Friday, September 3, 2021

Upstart (UPST) and its financial ecosystem


Network of Upstart Financial connections (Click on image for larger version)

I received several messages on how to read these graphs. This is due to the  relative unfamiliarity with this type of representation. These  graphs are a visualization tool. They are exceptionally useful to visualize the data and the  corresponding connections.

They comprise of a node which is a variable that is connected to  another variable (node) by a line (called edge). The edge connects 2 related nodes. With this basic information on hand, let’s review the financial ecosystem for Upstart.   

How was this information collected?: This information was collated from news sources, bank websites and search engines. Each of those node connections has been verified and is an existing relationship with Upstart as of 9-3-2021. Additional information was provided by a twitter user by handle @BeaverDamCap.

Upstart has made excellent foray into personal lending space. The number of banks that offer personal loans is about 25 as reported by them, I was able to verify about 13 (11+2) of them here (11 of these these are shown here as green nodes and specific personal loans, other 2 are car loans and microloans respectively). These banks are reported below with approximate assets under management (AUM) in parenthesis.

1.    TCF National Bank [49B]
2.    Telhio Credit Union [0.8B]
3.    Patelco Credit Union [8B]
4.    Kemba Financial [1.5B]
5.    Customers Bank [18B]
6.    Associated Bank [34B]
7.    First Financial Bank [16B]
8.    Ridgewood Savings Bank [6B]
9.    First Federal Bank Of Kansas City [0.8B]
10.    First National Bank Of Omaha [25B]
11.    Drummond Community Bank [0.8B]

USAA may be another one that may be in the process of working with Upstart.

Upstart also purchased Prodigy software, an automotive retail software which gives them an edge into the car loans space. As you may already be aware, Upstart is looking into car loans after its successful foray into personal lending.  This is shown on the graph as purple nodes and with just one bank at the present, hopefully should be an area of growth. At present only Midwest Bank [AUM: 2B] was associated with this aspect of upstart. I would keep an eye out for expansion in this space along with additional banks in personal lending space.

Upstart has partnered with NXT soft for their Artificial intelligence/machine learning modeling and this aspect has been attractive to some bank partners as well. Oriental Bank [AUM: 10B] is current associated with this. Upstart also does microloans with partnership with Accion Chicago for small and struggling businesses.

Upstream and on execution side, upstart has partnered with Credit Karma (owned by Intuit) – sea green nodes for loan aggregation and loan request origination. Finally on execution side, Upstart does its business with bank partners like Finwise Bank and Cross river bank (yellow nodes). Interestingly, Cross river bank, is highly fintech inclined since it also has partnerships with Affirm and Rocket Loans which gives it an operating advantage since it can navigate the fintech world with relative ease. Finwise bank also has several strategic partnerships with loan processing, funding establishments.

This is the Upstart financial ecosystem v2.0 as of Sept 1, 2021. Almost everyone knows or reports the same few names but as you can see the financial network that upstart has generated is bigger that one might assume.

I see massive increase in growth and increase in TAM for Upstart! I have also looked into the impact of the Upstart AI on lending practices and can be found here

Up next and exciting one coming up – the contract nexus of Palantir (PLTR)

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