Oportun announces definitive agreement to acquire Digit
Oportun (Nasdaq:OPRT), a mission-driven fintech company today announced that it has signed a definitive agreement to acquire Digit, a neobanking platform that provides automated savings, investing, and banking tools. By doing so, Oportun will further expand its A.I. and digital capabilities, adding to its services to provide consumers a holistic offering built to address their financial needs.
“This is a transformational deal that will expand our addressable market, accelerate and diversify revenue growth, and position Oportun for even more future success,” said Raul Vazquez, CEO of Oportun. “In Digit, we are purchasing a proven and scalable neobanking solution that gets us to market 3-5 years earlier than if we were to build it on our own.”
Oportun will acquire Digit for approximately $212.9 million, comprised of $98.5 million in equity and $114.4 million in cash, subject to customary adjustments. Oportun has obtained a commitment to finance the cash consideration.
Combining Oportun and Digit will create a leading neobanking platform with capabilities that include:
- A proven and profitable lending platform
- An unsecured credit card, with starting lines up to $1,000, available to customers without a credit score
- Digital banking with built-in intelligent and effortless budgeting capabilities
- Automated savings and investing features
- A.I.-driven, mobile-first consumer platforms
Digit is a neobanking platform founded in 2013 that provides its 600,000 paying members with personalized savings, investing and banking tools. Digit members can keep and integrate their existing bank accounts into the platform, or they can make Digit their primary banking relationship by opening new accounts via Digit’s bank partner.
Enabled by A.I., Digit automatically sets aside funds for members by analyzing cash flow and recognizing how much can be saved and invested today, while remaining well within a member’s immediate financial means.
The strategic benefits of the transaction include:
- Combined 1.4 million membersand a platform for accelerating growth
- Cross-selling opportunityto all applicants, as well as current and former customers of both Oportun and Digit
- Seamless customer experienceto be created through integration
- Higher conversion and lower CACby making neobanking available to everyone who comes to Oportun and Digit
- Daily engagementwith customers deepens and extends relationships
- A.I. capabilitiesare enhanced and expanded with real-time data
- Financial management algorithmsimprove members’ financial health
- Revenue diversification with the addition of subscription, transaction, and interchange fees
“With this acquisition, we believe we will be able to quickly actualize a bold vision for an A.I.-driven, digital-first platform that helps members daily when they need to borrow, save, invest, and bank,” continued Vazquez. “As a combined company, we will redefine what it means to be a neobank, with outstanding products and service that address the everyday financial needs of hardworking people.”
Raul Vazquez provided additional commentary via a company blog which can be viewed here.
“Over the past 6 years, Digit has helped millions of Americans save for everything from emergencies to down payments, vacations and more. The impact we’ve had on our members is proof that technology can make it easier to live a financially healthy life,” said Ethan Bloch, founder and CEO of Digit. “We have been obsessed with building a financial service from first principles, focused on improving the financial health of our society, all while creating a product and brand that our members love and are willing to pay for. Joining Oportun will accelerate our collective missions and product visions. Together we will create the leading digital platform, grounded in financial health, to serve all of a hardworking customer’s financial needs: from banking, saving, borrowing, investing, and beyond.”
The Needs Oportun will Address
According to CreditWise, 73% of Americans rank their finances as the number one stress in their lives, while the Financial Health Network’s 2021 Financial Health Pulse indicates that 2/3 of Americans are not financially healthy, and 57% of U.S. consumers are not confident about their long-term financial goals. To build financial health for the long-term, Digit’s members have effortlessly saved a cumulative $7 billion since 2015.
According to the Consumer Financial Protection Bureau (CFPB), overdraft fees cost consumers $17 billion annually. The CFPB further states that most overdraft fees are the result of timing or inattention, not due to financial emergencies. Digit monitors members’ existing bank accounts to help reduce the number of overdrafts they incur.
Details Regarding the Proposed Acquisition
Digit will operate as a business unit within Oportun and continue to be led by Digit founder and CEO, Ethan Bloch. All of Digit’s 100+ employees will join Oportun along with Ethan and continue their job functions.
The boards of directors of Oportun and Digit have each approved the transaction, which is expected to close by the end of 2021 or early 2022, subject to the satisfaction of customary closing conditions.
J.P. Morgan served as exclusive financial advisor and Wilson Sonsini Goodrich & Rosati served as legal counsel to Oportun. Jefferies has provided the financing commitment, subject to customary closing conditions. Goodwin Procter served as legal counsel to Digit. Financial Technology Partners is serving as exclusive strategic and financial advisor to Digit.
Investor presentation available here.
Additional details and information about the terms and conditions of the acquisition will be available in a current report on Form 8-K to be filed by Oportun with the Securities and Exchange Commission.
- Chris Baker Named Chief Strategic Officer at POSaBIT Read more
- Fintech Job Cuts: An Analysis of the Impact on the Industry Read more
- Wolters Kluwer’s CCH® Tagetik expert solution recognized by Nucleus Research Read more
- Court of Appeal Rules in First Case Over Developers’ Duty of Care to Crypto Asset Owners Read more
- Vancity’s Visa credit cards are counting carbon footprints with ecolytiq Read more