Many people don’t realize that Avant actually operates two lines of business. One, the online lending platform which offers loans to near prime borrowers and the other, a SaaS business previously branded as “Powered by Avant”. This week Avant rebranded their Powered by Avant service to Amount. We spoke to Al Goldstein, Founder and CEO of Avant to learn more about what the SaaS business has been up to and the reasoning for the rebranding.
Avant has been operating these two separate business lines for quite some time so it made sense to distinguish between the two. From a bank customer standpoint, the new Amount branding is much cleaner and more transparent. Avant also wanted to reduce any confusion from potential borrowers who may be aware of Avant’s platform and then also see the Avant name next to their bank’s offering. With the new name, they have also secured the domain www.amount.com which provides an overview of the offering.
Amount’s most well known relationship is with Regions Bank which was first announced in April, 2016. Regions Bank is a top 50 bank with about $123 billion in assets and has leveraged Avant’s technology for their personal loans business. Another partnership that has been made public is with Eloan, a division of Banco Popular. Goldstein noted that there are other banks already leveraging Amount and other deals in the works which have not yet been made public. We should hear their next big bank partnership announcement later this fall.
Where it gets really interesting is when you understand both the full suite of Amount’s offerings and Al Goldstein’s long term vision for the company. Amount is a full service platform offering loan origination, verification and fraud services, decision hosting, analytics, marketing, servicing and of course what powers the front-end customer experience as well as all of the infrastructure on the back-end.
The product will evolve over time with Amount first offering customized solutions for large banks which tend to be more full service, but Amount also plans to break out the services. For instance, you can already purchase as a separate product “Amount Verify”, their fraud and verification software which can not only be used for personal loans but across all banking products, credit cards, deposit accounts, etc. Another benefit of using Amount’s platform is the data they have gathered on over $6 billion, smaller dollar loans which can be leveraged to better underwrite borrowers.
The next phase will service the sub $10 or $20 billion asset banks which will be an off the shelf type product, which is not customizable, but configurable. This aims to strike a balance between offering a compelling, technology driven product suite while still keeping costs down for banks that lack deep pockets. Looking out to the future, these solutions may be the only way smaller banks will be able to compete as this type of technology becomes prevalent across financial services.
The final phase of Goldstein’s vision is the full stack, core banking systems offering. He noted that this is probably 10 years out, but they plan to go head to head with the incumbents such as Jack Henry and FIS. Core banking technology currently relies on decades old infrastructure. While there has been progress in updating these legacy core banking systems, it is most often a new skin on the same infrastructure or components being built on top of the existing infrastructure. Goldstein wants to change this.
Amount’s long term plans are certainly ambitious and they rely heavily on courting some of the biggest banks. We’ve often talked about the build, buy or partner decision that all banks have to make and Amount is making a bet that most banks, even big banks will see the benefits of the buy or partnership model.
Goldman Sachs has taken the opposite approach with Marcus, so we wanted to get Al Goldstein’s perspective on them. He noted that for big banks such as Goldman Sachs, it isn’t really necessary to build this technology from scratch. In the case of Marcus, they spent hundreds of millions and years of time developing their products from the ground up. Marcus has been a huge success, but it comes at a cost and it will take a long time to recoup that investment. Goldstein’s message to big banks is that you can spend a fraction of that, a lot less time and have certainty that you’re going to have a functional product. Goldstein believes that some financial institutions such as Capital One, Discover and others will always build due to the resources they have, but for most banks outside of the very largest it isn’t realistic.
Almost every large bank has a digital strategy, but many of their plans, particularly as it relates to lending are not yet known. It’s going to be interesting to see what route they ultimately take to upgrade their technology and whether they leverage a SaaS solution such as the one offered by this newly branded division of Avant called Amount.