This is your weekly update on what’s breaking (and fixing) modern lending.

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Your Next Competitors Are Already Onboarding Your SMBs

At the Fed’s Community Bank Conference on October 9th, Treasury Secretary Scott Bessent urged lenders to “go on the offense - retake market share, chase after customers, and leverage technology.” He called new bank creation a sign of a healthy ecosystem.

Credit unions and community lenders stand to benefit too, as lighter exam burdens reward modernization over scale. But while policy opens the door for growth, fintechs have already sprinted through it.

Their target: the daily cash-flow lifeline of small businesses - commercial cards.
When a business uses a fintech card for expenses, that same provider handles treasury, bill pay, and eventually credit. That’s the entire relationship, lost at the card level.

💡 The lending impact:
Fintechs like Brex and Ramp are capturing the $4 trillion B2B card market, the on-ramp to working-capital lending. Lose the card, lose the loan pipeline.

⚡ Action Steps

• Time your onboarding. Start a stopwatch from application to funded—treat it as your speed-to-fund KPI.

• Run a 24-hour test. Could your team decision and fund a $100K line in one day without skipping compliance?

• Automate the first mile. Replace PDFs with digital intake or API pulls from accounting software.

• Quantify lost deals. Review last quarter’s abandoned applications; note how many were price-competitive but stalled in processing. That’s your fintech leakage rate.

Fraud Attribution Isn’t a Cost — It’s a Retention Lever

A Notre Dame study tracking 422k customers found they are 41 % more likely to leave after fraud - unless the financial institution can identify the perpetrator.
When attribution succeeds, those borrowers stay longer than those who never experienced fraud.

That’s the service-recovery paradox: resolve a crisis well and loyalty rises. Yet most lenders still treat fraud investigations as back-office cleanup instead of borrower experience.

💡 The lending impact:
Fraud hits credit performance twice - in write-offs and in lost re-applications. Borrowers who see you trace and close a case view your institution as competent and protective, not bureaucratic. That confidence translates into repeat credit demand.

🤔 Where’s the gap?
Document checks and device fingerprints filter noise, but attribution needs behavioral signals - device switches mid-application, perfect upload speed (synthetic tell), and payment-pattern data like near-duplicate invoices or cycling deposits. Your LOS or intake stack likely isn’t catching them.

⚡ Action Steps

1. Wire fraud signals early. Feed device, ID-check, and statement anomalies into underwriting before approval, not after.

2. Pair KYC + KYB. Verify the owner–business relationship together; mismatched details are red flags for synthetic applications.

3. Test your response chain. Run a quarterly drill on a “suspicious application” scenario to see how fast lending, fraud, and compliance connect the dots.

4. Close the loop with borrowers. When you resolve a case, tell them what you found and fixed — transparency turns recovery into retention.

Tokenized Deposits Are Rewriting Loan Speed Expectations

BNY Mellon is exploring tokenized deposits to enable instant settlement on part of its $2.5 trillion daily payment flow. Goldman Sachs, JPMorgan, and HSBC are testing similar pilots. Meanwhile, Klarna and Google launched the Agent Payments Protocol -allowing AI agents to initiate payments autonomously.

🤔 Why does this matter for lenders?
When big banks offer instant, 24/7 fund movement via tokenized rails, borrowers will expect the same for loan disbursements. "Funds in 2-3 business days" becomes a competitive liability.

Tokenized deposits also enable embedded lending at scale. AI agents could initiate loan applications and fund disbursements automatically, with blockchain audit trails that satisfy regulators. If your loan origination system can't integrate with these rails, you're locked out of the channel where SMBs increasingly expect credit—inside QuickBooks, Shopify, and their accounting software.

⚡ Action Steps

1. Trace your funding path. Pick one recent loan—how many manual handoffs from approval to disbursement?

2. Press your vendors. Ask your core processor and LOS: What's the 2026 roadmap for instant settlement?

3. Set a same-day goal. Identify one product that could move to same-day funding and model the yield impact.

🦊 ZorroFi insight

Competition, speed, and trust are the regulators’ new playbook. Lenders that modernize intake - not just cut paperwork - will outpace both legacy peers and digital-native entrants.

The edge isn’t cheaper. It’s faster decisions, validated files, and relationships that compound.

💌 Want the 45-day fraud-to-retention checklist? Reply and I’ll send it your way.

💡 Want to Dive Deeper?

Demo: I work with CDFIs, community banks, and credit unions on modernizing lending. Reach out for a short demo.

Subscribe: Get the full breakdown every Thursday in my LinkedIn newsletter -Lending Insights.

Watch: The American Banker interview with bank executives on how tokenized deposits could reshape settlement speed - and why risk governance matters.

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📅 Next newsletter drops Tuesday, 10/21.