Avant has filed to become a bank instead of renting one. The online lender submitted an application to the Office of the Comptroller of the Currency and the FDIC to charter Avant Bank, N.A., a national bank that would let it hold deposits and issue credit directly rather than through a partner institution.

The filing matters because Avant has spent thirteen years running on the rent-a-charter model that most consumer fintech lenders still depend on: originating loans and cards through a partner bank, then buying the receivables. That structure works until a regulator tightens its view of third-party risk, which is exactly what has been happening across the sector, covered in Bank Regulators Rewrite the Rules for Fintech Partners. A charter removes that dependency and its regulatory overhang in one move, at the cost of taking on prudential supervision directly.

“Since we founded Avant in 2012, our mission has been the same: move financial lives forward for the more than 100 million everyday Americans who are overlooked by the legacy system,” said Al Goldstein, Avant’s co-founder and CEO, in the company’s announcement. The company says it has extended more than $17.6 billion in credit to roughly 4.8 million customers since founding, scale that helps explain why a charter, not a partnership renewal, is now the more efficient path.

The original insight here is what a charter buys Avant beyond independence: a lower cost of funds through deposits, which fintech lenders funding themselves through warehouse lines and securitization do not have. Kevin Friedrich, Avant’s CFO and the proposed CFO of Avant Bank, N.A., called this out directly, saying a charter “would enable further diversification, added resilience, and access to a lower cost of funds through the introduction of deposits as a funding source.” That is a balance-sheet advantage, not just a compliance one, and it is why de novo bank applications keep clustering among fintech lenders large enough to absorb the capital and supervisory cost, a pattern also visible in Why Some Bank Charters Never Go Through the FDIC.

Source: GlobeNewswire