Loan Club said on Tuesday (January 19) that it had received all the regulatory approvals necessary to complete its $ 185 million acquisition of Radius Bancorp.

In an interview with Karen Webster, Anuj Nayar, Vice President and Head of U.S. Financial Health at LendingClub, said the LendingClub / Radius combination will create the first publicly traded neobank in the United States, with a branchless digital approach to financial services then occurring that the pandemic has forced branches to close, and banking on online platforms is gaining critical mass.

Nayar noted that the approval was well on schedule.

“We said it was going to take between a year and 15 months,” he told Webster.

Timing, as they say, is everything. And the pandemic has only merged LendingClub’s digital strategy to become a full line of consumer ready and commercial products across digital conduits, said Nayar (who added that LendingClub already exists as a “powerhouse massive loan side ”).

Income Results showed the company can handle the pandemic (even before the Radius acquisition), he said, where borrowing demand has returned to 80% of previous levels. He told Webster that “our customers aren’t primarily in the areas that would be most affected by COVID” – and in reality, those customers have been racking up savings and paying off their debts. “

But many of these same customers are shifting their focus away from traditional credit to BNPL (Buy now, pay later) models. And borrowing on LendingClub’s portfolio has not been focused on consolidating credit cards, but on home improvement projects.

High yield savings

After the Radius acquisition closes, he said, the combined entity will likely first launch a high-yield savings account where the company can offer a higher rate on these accounts. – several percentage points compared to the current yield of tens of basis points offered by traditional financial institutions. In this way, the interest paid by borrowers on loans can be, in part, channeled towards the payment of interest on depositors’ accounts.

Other offers, he said, could come from the fact that the LendingClub checking account is a way to market other services that “connect the dots” between a range of LendingClub and Radius offers – and where the base installed base of LendingClub users already amounts to 3 million customers. . He nodded in favor of “continuous underwriting,” which offers the user who might not have the ability to pay off a credit card in a matter of months to convert that debt into a loan and then pay it off at the end of the day. over time.

In another example, he said that rewards on debit expenses could be used to pay off LendingClub loans. (The company said on Tuesday that 77% of LendingClub users surveyed said they used their debit cards for their daily expenses; 79% said they would open a checking account with the company if such rewards programs were offered. .)

This cross-functionality and cross-selling will be essential, he said, at a time when financial services companies will not be able to build large-scale businesses based solely on interchange fees.

On a larger scale and longer term, he said, the shift to digital banking is accelerating, as are branch closings, which will likely be a feature of 2021.

As the digital banking landscape crystallizes even more, he said, LendingClub sees its more direct competition as the SoFis of the world in which personal finance encompasses loans, cards and traditional banking. But as he told Webster, LendingClub targets the relatively higher earners who still have to juggle daily expenses or medical debt – in other words, the same target audience that dates back over a decade when the company was launched for the first time.

“But now,” with Radius in the operational mix, “we can add savings to the puzzle,” he told Webster.