The owner of Oportun, a San Francisco-based alternative lender, has applied for a banking charter.
Oportun Financial Corporation, a public company based in Delaware, intends to create Oportun Bank. That’s if the Office of the Comptroller of the Currency (OCC) approves its application.
Personal loan business
Its core Californian business Oportun issues personal and auto loans. It uses proprietary scoring and more than a decade of accumulated data.
The fintech reports to America’s major credit bureaus to help consumers with no credit history build up a file from scratch.
Founded in 2005, Oportun claims to have extended more than $9 billion in affordable loans. It largely serves consumers living in low- and moderate-income communities.
To date, it claims to have saved these communities around $1.7 billion in interest and fees.
Why a banking charter?
The bank would be a wholly owned subsidiary of the public company.
If approved, Oportun Bank would serve customers in all 50 states, offering both consumer lending and deposit services.
Currently Oportun’s personal loan product, which is capped at an annual percentage rate (APY) of 36%, is only available in 12 states.
As well as its home state California, it also operates in Arizona, Florida, New Jersey and Nevada – to name a few.
The fintech now wants to offer this product on a truly national scale. Whilst it waits on its banking charter – a process takes a notoriously long time – Oportun has partnered with MetaBank.
This means it will be able to offer its 36% APR-capped personal loans from around mid-2021, before it lands its charter.
“A national bank charter will allow us to reach the estimated 100 million LMI consumers in the US that we seek to serve,” explains Raul Vazquez, Oportun’s CEO.
The fintech also wants to provide “the security of dealing with a federally regulated and supervised bank”.