JPMorgan Chase is teaming up with OnDeck Capital to build an online platform designed to approve small-business owners' loan applications in a matter of minutes.
Jamie Dimon, JPMorgan's chief executive, alluded to the budding partnership Tuesday at an event in Washington, but without identifying OnDeck. By the end of the day, both companies had confirmed the collaborative effort.
"OnDeck is working with Chase to build a new Chase lending product that will provide online loans to their small business clients," OnDeck CEO Noah Breslow said in a press release. "By combining Chase's relationships and lending experience with OnDeck's technology platform, Chase will be able to offer almost real-time approvals and same- or next-day funding."
New York-based OnDeck, which uses a proprietary scoring model to assess the creditworthiness of borrowers, said that the partnership will be launched in 2016.
Earlier in the day, Dimon let the cat partially out of the bag when he said: "We haven't announced it yet, we're going to be doing a thing with one of these peer-to-peer small-business lenders."
The partnership between the nation's largest bank and one of only two publicly traded marketplace lending firms represents a new level of validation for the fast-growing online lending sector.
Marketplace lending has taken off over the last couple of years as banks have reduced their lending to small businesses. The digital lenders often appeal to business owners who cannot qualify for a bank loan, as well as those who are willing to pay a higher interest rate in exchange for a simple application process and fast access to the funds.
Dimon first signaled that he was open to partnership with companies such as OnDeck back in April. In an oft-quoted letter to JPMorgan shareholders, he declared that "Silicon Valley is coming."
"There are hundreds of startups with a lot of brains and money working on various alternatives to traditional banking," Dimon wrote. "The ones you read about most are in the lending business, whereby the firms can lend to individuals and small businesses very quickly and — these entities believe — effectively by using Big Data to enhance credit underwriting."
"They are very good at reducing the 'pain points' in that they can make loans in minutes, which might take banks weeks," he added. "We are going to work hard to make our services as seamless and competitive as theirs. And we also are completely comfortable with partnering where it makes sense."
Ian McKendry contributed to this report.