Back in the day, everyone — well, not everyone but certainly the vocal majority — thought it made sense to start non-bank lenders and go head-to-head with banks. OnDeck and Lending Club were headed to IPO. Somehow, what was overlooked was how hard and expensive it is to compete with banks’ low cost of capital. While working at Intuit, Trevor Dryer had a different idea. He was running the firm’s mobile payments and point of sale businesses and kept hearing from main street businesses that they lacked access to affordable business loans.
Trevor started Mirador to fill this void of bank-originated small business lending. We talk about why he started Mirador with a lending as a service model and what painpoints he was addressing. He shares how venture capitalists eventually caught up with this idea of tech firms as enablers or partners of banks and what it takes to get a deal done in this industry. We also talk about Mirador’s recent acquisition by CUNA Mutual Group.
The genesis of Mirador
The idea came while I was working at Intuit, running their mobile payments and point of sale businesses. As part of our product development, I expected our entire team to go out to small businesses, observe them and talk to them. We kept hearing about their challenge finding reasonably priced capital. Banks didn’t want to lend to them.
Often, they’d go online and Google ‘small business loans’. They’d end up in the arms of a non-bank lender, paying as high as 100 percent APR on a loan. But it was quick. There was a real need there. Banks love small businesses but lending to them was time consuming and labor intensive.
Why not go direct to businesses?
I got asked this a lot in our early days when we were raising our first round of capital. OnDeck and Lending Club were headed to IPO. There were statements at LendIt about how banks are going to get out of the lending business.
I didn’t think the world needed another high price lender. The reality is that it’s really hard — maybe impossible — to compete with the low cost capital that banks and credit unions have from their deposits. I thought the better long term play for us and for small businesses was for Mirador to enable banks that can lend at 5 or 6 percent. We help them compete on speed and customer experience. That was our mission from the beginning.
Now, some of those early VCs came back with a new theory of enabling financial institutions. I chuckle and remind them of our first conversations a couple years back. The industry has come back in the direction of partnering.
Partnering with banks
Be prepared for a long slog. It’s not easy. Virtually, every bank and credit union believes things are going digital but less than half actually have a strategy built around this idea. There’s a lot of awareness but not a lot of knowhow to get from here to there.
There are banks that are still trying to figure it out. There’s a lot of consultative selling as we help them build consensus around a strategy. Companies like these have a year to a year and a half sales cycle. There’s another group that has a digital strategy and are ready to move quickly. We can get them up in a matter of months.
Are banks getting better at partnering?
Banks are getting a bit better at partnering. The biggest barrier for them is bringing on a new vendor. The bar for third party vendor diligence has gone way up. We’ve had a few large banks tell us that it’s so hard to bring in a new vendor that if you don’t have a significantly better product, it’s not worth it. The sales cycle has begun to shorten — in some cases, by half.
We won’t be shy. We’ll share examples of our clients that has gotten great results working with us and here’s what they did. Part of our core values is being open and honest.
Mirador’s target audience
Last December we were acquired by CUNA Mutual Group in Madison. They have relationships with almost every credit union in the country. Our demographic has shifted a bit. Post acquisition, we’ve been working on a product designed for smaller institutions like community banks and credit unions.
Tompkins Bank is a group of banks around Pennsylvania and New York with about five billion in assets. They wanted a quick and fast loan experience. We were able to get them up and running in like eight weeks because they trusted us on the UX and the way information is collected. They focused on brand and marketing. They created a new sub brand called Lightening Loans. They’ve seen great success from focusing on their brand and communicating with their customers. Now they have all of their SMB loans going through Mirador and customer and employee feedback has been positive.