The role Credit Hub fills for builders of digital credit offerings
An overview of the product and sub-products
The benefits of the product
Why We Built Credit Hub
At Synapse, our mission is to ensure that everyone around the world has access to best-in-class financial products, regardless of their net worth. Traditional lending and underwriting models rely too heavily on credit scores. Those with a credit score of 680 or greater have easy access to credit, a mortgage, and the American dream of owning a home. However, those with a credit score below 680 are left on an island, with little to no access to credit. In many cases, a low or no credit score under-represents the creditworthiness of many consumer sectors, such as immigrants who are credit invisible and those who have not yet consumed traditional credit products, yet have predictable income and willingness to pay. Credit Hub enables Fintech and Embedded Finance innovators to bring credit to the masses, including these and other under-represented groups. Credit hub enables the Democratization of Credit and a path to the American dream of homeownership!
Lending Barriers for Fintech Innovators
However, for Fintech and Embedded Finance innovators to bring credit to the masses, they need to overcome their own barriers, including:
Lending license and compliance barriers
Speed-to-market, supporting rapid and iterative innovation
Developing innovative underwriting models
Synapse Breaks Barriers
With Synapse Credit Hub, we take care of lender licensing and compliance for you — Synapse Credit LLC is your built-in, lender of record, operating across 43 states plus the District of Columbia. And through our easy-to-use APIs, one can issue credit products in as few as 4 API calls. This enables our customers to simply focus on your customer experience as well as unique underwriting models to more effectively bring your democratization of credit to market.
What’s in Credit Hub
Let’s walk through the four types of products supported by Credit Hub, which are:
Payroll-backed Cash Advances
Let’s go through each of these, one by one.
An Open Loan is a loan with a flexible credit limit, where the credit limit can be dynamically set by a collateral account. For consumers without a credit history, this represents an effective means to build credit. It also enables you to create loans products that have very low barriers to entry, meaning low-value loans at zero risk.
Demo: Here’s how it works.
Now let’s discuss Revolving Loans. Unlike an open loan, a revolving loan has a fixed credit limit The credit limit is locked at any given time. With this loan type, you can build secured credit products, for example, tied to a reserve account, or unsecured credit products not tied to a reserve account. A common use case for revolving loans is issuing cards.
Demo: Let me show you how easy it can be to issue Revolving loans.
Shifting to One-time loans, A one-time loan is a single disbursement loan product where funds are paid back in equal installments over time. A common use-case for one-time loans are Buy-now-pay-later plans.
Demo: Let’s see how simple these are to issue.
Payroll-Backed Cash Advances
And finally, Payroll Cash Advance. This is a one-time disbursement product with repayment tied to a payroll disbursement, typically within a month’s time. Cash advances can be a fast and convenient alternative to loans due to their simplicity and limited regulatory burden.
Demo: Let’s see how these work.
So with Synapse Credit Hub, I have quickly shared how you can create and launch feature-complete, credit product experiences, including Open loans, Revolving loans, One-time loans, and Payroll Cash Advances.
Features & Benefits
Now, let’s turn to the key features and benefits of Synapse Credit Hub. In this section, we will cover Underwriting Decisioning, Disbursements, and Credit Building/Reporting.
First, Underwriting Decisioning. Synapse provides straightforward decisioning to ensure users are properly onboarded, allowed to receive lending based on your user rules, requesting a loan within the acceptable limits, and not exceeding your covered reserve. Beyond that, Synapse provides the flexibility to create and enforce any underwriting model you choose within compliance guidelines.
Synapse has the most comprehensive payments stack in the market today. The same payments stack can be used here to offer a diverse array of disbursement options like ACH, Push to Card, Real-Time Payments, Wires. On top of that, you can also leverage our card issuance stack to issue cards for one-time or repeat usage.
Since our goals with Credit Hub are to help credit invisible customers get established among mainstream lenders, we also offer credit reporting as a feature. Credit reporting can be enabled to inform credit bureaus of a user’s credit status and help users build credit with your service.
This concludes my introduction to Synapse Credit Hub. In this video, I covered:
The greater purpose for launching applications on Credit Hub, expanding the access to credit to underserved segments.
The role Credit Hub fills for builders of digital credit offerings, breaking down the barriers to licensing and compliance and enabling speed-to-market and underwriting model flexibility.
An overview of the product, enabling the launch of Open Loans, Revolving Loans, One-time loans, and Cash Advances.
And finally, the features and flexibility to support multiple methods of funds disbursement, underwriting decisioning, credit building, and reporting.
Synapse Credit Hub represents a valuable service-enabler to you and your end-users based on your underwriting and risk appetite with a rich feature set and a wide variety of options to suit your user’s needs. If you’d like to learn more, visit us at www.synapsfi.com.
I’m Matt Freeland. Thanks for watching.