In a key development that highlights the growing importance of the alternative finance sector, J.P. Morgan Chase – the biggest lender in the United States and widely regarded as “king of banks” – has decided to partner with a so-far unnamed peer-to-peer lender specialising in loans to small businesses.

The move signals the banking giant’s recognition of the need to adapt to the rapidly developing and fast-growing online finance sector. Bloomberg reports that the bank’s CEO, Jamie Dimon, revealed the decision during a US Treasury panel discussion in Washington last week, stating:

“We haven’t announced it yet, we’re going to be doing a thing with one of these peer-to-peer, small-business lenders. The kind of stuff we don’t want to do or can’t do, but there’s somebody else who can do it and do it probably well. So this is going to be collaborative.”

The erstwhile head of the US Small Business Administration (SBA), Karen Young, recently explained that her own research had demonstrated that banks continue to find it difficult to provide access to capital to small businesses. It makes little sense for them to do so, she said, because of challenging regulations and excessive cost. Yet small business remain the engine for job creation and economic growth, she added, so that providing credit to SMEs “is of strategic importance for the economy.”

One UK-based peer-to-peer lender providing online access to SME loans breaks the mould by dispensing entirely with the need for intrusive and potentially damaging credit searches. Unbolted adopts a secured asset loan model, collateralising a valuable asset owned by the borrower as security for the loan.