- Oportun, a low- to moderate-income (LMI) lending specialist, has agreed to buy neobanking platform Digit for $212.9 million — $98.5 million in equity and $114.4 million in cash — the fintech announced Tuesday.
- The deal, which was approved by the boards of directors of both companies, is expected to close by the end of 2021 or early 2022, Oportun and Digit said.
- "This is a transformational deal that will expand our addressable market, accelerate and diversify revenue growth, and position Oportun for even more future success," Raul Vazquez, CEO of Oportun, said in a statement.
Oportun has had its eye on expanding into offering banking services for some time. The San Carlos, California-based fintech filed an application for a bank charter with the Office of the Comptroller of the Currency (OCC) last year, then withdrew it last month.
Under the deal, Digit will operate as a business unit within Oportun and continue to be led by Ethan Bloch, Digit’s founder and CEO, according to Tuesday's press release. All of Digit’s more than 100 employees will join Oportun and continue their job functions, Oportun said.
"With this acquisition, we believe we will be able to quickly actualize a bold vision for an [artificial intelligence]-driven, digital-first platform that helps members daily when they need to borrow, save, invest, and bank," Vazquez said. "As a combined company, we will redefine what it means to be a neobank, with outstanding products and service that address the everyday financial needs of hardworking people."
Digit was founded in 2013 and provides personalized savings, investing and banking tools to 600,000 paying members, according to the press release. The proposed combination will give Digit and Oportun access to 1.4 million members, to whom both entities plan to cross-sell their products.
Vazquez said the deal accelerates Oportun’s digital banking strategy.
"In Digit, we are purchasing a proven and scalable neobanking solution that gets us to market 3-5 years earlier than if we were to build it on our own," he said.
Oportun said it remains committed to pursuing a bank charter with the OCC and plans to amend elements of its charter application to reflect changes to its business.
In addition to revenue diversification with the addition of subscription, transaction and interchange fees, Oportun anticipates the deal will spur higher conversions and lower customer acquisition costs by making neobanking available to all Oportun and Digit customers.