OnDeck is going to be providing the technology and the underwriting, while JPMorgan is going to serve up its Chase banking brand, its customers and the capital. Or as the FT points out quite elegantly, a startup that’s less than a decade old is going to teach JPMorgan Chase how to do small business lending.
Shares in LC jumped following Dimon’s comments, perhaps due to investors lingering memories of chatter in early July that JPM had been interested in buying the company. Meanwhile, shares in On Deck Capital began to drop and kept falling throughout the day, finishing down 9.5%. The apparent thinking was that ONDK, already facing significant competition in the small-business lending space on which it is focused, would face even more from a JPM-LC tie up in which LC would look to grow in an area that currently represents a low-single-digit percentage of its loan originations.