Many Americans find themselves without a traditional bank account, either due to being flagged in a bank’s system, living in areas underserved by traditional banks, or choosing to opt out of the banking system for personal reasons. According to the Federal Reserve Bank of Cleveland, approximately 18% of Americans fall into this category.
To address this issue, fintech firms and online banks have stepped in to provide services to those who struggle to obtain a traditional bank account or loan approval. These alternative financial institutions operate outside the realm of traditional banks, offering solutions to individuals who have been excluded from the banking system.
One such fintech lender making waves in the industry is OppFi, which has announced its plans to acquire Arizona-based BNC National Bank in a $130 million stock-and-cash deal. This acquisition will enable OppFi to expand its offerings to include banking services such as checking and savings accounts on a national scale.
The merger between OppFi and BNC National Bank will combine OppFi’s online lending platform with BNC’s national bank charter, paving the way for increased growth and diversification of products, according to OppFi CEO Todd Schwartz. This move is expected to enhance the overall customer experience and provide better services to clients as their needs evolve, as stated by Dan Collins, President, and CEO of BNCC.
However, the acquisition of a chartered bank by a fintech lender like OppFi has raised concerns among industry experts and regulators. Fintech lenders have faced scrutiny in the past for their lending practices, with some studies suggesting that borrowers who utilize fintech services are more likely to accrue debt and overspend.
OppFi has also faced regulatory issues in the past, including settlements with Washington, D.C., investigations by the Consumer Financial Protection Bureau, and battles with California regulators over interest rate limits. Critics have accused OppFi of circumventing state usury laws to offer loans with exorbitant interest rates.
The National Consumer Law Center has voiced concerns about OppFi’s high-interest charges and the potential implications of the BNC National Bank acquisition on interest rate limits in various states. OppFi’s headquarters in Chicago, where lending cap rules exist, contrast with BNC National Bank’s location in Arizona, a state without interest rate limits.
As the debate around nonbank lending practices continues, it remains to be seen how OppFi’s acquisition of BNC National Bank will impact the financial landscape and the customers it serves. The intersection of fintech and traditional banking raises questions about consumer protection, regulatory oversight, and financial inclusivity in the digital age.
