LendUp Starts Digital Bank, Named ‘Ahead Financials’
Last week, small-dollar lender LendUp officially launched a subsidiary digital bank called Ahead Financials, offering younger customers and the emerging middle class a no-fee checking account and debit card, financial education, overdraft protection, and early access to earnings in advance of official paydays. Deposits for Ahead Financials are held with Attica, Ohio’s $827.9 million-asset Sutton Bank.
Anu Shultes, CEO of LendUp and Ahead Financials, wanted to focus on serving consumers who regularly struggle with their credit and finances, an issue that is not exclusive to students or immigrants.
“Everyday Americans have this issue,” she said, according to American Banker. “It’s not that they’ve never had a credit card. They know the products are out there, but they just can’t get them.”
The digital bank aims to target customers with $35,000 to $45,000 in annual income, and who are typically renters. These consumers may not be able to use mainstream financial services due to poor or nonexistent credit histories and inconsistent incomes. Nearly 80 percent of LendUp’s customers report that their incomes fluctuate by $200 per month.
“Almost all neobanks are focusing on the upwardly mobile,” Shultes said. With a senior leadership team of mostly women and people of color, Shultes hopes to expand beyond LendUp customers to a more national audience.
Since 2012, LendUp has originated more than $2 billion in small-dollar loans, rewarding customers with points for making payments on time and taking educational courses with its Ladder program. Many of its customers make volatile incomes with no savings to fall back on in an emergency.
Ahead has partnered with Financial Health Network and SpringFour in Chicago, and Balance in Concord, California to provide resources to its customers. Financial Health Network will provide customers with a financial health ‘scorecard’; customers can use SpringFour’s online database to find resources to help with expenses; and Balance will provide appointments with certified credit counselors.
