LendingClub, a personal loan-focused fintech company, announced on Tuesday the acquisition of Radius Bancorp, an online baking platform, in a deal involving $185 million.
The press release detailed that the transaction will be made in both cash and stocks. Radius will operate as a fully owned subsidiary of the fintech firm.
Commenting on the acquisition, Scott Sanborn, CEO of LendingClub, said: “This is a transformational transaction that allows us tre imaginene 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.”
LendingClub provides personal loans to customers via its online platform. The company creaa lot of buzzesbuzz in 2014 and ended up to be the biggest tech IPO of that year with a valuation of $8.5 billion.
With the integration of both platforms, the company is planning to create a “digitally native marketplace bank, ” bringing customer-friendly features.
The fintech company is also optimistic that the acquisition will diversify and increase its earnings and is looking to expand products and services.
“By combining with Radius, we will create a category-defining experience for our members that will dramatically enhance the resilience and earnings trajectory of our business, ” Sanborn.
The urge of fintech to become banks
This is the first time a US-based fintech firm has acquired a bank, CNBC pointed out.
Many other fintech companies, including Robinhood and Square, have also applied for a banking license as it can increase their profit margins with the offerings of services like checking accounts.
“LendingClub has always been a fintech innovator, and I look forward to leveraging the strengths of both of our talented teams as we usher in a new era in banking, ” Mike Butler, president and CEO of Radius, added.
“This is a perfect marriage, with LendingClub bringing the leading digital asset generation platform, and Radius contributing a leading online deposit gathering platform, to position the combined company for long-term success.”