The financial technology sector witnessed a significant shift in the landscape of capital markets this week as 9Squid Private Markets, a subsidiary of TAPP Engine, officially unveiled its AI-powered private markets platform. Designed specifically for credit unions and community financial institutions (CFIs), the platform aims to dismantle the long-standing barriers that have historically prevented smaller lenders from accessing the securitization markets. By integrating advanced artificial intelligence and balance sheet modeling, 9Squid seeks to transform securitization from a prohibitively complex, one-off event into a systematic and repeatable strategy for liquidity and asset-liability management (ALM).
For decades, the process of securitization—the practice of pooling various types of contractual debt such as auto loans or mortgages and selling their related cash flows to third-party investors as securities—has been the near-exclusive domain of Tier-1 global banks and massive non-bank lenders. Community-based institutions, despite their significant aggregate market share, have often found themselves sidelined due to high transaction costs, structural complexities, and the massive minimum volume requirements demanded by institutional investors. The launch of 9Squid marks a strategic attempt to bridge this gap, providing smaller institutions with the same sophisticated financial engineering tools utilized by Wall Street giants.
Addressing the Liquidity and Capital Gap in Community Banking
The motivation behind the 9Squid platform is rooted in the current economic pressures facing localized financial institutions. Credit unions and community banks are the backbone of local capital formation, yet they often face challenges in maintaining liquidity while managing regulatory capital requirements. Tapp Engine Founder and CEO Tosin Osunsanya emphasized that while these institutions are central to the economy, they have been "priced out" of the very markets that could help them grow.
"9Squid brings securitization, balance sheet modeling, and an AI-powered platform built for credit unions and community financial institutions of all sizes," Osunsanya stated during the launch. "It provides a repeatable and efficient path to institutional capital while preserving cooperative governance and relationship banking."
The platform arrives at a time when the "originate-to-distribute" model is becoming increasingly attractive to smaller lenders. By converting loan assets into marketable securities, credit unions can move those assets off their balance sheets, freeing up capital to issue new loans to their members and local businesses. This cycle is essential for maintaining the health of local economies, particularly during periods of fluctuating interest rates and tightening credit conditions.
Market Data: The Untapped Potential of Localized Lenders
The scale of the opportunity for 9Squid is underscored by the sheer volume of assets currently held by non-money-center banks. According to data from the National Credit Union Administration (NCUA), credit unions in the United States collectively hold approximately $2.4 trillion in assets, with more than $1.7 trillion dedicated to consumer loans. Simultaneously, community and regional banks—represented by the Independent Community Bankers of America (ICBA)—hold an additional $6 trillion in assets, including $4.1 trillion in consumer, small business, and commercial loans.
Despite these massive figures, the rate of securitization among these institutions remains disproportionately low compared to the broader financial market. Historically, the primary hurdle has been the "size threshold." To make a public or private securitization deal economically viable, an institution typically needs to pool hundreds of millions of dollars in loans to cover the legal, rating agency, and underwriting fees. 9Squid’s AI-driven approach seeks to lower these operational hurdles, allowing for smaller, more frequent transactions that are tailored to the specific needs of a credit union’s balance sheet.
The Role of AI in Balance Sheet Optimization
At the core of the 9Squid platform is a suite of AI-powered simulation tools. One of the primary risks in securitization is the uncertainty regarding how a transaction will impact an institution’s long-term health. The platform utilizes balance sheet impact simulation to allow CFOs and treasury departments to evaluate various securitization scenarios before any legal commitments are made.
This "look-ahead" capability provides visibility into projected impacts on several key financial metrics:
- Liquidity Ratios: Ensuring the institution maintains sufficient cash flow to meet obligations.
- Capital Adequacy: Monitoring how asset sales affect regulatory capital requirements.
- Earnings Projections: Analyzing the trade-off between immediate liquidity and the loss of long-term interest income.
- Concentration Exposure: Helping institutions diversify their portfolios by shedding over-represented loan types.
Michael Massey, President of TDECU Holdings, highlighted this predictive capability as a game-changer for the industry. "What stood out was the ability to understand balance sheet outcomes before committing to a transaction," Massey noted. "That level of visibility allows credit unions to evaluate securitization as a practical and repeatable balance sheet strategy."
Chronology and Development: From Finovate to Market Launch
The emergence of 9Squid is the latest milestone in Tapp Engine’s rapid growth within the fintech ecosystem. Founded in 2021 and headquartered in Quincy, Massachusetts, Tapp Engine has focused on providing digital investment and wealth management solutions that allow credit unions to compete with "Big Tech" and "Big Finance."
A pivotal moment in the company’s history occurred at FinovateSpring 2025 in San Diego, California. During this debut, Tapp Engine demonstrated a platform designed to deliver self-directed, automated investing experiences to bank accountholders within their existing digital banking environments. That initial focus on consumer-facing financial wellness has now expanded into the institutional "back-office" with 9Squid.
The transition from consumer wealth tools to institutional securitization tools represents a holistic approach to the credit union business model. By helping institutions manage their balance sheets more effectively on the back end, Tapp Engine enables those same institutions to offer better rates and more robust services to their members on the front end.
Currently, 9Squid supports the securitization of three primary asset classes:
- Personal Loans: Unsecured consumer credit.
- Auto Loans: A staple of credit union lending portfolios.
- Home Equity Lines of Credit (HELOC): Leveraging the significant equity built up in the US housing market.
The platform is designed to use regulator-aligned structures, ensuring that all transactions comply with the stringent oversight of the NCUA and other relevant banking authorities.
Institutional Pipeline and Future Expansion
The market reception to the 9Squid platform has been immediate. At the time of the announcement, five credit unions are already in the initial pipeline to utilize the platform for upcoming securitization deals. Tapp Engine has indicated that plans are already in motion to onboard additional credit unions and CFIs of varying sizes throughout the remainder of the year.
The strategy involves creating a "network effect" where multiple smaller institutions can potentially use the platform to standardize their loan data, making it easier for institutional investors (such as pension funds and insurance companies) to evaluate and purchase these assets. This standardization is critical; institutional investors often shy away from community bank assets because the data formats and underwriting standards can vary wildly between institutions. 9Squid’s platform acts as a translator, turning local loan data into institutional-grade investment products.
Broader Implications for the Financial Industry
The democratization of securitization could have profound implications for the stability of the US financial system. By providing community banks and credit unions with more robust liquidity tools, the industry becomes less reliant on traditional deposit growth, which has become increasingly volatile in the digital age.
Furthermore, this technology addresses the "too big to fail" imbalance. When small institutions have the same tools as large ones, they can offer more competitive loan pricing and better interest rates on deposits, fostering a more diverse and resilient banking ecosystem.
As the financial sector moves toward "FinovateSpring 2026," which is scheduled for May 5-7 in San Francisco, the industry is expected to see a surge in AI-driven ALM tools. The success of 9Squid will likely serve as a case study for how specialized AI can solve structural inequities in global capital markets.
For now, 9Squid remains focused on its mission to empower the local institutions that serve millions of Americans. By turning the complex machinery of Wall Street into an accessible software service, Tapp Engine is not just launching a platform—it is attempting to rewrite the rules of capital access for the community banking sector. With five institutions already moving toward execution, the transition from theoretical democratization to practical application is officially underway.
