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Advancing economic equity through financial inclusion
Over Oportun’s 15-year history, we have prided ourselves on being a different kind of financial services company, including having a majority of our entire team along with every level of Oportun’s leadership—from front line supervisors to our Board of Directors—identify as women or people of color. Our entire business is driven by a mission to bring financial inclusion to people who have traditionally been outside the mainstream, and we believe access to responsible and affordable financial services is a right that transcends color, gender, income or zip code.
Today, Oportun formally applied for a national bank charter from the Office of the Comptroller of the Currency (OCC) to extend our mission to all 50 states. A national bank charter will allow us to reach all of the estimated 100 million low- and-moderate income (LMI) consumers in the U.S. that we seek to serve. Currently, Oportun maintains dozens of state licenses in order to offer affordable and responsible financial services to LMI communities. As a national bank, we can efficiently provide the security of dealing with a federally regulated and supervised bank to our customers and other stakeholders. While initiating the application process is a first step, we welcome the full supervision of prudential regulators, and look forward to transparently implementing a robust Community Reinvestment Act (CRA) plan that positively impacts LMI communities across the country.
Bringing the financial mainstream to LMI communities
In the U.S., we estimate that 100 million consumers are neither well-understood nor fully seen by the mainstream financial system. Because incumbent institutions are unable to evaluate their creditworthiness, many LMI individuals have few options available to address unexpected costs, emergencies, or even new opportunities.
The consumers we serve are hardworking people with limited or no credit history. More than 89% of our customers live in LMI communities, and approximately half of our customers historically came to Oportun without a credit score or with a credit history too limited to score accurately. Without Oportun, these customers often turn, out of necessity, to far less affordable options offered by alternative financial services providers.
Today, Oportun’s core product is a fully amortized personal loan, capped at a 36% APR. Our loans are transparent, carry no hidden fees, and are designed for customer success. In fact, our most profitable loan is one that is paid back on time and in full. By reporting loan performance to the leading credit bureaus, our customers build the history they need to enter the financial mainstream. A credit score is one step toward financial inclusion; another is having a bank account, and even today, millions of LMI households are unbanked. As a national bank, Oportun will add depository products to our consumer lending and be able to offer these affordable and accessible banking services to LMI individuals in all 50 states.
A proven track record of success in LMI communities
Over our 15-year history, we have originated more than 3.9 million loans and saved our customers an estimated $1.8 billion in aggregate interest and fees compared to the alternatives typically available to them (according to a study we commissioned that was conducted by the Financial Health Network). Since our inception, Oportun has extended more than $9.3 billion in affordable loans, primarily to people living in LMI communities, helping more than 870,000 individuals establish a credit history and advance toward the mainstream of our society.
The proposed Oportun Bank
In addition to leveraging our proprietary lending platform, Oportun Bank will be able to sustainably serve LMI consumers nationally with consumer banking services. In addition, the bank will seek deposits from socially conscious individuals, foundations, non-profit organizations, corporations and other entities that are seeking to support historically underserved communities.
Our goals on this journey include:
- Efficiently serving the needs of LMI consumers in all 50 states
- Providing and encouraging traditional depository services that promote savings to the consumers we serve
- Continuing to cap the price of our credit products at 36% APR
- Maintaining and growing our presence in underserved LMI communities
- Implementing a robust strategic Community Reinvestment Act (CRA) plan that helps to uplift LMI communities
- Building on our history of bilingually serving LMI customers
The harmful legacy of economic injustice in the neighborhoods we serve—and aspire to serve nationally—remains apparent today. Providing responsible banking services in LMI communities is critical to making meaningful progress on the path towards economic equity and Oportun Bank will be committed to this noble cause.