Virtually every bank's form lending program agreement
we've negotiated for our fintech clients has come with an
exclusivity provision.
The bank's policy behind them is simple: We've put
in the time, effort, expertise and expense to build the
program's launching pad, and we should reap the whole bank
benefit when the program takes off and soars.
The fintech company's counter-policy against exclusivity
is reasoned and just as simple: We can't have a single point
of failure for our business if the bank can't handle the
volume, its regulator limits or terminates its programs, or it
limits, suspends, or ends our program as a business decision or for
any other reason.
Exclusivity provisions come in various shapes and sizes. Some
are served up ironclad without any exceptions. Others seek to go
beyond the program loan product and grasp at covering other
financial products and services that the fintech may offer in the
future (e.g., deposit accounts and debit cards).
