The online lender Avant, which has offered credit to near-prime customers since 2013, is a step closer to becoming a full-fledged bank.
The Chicago fintech acquired a neobank called Level and its parent company, Zero Financial, on Wednesday for an undisclosed amount of cash and stock. The acquisition will allow Avant to offer a checking account, debit card and potentially other products down the road.
Having direct access to customers' checking account data will allow us to offer them better credit products when they need them, says James Paris, CEO of Avant. That might translate into lower interest rates on loans and credit cards, it might translate to a credit card with a higher limit with better rewards.“
With the move, Avant joins other fintechs that are rebundling consumer financial services expanding from a focus on a limited number of products to a model that more closely resembles a full-service bank. Examples include Betterment, Wealthfront, SoFi, Varo and Upgrade.
Avant will gain the ability to cross-sell and offer cross-rewards to its customers. It will also get direct access to customers bank account data, which it can use for purposes such as loan underwriting.