Digital lender LendUp launches a challenger bank

LendUp has unveiled its digital bank, Ahead Financials. 

Ahead provides emerging middle class consumers in the U.S and worldwide with banking and financial health services. The LendUp subsidiary will offer a checking account and debit card with no monthly fees along with financial literacy tools to educate consumers on their budgeting habits. 

“Borrowing, saving, planning, budgeting and financial education each play an important role in financial health no matter where you fall on the income spectrum,” said LendUp CEO, Anu Shultes. “However there are tens of millions of Americans who have been shut out of the mainstream banking system and therefore do not have a financial partner to help them with these items. And these are not just students, new workers or immigrants, they are hard working individuals with good jobs.”

As of August 2020, around 167 million Americans identified themselves as ‘financially coping’ or ‘financially vulnerable’ in a Financial Health Network report. In the past year, financial health disparities have widened across income and race and have persisted across gender. 

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“LendUp and now Ahead were founded to break the cycle of hard-working Americans who are denied access to the system because they have poor credit or no credit,” said Shultes. “Improving financial education, improving credit scores, and improving the financial health of millions of Americans is one part of breaking this cycle. Because our customers have been shut out of the mainstream banking systems, we are creating a banking ecosystem specifically designed for our customers to be set up for success and that can grow with them.” 

Economically vulnerable consumers who live paycheck to paycheck struggle with poor credit histories, minimal savings opportunities and low financial literacy. “Our customer typically makes $35k-$45k, has a family, has probably made some mistakes at some point in their financial life and now are underbanked,” she said. 

Traditional banking services have largely neglected the lower middle class by targeting high income groups. “Most traditional banks are focused on the solidly middle class or wealthier consumers. Digital banking services are making headway to attracting younger consumers yet they are still focused on the upwardly mobile consumers who can grow with them. Ahead Financials has been created to focus on the emerging middle class — customers who continue to be marginalized by mainstream and digital banking companies,” said Shultes.

Ahead will introduce its digital banking app to customers who will have early access to their paycheck, no cost overdraft protection for up to $100 and surcharge-free and in-network ATM access at over 55,000 ATMs. The app will assist consumers with their financial planning through a financial personal trainer tool and credit-building offers to strengthen credit scores. The company has partnered with Financial Health Network, SpringFour and the Balance Partnership to strengthen its financial wellness capabilities. 

Since its inception in 2012, LendUp provides financial solutions for the economically disadvantaged. The company has adopted alternative credit scoring, loan financing and cost-savings solutions as part of its financial service offerings. The company has originated over $2 billion in loans and served more than 1 million customers.