FinTech lender Avant filed an application with the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. on Friday, Sept. 18, to establish an insured national bank named Avant Bank, N.A. The proposed de novo charter aims to lower the company’s cost of funds and expand direct credit access for middle-income consumers.
The Bottom Line
- Financial Mechanics: Leadership expects the charter to meaningfully reduce its cost of funds by introducing insured consumer deposits onto the balance sheet.
- Execution Timeline: If approved, Chief Business Officer Charles Whittaker is slated to step in as CEO of Avant Bank, N.A., scaling core products end-to-end.
The Mechanics of Avant’s National Charter Application
FinTech platform Avant formally entered the regulatory queue, submitting applications to both the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC). According to company statements released on Friday, Sept. 18, the firm intends to build Avant Bank, N.A. from the ground up as an insured digital bank.
Since its founding in 2012, Avant has processed approximately $17.6 billion in credit for 4.8 million middle-income customers, relying heavily on third-party partners like WebBank to originate its loans and credit products. Operating primarily through off-balance-sheet securitizations—such as its February personal loan securitization totaling $200 million—imposes structural funding costs that a direct deposit base can alleviate.
“We expect to reduce our cost of funds, which is one of the primary reasons for seeking a bank charter,” Margaret Hermes, Avant’s chief operating officer, told American Banker. Kevin Friedrich, Avant’s chief financial officer and proposed CFO of Avant Bank, added that the move provides “added resilience and access to a lower cost of funds through the introduction of deposits as a funding source.”
Weighing De Novo Risk Against Regulatory Realities
Charles Whittaker, Avant’s chief business officer and the proposed CEO for Avant Bank, told American Banker that the internal build was a better “logical and strategic fit for us at this point.” Whittaker noted that the bank plans to consolidate its core offerings, stating, “We plan to put all of the loan business, the card business and the credit building products into the bank.”
The OCC processed nine significant charter determinations over the 90 days ended August 24, yielding six preliminary conditional approvals, one final approval, and two denials, according to reporting from PYMNTS. Just a week prior to Avant’s filing, nonbank lender Enova withdrew regulatory applications to acquire Grasshopper Bank amid friction over nonbank licensing standards.
Theodora Lau, founder of Unconventional Ventures, noted to American Banker that Avant shares similarities with platforms like Upstart, which secured conditional OCC approval in July. “They both underwrite with their own models,” Lau observed. “Upstart received conditional OCC approval in July so that’s a good early test case proving the OCC isn’t screening out lenders. What we need to watch out for is fair-lending explainability: Can the bank demonstrate why the model approved one borrower and declined another?”
Targeting the Overlooked Consumer Segment
The proposed digital banking platform focuses tightly on middle-income consumers earning between $40,000 and $100,000 annually. Co-Founder and CEO Al Goldstein emphasized that the firm has targeted roughly 100 million Americans overlooked by traditional financial institutions since 2012. Securing a national charter allows these operations to run under a single unified federal regulatory framework.
If the OCC and FDIC greenlight the application, the operational roadmap points toward expanded product lines. Beyond personal loans and credit cards, Avant Bank, N.A. plans to roll out checking and savings accounts. This transition transforms the firm from an online lender into a primary financial institution holding consumer deposits.
| Metric / Detail | Avant Baseline | Proposed Avant Bank, N.A. Target |
|---|---|---|
| Target Consumer Segment | Middle-income earners ($40K – $100K) | Expanded digital banking demographic |
| Core Funding Model | Securitizations & Third-Party Lenders (e.g., WebBank) | Insured Consumer Deposits & On-Balance Sheet Lending |
| Regulatory Framework | Partner Bank Dependency | Single National Bank Charter (OCC / FDIC) |
| Designated Leadership | Al Goldstein (CEO, Avant) | Charles Whittaker (Proposed CEO, Avant Bank) |
Navigating the Path Forward
The transition from an online lending platform to a regulated national bank requires navigating compliance milestones.
By securing direct access to liquidity via insured deposits, Avant aims to protect its margins.
Disclaimer: The information provided in this article is for educational and informational purposes only and does not constitute financial advice.
