Alternative Lending is Dead, Long Live Data - by Kabbage's Rob Frohwein

By Kabbage's Rob Frohwein

Rob Frohwein from Kabbage provides his perspective on the industry, sharing that alternative lending is no longer alternative, it is simply lending; Frohwein discusses that many companies have focused on answering the question “Can you fill the void left by banks?” instead of “Why aren’t banks filling this void?”; Kabbage took this approach when they were building their business to solve the problem that banks couldn’t profitably serve small businesses; the company took a slow approach to small business lending having been in operation since 2009 but not making their first loan until 2011; Frohwein explains that there are only four expenses for banks and online lenders including acquisition and utilization, bad debt, capital and other operating expenses; instead of focusing on capital where banks have a clear advantage, Kabbage focused on data and technology which lowered all other expense categories which Frohwein expands upon in his presentation.