Why Lending Club’s Acquisition Of Radius Bank Is A Smart Deal

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Radius Bank gives Lending Club members the opportunity to open a savings account. Any bank could have done that for Lending Club. Radius, however, brings relationships and integration with its banking-as-a-service partners—and not any bank can provide that.

Lending Club banners hang on the facade of the New York Stock Exchange for it's IPO on December 11,2014 in New York. Lending Club started trading on the NYSE at a high $24.75 USD per share. AFP PHOTO/DON EMMERT Lending Club, one of the nation’s first peer-to-peer lenders , announced it plans to acquire Radius Bank, a relatively small Boston-based bank, unknown to most people outside of the industry .

Despite the buzzword-laden proclamation, this acquisition makes a lot of sense for both parties for reasons that go beyond what many observers have reported on.Much of the discussion about the deal has focused on some of the obvious, and shorter-term benefits of the acquisition, including a more stable source of funding and a $40 million reduction in bank fees and funding costs, both of which will help boost the spread Lending Club earns on the loans it keeps on its balance sheet.

Many banks are falling over themselves trying to partner with fintech companies. In its latest survey, Cornerstone Advisors found that 70% of financial institutions consider fintech partnerships to be an important aspect of their 2020 strategies. In the S&P article, a Wedbush Securities analyst says, “LendingClub will be a competitive deposit-gatherer by offering a very attractive value proposition for customers.”

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