Lake Trust and Upstart: A Digital Lending Partnership to Watch

The partnership between Lake Trust Credit Union and Upstart, announced in April 2025, marks a significant step in the evolution of digital lending. By leveraging Upstart’s AI-driven platform, Lake Trust aims to expand access to personal loans while streamlining operations. This collaboration not only reflects Lake Trust’s commitment to innovation but also underscores Upstart’s growing influence in the credit union market.

The Partnership at a Glance

Lake Trust, a Michigan-based credit union with $2.5 billion in assets and 200,000 members, began partnering with Upstart in January 2025. The goal is to use Upstart’s Referral Network to attract new members and serve existing ones through an all-digital lending process. Qualified applicants on Upstart’s platform who meet Lake Trust’s credit policies are seamlessly directed to a Lake Trust-branded experience to complete their loan application and closing.

The integration is designed to reduce friction for borrowers, with loans disbursed within one business day. Over 90% of loans processed via Upstart’s AI platform are fully automated, minimizing human intervention and speeding up approvals.

Strategic and Operational Benefits

For Lake Trust:
- Member Acquisition: The partnership opens a digital channel to attract new members, particularly younger, tech-savvy consumers.
- Risk Mitigation: Upstart’s AI models identify borrowers with strong credit profiles (e.g., super-prime borrowers with FICO scores of 780+), reducing default risk and easing CECL reserve pressures.
- Cross-Selling Opportunities: By offering competitive personal loans, Lake Trust can convert borrowers into long-term members who use additional products like savings accounts or home equity lines of credit (HELOCs).

For Upstart:
- Market Penetration: The partnership expands Upstart’s network, which already includes over 100 banks and credit unions.
- Revenue Growth: While financial terms remain undisclosed, Upstart likely earns fees per loan originated, and the referral model reduces marketing costs for Lake Trust.

Loan Terms and Financial Implications

The partnership’s loan terms highlight competitive pricing:
- Interest Rates: Variable rates start at 5.9% APR, with fixed rates at 6.4% APR. Borrowers with excellent credit (FICO 780+) may qualify for as low as 6.49% APR, while those with lower scores (660–699) face rates up to 13.99% APR. Autopay enrollment reduces APR by 0.25%.
- Loan Terms: Ranging from 3 to 10 years, with minimum loan amounts of $5,000.
- Fees: Origination fees range from 1% to 5%, depending on creditworthiness.

Industry Context and Competitive Landscape

Lake Trust’s move aligns with a broader trend: credit unions are partnering with fintechs to counter competition from neobanks like SoFi and Chime. In 2025, Pelican State Credit Union (Louisiana) and Holyoke Credit Union (Massachusetts) also launched similar collaborations with Upstart, signaling a shift toward AI-powered lending.

For investors, Upstart’s partnerships offer a compelling growth story. With over 100 institutional partners and a scalable platform, Upstart’s valuation could rise as credit unions increasingly adopt its technology. Meanwhile, Lake Trust’s strategic bet on digital lending positions it to capture market share in Michigan, a state where it already operates 20 branches.

Risks and Considerations

• Regulatory Scrutiny: AI-driven lending faces ongoing scrutiny over algorithmic bias. Both entities must ensure compliance with NCUA and CFPB regulations.
• Interest Rate Sensitivity: High-interest loans to lower-credit borrowers could face delinquency risks in a rising-rate environment. Upstart’s variable fees tied to delinquency rates (up to 2.5% of loan amounts) may mitigate this risk.

Conclusion

The Lake Trust-Upstart partnership exemplifies the fusion of traditional financial institutions and cutting-edge technology. For Lake Trust, it’s a strategic move to modernize lending operations and grow its member base. For Upstart, it’s a validation of its AI platform’s ability to drive efficiency and profitability.

Investors should monitor Upstart’s stock performance, as partnerships like this could fuel revenue growth. Meanwhile, Lake Trust’s ability to scale this initiative—potentially expanding into HELOCs or other products—will determine its long-term impact. With 90% of loans processed fully automated and a focus on super-prime borrowers, this collaboration is a win for both parties and a model for the future of digital lending.

In a sector where digital innovation is critical, Lake Trust and Upstart are setting the pace. The results could redefine how credit unions compete in an increasingly tech-driven financial landscape.