Before, an online lender that has raised more than $ 600 million in equity, today announced that it has acquired Zero Financial and its neobank brand, Level, to continue its mission of becoming a digital bank for the masses.
Founded in 2012, Chicago-based Avant started out primarily as an online lender targeting “underserved consumers,” but is moving into digital banking with this acquisition. The company reported gross sales of $ 265 million in 2020 and has raised capital over the years from funders such as General Atlantic and Tiger Global Management.
“Our path has always been to become the number one digital bank for the everyday American,” James Paris, CEO of Avant, told TechCrunch. “The massive transition to digital over the past 12 months has made it a good time to expand our offerings.”
The acquisition of Zero Financial and its neobank Level (as well as its banking application assets) will give Avant the ability to offer “a complete ecosystem of banking and credit product offerings” through a fully digital platform , according to Paris. These offers include deposits, personal loans, credit cards, and auto loans.
Financial terms of the transaction were not disclosed other than the fact that the acquisition was made with a combination of cash and shares.
Founded in 2016, San Francisco-based Zero Financial raised $ 147 million debt and equity, according to Crunchbase. New Enterprise Associates (NEA) led its $ 20 million Series A in May 2019.
The level was unveiled to the public in February 2020, ccreated by the same Californian team that founded the ‘debit’ credit card offering Zero, according to this FintechFutures room. The challenger bank was created to target millennials dissatisfied with existing banking options.
Zero Financial co-founder and CEO Bryce Galen says Avant shares his company’s mission “at challenge the status quo by bringing innovative financial services products to consumers who otherwise would not be able to access them. “
Before, notes Paris, uses thousands of AI-based data points to determine credit risk. With this acquisition, that goal will be expanded with data, such as a deposit customer’s cash flow, how they manage their finances, and whether they pay their bills on time.
“This will allow us to make credit decisions faster and provide personalized options to help under-bankable consumers gain financial freedom, at any stage of their financial journey,” Paris told TechCrunch. “It will also strengthen long-term engagement and loyalty and help us expand our reach beyond the 1.5 million customers we have served to date.”
Like a growing number of fintechs, Avant operates on the premise that a person’s ability to obtain credit shouldn’t be dictated by just one credit score.
“A significant number of Americans have poor credit, bad or not at all. For these people, accessing credit is not really easy and often comes with additional costs, ”said Paris. That’s why, he added, Avant has focused on providing options to these consumers with “transparent rewards-driven products.”
Level’s branchless digital platform offers benefits such as cash back on debit card purchases, a ‘competitive APY’ on deposits, early access to paychecks and no hidden fees, which are all particularly beneficial for consumers on the road to financial freedom according to Paris.
Since its inception in 2012, Avant has connected more than 1.5 million consumers to $ 7.5 billion in loans and 400,000 credit cards. The company launched its credit card in 2017 and in the past two years alone it has increased its number of credit card users by 170%.