Out of the Lending Loop! Fintech peer to peer lender clashes horns with two major banks which cut off access to funds
Peer-to-peer lending is the buzzword of the moment, and most certainly with regard to the massive increase in the number of fintech-related startups that have hit the headlines with ingenious innovations such as AirBnB, Gett, Uber and WeWork, the drive among young and intelligent entrepreneurs is to gain peer-to-peer funding so that they can put […]
Peer-to-peer lending is the buzzword of the moment, and most certainly with regard to the massive increase in the number of fintech-related startups that have hit the headlines with ingenious innovations such as AirBnB, Gett, Uber and WeWork, the drive among young and intelligent entrepreneurs is to gain peer-to-peer funding so that they can put their thoughts into action.
….but not so fast in ultra-conservative Canada!
It is well known that in many parts of the world, upstarts in the fintech sector which are facilitating the quick access to funding that is often required in such a fast-moving world of development have become the bete noire of many banks which have stuck to the traditional and in some respects obsolete method of lending to new businesses, however this week, more than a degree of unpleasantness has surfaced between two of Canada’s banks and peer-to-peer lender Lending Loop.
Cato Pastoll, who co-founded Lending Loop alleges that his online platform was removed from the electronic bill payment services systems within the Canadian Imperial Bank of Commerce an Bank of Nova Scotia earlier this month, in an abrupt fashion and without warning.
Mr Pastoll’s service relies on the services provided by these major banks to access online accounts from individuals who want to fund its crowd-sourced loans.
In come the men in suits!
Metaphorical fisticuffs ensued, with the retained law firm that which represents Lending Loop’s commercial operations moving in swiftly to take action by writing to both of the banks to complain about the sudden withdrawal of access, without notice or sufficient explanation, and the service was resumed.
Although the banks backed down and resumed the service, Mr. Pastoll has provided information stating that subsequent to the reinstatement of service, he was then given 30 days’ notice that he will lose access again, meaning that Lending Loop will be cut off from the two banks’ customers again in early January.
The old fashioned institutions which are reluctant to change their methodology really do not like the new boys, do they?
