As an early online lender, Avant built a consumer lending business. And as the market evolved, Al Goldstein’s company found itself situated to also help banks enter digital lending. So, in addition to Avant, the firm launched a B2B service. Initially called Powered by Avant, Amount works with banks like Regions, HSBC, and TD Bank to handle end to end or modular services for things like personal loans, credit cards, deposit accounts, and point of sale loans.
Al joins us on the podcast to talk about the evolution from B2C lender to B2B service provider. We discuss what he’s hearing from banks about their biggest challenges in digital lending and we hear from Al about his own challenges working with large banks.
The move into B2B
With Avant, about six and a half years ago, we had this vision to build a digital bank for middle income consumers — to make their credit lives simple and easy and to give them the ability to borrow money and transact in a modern, seamless way. About four years ago, we realized that this technology was applicable to our bank partners, as well. So we created this effort which we originally called ‘Powered by Avant’. About two years ago we renamed the company Amount. Now, Amount is a separate company with the sole goal to enable large financial institutions to originate digitally across their product lines and channels.
Banks biggest challenges in lending
Banks have realized that in today’s world, we’re so used to the Amazon experience: you think about something, press a button, and it shows up. Their customers want this same experience. That wasn’t necessarily true five years ago, but today’s bank customers are extremely discerning. They need to have a simple, elegant user and onboarding experiences. That experience is hard for banks to provide and that’s what Amount does. It helps banks build a digital experience.
Fintech’s challenges working with large banks
Today, Amount has eight banking partners, including HSBC and TD Bank. These are gigantic institutions and their bar for the partners they work with is extremely high. As a startup company six and a half years into our journey, it’s still very challenging to meet that bar and threshold. We try to make sure everything we do for Avant and our bank partners is at the highest possible level of compliance and execution. That’s really the requirement — banks have little margin for error.
Selling further into banks
You can imagine the sales cycles with large banks are pretty long. I didn’t have as much grey hair when we started this process. We’ve figured out ways to accelerate that process. Bringing on the first bank was the hardest — the second was easier. We now have eight banks we’ve partnered with.
We’re actually building new products for our partners. Where we started with our partners with digital, personal loan products, we’re now transitioning to provide full onboarding transition support. We call that Amount 360, where we help banks onboard customers across various products and deal with fraud in the process. We’ve expanded our product universe into point of sale loans and credit cards.
It’s much easier to make that second sale after we’ve proven ourselves. That first sale is just going to be long and challenging.
Competition and positioning
Our target customers have been the larger — though not the largest — enterprise banks. They’re in the $50 billion to $500 billion range in terms of assets. These customers have largely worked with legacy platforms and providers in the past. They’ve built their own technology and for the most part, continue to work with legacy providers. We generally compete with internal build.
We think we have a unique proposition because Avant, as a lending platform, as originated over 1 million transactions. We’ve learned so much from that experience and that’s knowledge we can share with our bank partners.
Transfering Avant experience to banks
We offer professional services to our clients as a support organization to help them use the tools more effectively. We’re building the car. We want to give them a Ferrari and ensure that they drive it most efficiently. Professional services help them to do that, to share the knowledge we think will be most useful.
Targeting decision makers
Ideally, we love to work with the executive suite that’s made a decision to go digital. That’s a strategic decision and not every bank will go down that path. But a lot of large financial institutions are seeing that consumers want digital. They’ve seen what Goldman Sachs has done with Marcus and they say, we want that. Those are the types of banks we want to work with.
Generally, we work with product owners. There’s someone at the bank that owns the consumer lending book and we want to work with that person and the folks in charge of digital product innovation, and people with a mandate to grow assets.
Regions Bank and Amount
Regions has been our partner since 2016. They were the first bank outside of Avant’s lending platform that we partnered with. We met them pretty early on. Their focus has been on expanding their capabilities to go digital. It’s been fun to work with them. Over three years in, we’re looking to extend our relationship to different parts of the organization. It won’t be just digital personal loans — it will be other products as they grow.
The future for Avant and Amount
Originally, the two businesses worked amazingly well hand in hand. Avant was a lending platform and we were learning so much about being in the lending business, supplying credit to consumers. We were able to impart that experience to our partners.
Now, both businesses have scaled up. We believe that the two businesses make more sense to run independently. Over the next 6 to 12 months, you’ll see us separate the businesses where Amount’s sole mission will focus on making sure our banking partners are successful. Pure B2B.
Whereas Avant’s mission is to be the best provider of credit alternatives to middle incomes consumers. That’s a B2C company. We think there will be a lot of value. Avant will be a customer to Amount — Amount will be the technology provider to Avant and a lot of other banks alongside.