European fintech companies solarisBank and CrossLend have forged a partnership to offer digital and fully automated loan securitization.
While the Germany-based solarisBank is a banking platform with a full banking license, CrossLend calls itself to be a digital marketplace for European loans that offers securitization as a service by transforming loans into notes on a flexible and transparent manner.
Through the partnership, solarisBank will set up a balance sheet light model under which loans are created in a way that enables to pass them on directly to investors or with a delay. It will help in avoiding a long-term strain on the bank’s balance sheet.
The German banking platform claimed that CrossLend’s automated securitization in combination with a central, high-quality data warehouse will maximize the transparency of the resulting securities.
The combination will also result in lowered transaction costs, thereby making loan securitization possible for securities worth €20-100m instead of the usual €500m.
solarisBank CEO Roland Folz said: “Together with CrossLend, we are creating a flexible, prompt and transparent loan securitization and thus a real novelty in the market.
“We are linking both platforms in a way that makes the process fully digital and automated. Individual loans can be bundled and then passed on directly to investors as a securities portfolio starting at approximately 20 million euros.”
To set up the processes between the two firms, solarisBank will utilize the CrossLend platform to buy and securitize loan portfolios. This will enable it to grow its balance sheet to reach an optimal return on equity value, upon which, the Balance Sheet Light model takes effect with the help of automated securitization, said solarisBank.
In March, solarisBank purchased a minority stake in CrossLend with an objective to partner with the latter and develop the Balance Sheet Light model, which is expected to be launched in the first half of 2019.
CrossLend CEO Oliver Schimek said: “From the very beginning, our platform was designed to make the loan market more efficient, more transparent and more digital. Together with solarisBank, we can now offer completely digital securitization as a service.
“We believe that the Balance Sheet Light model is setting the trend for the future.”