Avant broadens digital banking with challenger acquisition

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Avant is acquiring Zero Financial and its challenger brand, Level, in a mixed cash-stock transaction, per TechCrunch. No other financial terms have been disclosed. The deal will enable Avant to offer a comprehensive suite of banking products, including deposits, personal loans, credit cards, and auto loans.

Avant is following the lead of other alternative lenders that have tied up with banks to increase profitability or expand into new credit products. Here are two examples:

LendingClub’s recent acquisition significantly reduced its cost of funds. By buying Radius Bank, the alt lender reduced its borrowing costs by 90% from the previous year. Avant’s savings from the Zero purchase will likely be smaller, given it will still be paying fees to a partner bank, but broadening its deposit base could still have a meaningful impact on loan profitability. And should it pursue a national banking charter, Avant would be able to drop the middleman, expanding its margins even further.

SoFi’s forthcoming transaction allows it to offer new lending products. The online lender’s recent purchase of Golden Pacific Bancorp is already enabling it to expand its credit solutions into new areas: SoFi launched its first-ever credit card …read more

Source:: Businessinsider – Finance


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