Latest Upstart Partner: Berkshire Hills Bancorp

Berkshire Hills Bancorp is the parent of Berkshire Bank, which is transforming what it means to bank its neighbors socially, humanly, and digitally to empower the financial potential of people, families, and businesses in its communities as it pursues its vision of being the leading socially responsible omnichannel community bank in the markets it serves. Berkshire Bank provides business and consumer banking, mortgage, wealth management, and investment services. Headquartered in Boston, Berkshire has approximately $11.7 billion in assets and operates 107 branch offices in New England and New York

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It is interesting this is another bank that announced partnership 2 months after it started.

And it is another bank that announced itself, without Upstart having a press release.

Berkshire Bank will expand consumer lending options via a seamless, digital experience enabled by Upstart’s lending platform and the Upstart Referral Network.

“We are excited to enter this partnership with Upstart,” said Nitin Mhatre, CEO of Berkshire Bank. “With an exceptional all-digital personal loan experience, it will make credit more accessible and aligns with our focus on reaching more people in our communities while helping grow our consumer lending business. It’s also the first of many programs to result directly from the ‘digitize’ pillar within Berkshire’s Exciting Strategic Transformation (BEST) plan.”

Berkshire became an Upstart lending partner in August 2021 and will leverage Upstart’s AI lending platform for personal loans to make better and faster risk-based credit decisions and approve more creditworthy borrowers.

“This partnership will help Berkshire grow our consumer loan portfolio,” said Ellen Steinfeld, EVP, Head of Consumer Lending and Payments. “With the predictive underwriting models and lower fraud rates delivered by the Upstart AI-based lending platform, Berkshire can deliver more inclusive lending options that ensure our neighbors and communities continue to thrive while delivering an enhanced customer experience.”

Upstart partners with banks to deliver data-driven decisions through AI and enable broader distribution of lending options to borrowers of all backgrounds.

“We started on this journey because credit is not just a cornerstone of our economy but a fundamental ingredient in the lives of Americans,” said Dave Girouard, Chief Executive Officer and Co-Founder of Upstart. “For hundreds of years, credit has represented opportunity and mobility for those seeking what’s next in their lives. Whether it’s to learn a new skill, relocate to a new city, start a new business, or buy a new home or car, the price of credit is the price of opportunity and mobility. It’s the price of what’s next.”

ABOUT BERKSHIRE HILLS BANCORP
Berkshire Hills Bancorp is the parent of Berkshire Bank, which is transforming what it means to bank its neighbors socially, humanly, and digitally to empower the financial potential of people, families, and businesses in its communities as it pursues its vision of being the leading socially responsible omnichannel community bank in the markets it serves. Berkshire Bank provides business and consumer banking, mortgage, wealth management, and investment services. Headquartered in Boston, Berkshire has approximately $11.7 billion in assets and operates 107 branch offices in New England and New York, and is a member of the Bloomberg Gender-Equality Index.

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Upstart’s newer partner since August, Berkshire Hills Bancorp, had its earnings call on October 21. I don’t think this was posted here since then.

BHLB, which has $11B in assets, currently plans for a “well above” 625 prime FICO requirement and $100 million originations per year (about $8M per month). It may take a couple quarters of seeing success before they loosen up requirements and volume. BHLB also states they are looking for other fintech partners.

As previously detailed by UPST’s fireside chats/podcasts, new bank partners will start out conservatively. These partners will take time to ramp up. Customers Bank, Finwise, and Cross River remain critical as conduits for institutional loan sales/demand. Outside of them, it might take like a total of 100 partners to have $10 billion a year of separate, diversified originations.

CEO:
As mentioned earlier, part of our growth strategy includes partnerships. These partnerships include like-minded FinTech partners that are delivering exceptional customer experience. We just announced a strategic partnership with Upstart. Upstart is a lending - leading artificial intelligence or AI lending platform, designed to improve access to credit digitally, while reducing the risk and cost of lending. Upstart will help us generate consumer loans in the footprint within our credit risk parameters.

Analyst:
And then just on the partnership with Upstart, I guess, can you guys just maybe give some more color on these loans? Are they kind of buy-now-pay-later types of loans? How big are they, the credit profile of the customer and how much exposure you guys are willing to take on it?

CEO:
Yes, happy to give you an overarching view, Steve, and we could get into more details later. But broadly speaking, Upstart is a program, and part of our program plan to partner up with like-minded FinTech partners that provide easier access to credit for customers in our footprint, where we can build on to a larger relationship. It is a AI-based decisioning model with about 1,500 factors that help maximize the opportunity for customers to get access to that credit at the best available price. It is - we’re going to stay in the prime space, FICOs above - well above 625.

In terms of the originations, we expect that one partnership alone to be about $100 million of personal loan originations a year, but we would have more partners over time.

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