Co-Origination
Co-origination is a lending model in which a fintech and a bank jointly originate loans — sharing underwriting responsibility, risk, and economics — allowing the fintech to offer bank-funded loans without holding a balance sheet.
In a co-origination model: the fintech originates the customer relationship and performs the credit decision; the bank funds the loan and holds it on the balance sheet (or sells it); the fintech earns an origination fee and often a residual tied to loan performance.
Co-origination vs. referral: in a referral model, the fintech sends customers to a lender and earns a fee per referral. In co-origination, the fintech participates in the credit decision and shares in the economics — generating significantly more revenue per loan in exchange for sharing the risk.
Co-origination vs. balance sheet lending: balance sheet lending (the fintech funds the loans directly) generates maximum economics but requires capital and creates credit risk on the fintech's balance sheet. Co-origination is the middle path — better economics than referral, less capital required than balance sheet.
For embedded finance programs, co-origination requires a bank partner with an appetite for the specific loan type, customer segment, and credit risk profile. Not all sponsor banks support co-origination; it's a specific program model that requires negotiation in the bank partnership agreement.