Oportun set to acquire neobank Digit in $213m deal

US FinTech company Oportun has entered an agreement to acquire neobanking platform Digit in a deal set to be worth $212.9m.

The deal will comprise of $98.5m in equity and $114.4m in cash, subject to customary adjustments.

California-based Oportun uses AI-driven models to extend over 4 million loans and over $10bn in affordable credit to provide its customers with alternatives to payday and auto title loans. Through the acquisition, the company claims it will further expand its AI and digital capabilities.

Founded in 2013, Digit offers its over 600,000 paying members with personalised savings, banking and investing tools, with the ability to keep and integrate their existing bank accounts into the platform. Digit sets aside funds for members by analysing cash flow and recognising how much can be saved and invested today.

Oportun said that the combining of the two companies will create a neobanking platform that offers a proven and profitable lending platform, an unsecured credit card available to customers without a credit score, digital banking with built-in budgeting capabilities and automated savings and investing features.

According to Oportun, the benefits of the transaction include – amongst other things – cross-selling oppurtunities to all applicants, seamless customer experience, daily customer engagement, strengthened financial management algorithms to improve members’ financial health and enhanced AI capabilities due to real-time data.

Oportun CEO Raul Vazquez 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. 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.”

“With this acquisition, we believe we will be able to quickly actualize a bold vision for an A.I.-driven, digital-first platform that helps members daily when they need to borrow, save, invest, and bank. 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 CEO Ethan Bloch added, “Over the past 6 years, Digit has helped millions of Americans save for everything from emergencies to down payments, vacations and more. The impact we’ve had on our members is proof that technology can make it easier to live a financially healthy life.

“We have been obsessed with building a financial service from first principles, focused on improving the financial health of our society, all while creating a product and brand that our members love and are willing to pay for. Joining Oportun will accelerate our collective missions and product visions. Together we will create the leading digital platform, grounded in financial health, to serve all of a hardworking customer’s financial needs: from banking, saving, borrowing, investing, and beyond.”

The transaction is expected to be completed by the end of 2021 or early 2022 subject to the satisfaction of customary closing conditions.

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