One of America’s fastest-growing online banks is being scooped up, but not by a credit union or another bank.
Radius Bank — along with its parent company — is being acquired for $185 million by LendingClub, an online marketplace offering personal loans and other financing options, according to an announced agreement on Tuesday.
If the deal gains regulatory approval, LendingClub would likely make history as the first fintech company to own a bank. And Radius Bank — renowned for its products and fintech partnerships — could then offer additional benefits to customers already enjoying a stellar digital banking experience.
A first for fintechs
The acquisition announcement comes within a week of another historic moment for fintech startups.
The Federal Deposit Insurance Corp. in early February moved to approve Varo Money for deposit insurance. This brought the mobile bank closer to attaining a national bank charter, a feat no other company in its position has managed to achieve so far.
Among companies that have applied for a bank charter and others who’ve settled for partnerships with other banks, LendingClub’s approach is unique.
“This is a transformational transaction that allows us to reimagine banking in a way that is free from legacy practices and systems, and where the success of LendingClub is aligned with the success of our customers,” said Scott Sanborn, CEO of LendingClub in a statement.
Radius Bank has made some standout decisions as well. The Boston-based institution, which spun out of a traditional bank founded in 1987, has built relationships with various companies, such as Credible, Booking.com and MaxMyInterest, which offers a high-interest checking account powered by Radius Bank.
What’s in store for customers
The deal won’t close for a while as the parties await the green light to move forward. At the moment, there are no immediate changes or next steps for Radius Bank customers.
“All customers were notified of the combination via email following the announcement,” says Mike Butler, president and CEO of Radius Bank. “We will continue to keep the communications going via this channel over the next 12-15 months, which is how long we’re expecting regulatory approval to take. Radius prides itself on being transparent with its customers, so we plan on keeping them in the know as the integration process moves forward.”
Existing customers shouldn’t be worried about their favorite savings and checking products going anywhere, as all current features and tools will continue to be accessible.
“In the short term, there are no changes to our current product lines,” Butler says. “In the long term, this combination will allow us to better serve our partners with new products, services and resources, including digital lending, through the expansion of our banking-as-a-service (BaaS) platform.”
Customers have other benefits to look forward to, including access to LendingClub’s personal loans and other product offerings. Consumers should expect a more personalized digital experience over time. And according to LendingClub’s website, there will also be a chance for borrowers to pay less and for savers to boost their earnings.