Online lending marketplace Upstart announced the rollout today of its Upstart Referral Network, a new system driven by artificial intelligence (AI) that helps match loan applicants with banks and credit unions.

The new platform, in limited preview for partner banks until its release this week, works as an aggregator for personal loans, and can be used both by banks seeking new clients and customers exploring available loan options. Some of the financial institutions already using Upstart’s AI lending technology are First National Bank of Omaha, Ridgewood Savings Bank and KEMBA Financial Credit Union.

“We have a relationship with the bank, that simply says, ‘you should pay us a fee once we send you a loan,’” Michael Lock, senior vice president of bank partnerships at Upstart, told Bank Automation News. This way, Upstart “basically facilitates the matchmaking between the borrower and the bank,” and Upstart doesn’t have a contractual relationship with the borrower, Lock said.

The Ohio-based $1 billion KEMBA credit union is using Upstart for those reasons. “KEMBA chose the Upstart Referral Network to get to market quickly and expand member reach,” said Brent McCoy, the credit union’s chief credit officer.

Upstart’s matching process allows banks to set parameters like geography, credit score, and acceptable loss rates, then the aggregator links up applicants who match the criteria with banks or credit unions offering loans. Lock said the firm’s AI model considers, “over 1,600 variables,” and asks applicants for more details than a bank might, like the applicant’s occupation and highest education level. It takes lenders about 60 days to get set up on the network and begin making loans.

Locke said Upstart has worked in close conjunction with the Consumer Financial Protection Bureau (CFPB) and other banking regulators with respect to data privacy and abiding by the fair lending rules. “They’ve helped us design the tests of the algorithm,” he said of the CFPB.

In addition to matching lenders and borrowers, Upstart derives revenue from selling tech for digital, automated platforms. Earlier in March, New York-based Apple Bank announced the launch of its digital unsecured loan product, which is delivered using Upstart’s AI lending platform.

Upstart debuted on the Nasdaq in December 2020, and its stock closed at $112.28 today, after climbing to an all-time high of $164.87 on Monday, up from $60.79 last week. The uptick has helped the firm increase its valuation to more than $12 billion, compared to $2.1 billion when its shares launched on the index.

Other players in the online lending space include Lending Tree, LendingClub and Prosper Marketplace. While digital lenders like Affirm and Lending Tree have touted traction among younger borrowers, products like Upstart’s could also be attractive for smaller banks and credit unions looking to shift to a digital lending model.

Upstart has ambitious plans going forward. “The next big thing for us is to expand the product line,” said Lock. Upstart in June announced plans to offer AI-powered auto loans. “Auto lending is about six times the market size of personal loan loans. We’ve helped a lot in personal loans, and now we want to help in auto loans as well,” he added.

Bank Automation Ignite, on April 13-14, is the event for inspiring automation initiatives and investment in financial services. At the virtual event, financial services professionals can discover new use cases and technologies that are accelerating automation in banking. Learn more and register at www.BankAutomationIgnite.com.