2023 proved that the rate of change is only increasing – especially in the financial services sector. In addition to geopolitical conflict, financial institutions and consumers alike are still recovering from the effects of recent bank failures and a high interest rate environment. During a time with mixed economic signals where interest rates are at a 20-year high, but GDP is at 4.9 percent growth and consumer spending remains strong, how can credit unions strengthen their balance sheets to withstand the next wave of change? 

As credit union leadership teams kick off 2024, thoughtful balance sheet diversification should be top of mind. Especially as lower-yielding loans are running off the books, credit unions can participate in loans originated by other top credit unions on Upstart’s lending platform to acquire high-yielding, short-duration personal loans to withstand economic cycles. 

The AI performance advantage

Unlike loans based on traditional scoring models from other fintechs, loans originated by credit unions that use Upstart’s powerful AI underwriting model factor in market conditions to better separate and price risk due to macroeconomic stress. 

The result: Upstart’s AI-powered loans have had 11 - 27 percent higher net annualized returns from 2022 to mid 2023 compared to the unsecured consumer loans benchmark group from DV01 that includes online lenders like Upgrade, Sofi, Lending Club, Marlette, Prosper and Avant.

Upstart's leading credit union partners are offering participation loan pools of high-yielding, short duration Upstart-powered loans as an easy and attractive option for boosting returns and diversifying balance sheets. Loan participations from Upstart’s lending partners can provide credit unions with yields of 8+ percent after losses and fees. 

Finally, the loan pools can be customized to fit a credit union’s specific credit policy, loan seasoning range and target loss rate. 

Partnering with a trusted fintech

With Upstart, credit unions are filling their balance sheet needs quickly. Partnering to purchase Upstart-powered participation loan pools gives credit unions the opportunity to develop a strong balance sheet strategy for 2024, enabling them to effectively diversify their portfolio and compete in a challenging environment.