New York-based Ponce Bank has partnered with fintech firm Grain Technology to expand credit services to customers with limited existing credit facilities.
Ponce Bank said in a statement that it would provide revolving credit lines to customers with “little to no credit, or who’ve had their credit damaged”.
Grain’s app allows Ponce customers to transform their debit cards into credit cards – which the companies have nicknamed “crebit cards”. It uses artificial intelligence (AI) technology to build credit histories.
Together, Grain and Ponce said they had developed a “non-traditional underwriting methodology” based on Grain’s AI tools to allow Ponce to lend responsibly to customers without a full credit history. The AI tool analyses income and spending patterns to ascertain their borrowing capabilities.
The app automatically manages payments and anticipates future shortfalls, helping users to improve their credit scores.
In addition, the partnership will provide users of the app with financial literacy tools, which Ponce – a minority depository institution – said would add to its aim of providing education to underserved customers “while combating economic inequality in the US”.
The app will communicate with users about their cash flow positions, Ponce and Grain said, as well as providing suggestions around forward planning, spending habits and saving.
Grain said high levels of student debt – as well as research that suggested four in 10 Americans were unable to cover a $400 emergency expense – meant customers were “sorely in need of credit management skills and financial education”.
Ponce parent buys mortgage provider
Separately, Ponce Bank’s parent company PDL Community Bancorp is set to buy mortgage provider Mortgage World Bankers (MWB) after obtaining regulatory approval from the New York State Department of Financial Services.
The acquisition – which is worth an estimated $1.2 million – is due to close on July 1, 2020.
As a result of the transaction, MWB’s president and CEO Michael Lagoudis will become a senior voce president at PDL. Stephanos Lagoudis – one of two MWB stockholders along with Michael Lagoudis – is to remain involved with the mortgage provider in a consulting capacity, PDL said in a statement.
PDL’s executive chairman Steven Tsavaris is to become chairman of MWB, and Carlos Naudon, PDL’s president and CEO, will become a director of the mortgage company.
Naudon said the deal would “enhance our mortgage origination capacity, enable us to offer more competitive consumer mortgage products in our communities, give us an experienced and established channel to the secondary markets and expand our reach into additional communities”.
Michael Lagoudis added: “We are delighted to be joining the Ponce family, with whom we have had a close relationship for over 20 years. We look forward to adding our expertise, offices and distribution channels to their larger financial resources and retail network.”