Fintechs merge to combine consumer, business loan tech for banks

Two bank technology providers are merging to create a single company that helps banks extend digital loans and open accounts for consumers and small businesses alike.

Chicago-based Amount, a spinoff of the fintech lender Avant, helps banks such as Barclays, Regions Financial and TD Bank digitize account opening, loan originations, credit card applications and more for consumers, as well as offer buy now/pay later financing. It acquired Linear Financial Technologies, in Reston, Virginia, for a purchase price of $175 million in cash and stock, the companies announced Tuesday. Linear supports banks such as Citizens Financial, Fifth Third Bancorp and Huntington Bancshares in digitally originating, onboarding and servicing small-business loans.

The merger is part of a wave of fintechs acquiring other fintechs (or even banks) to diversify their offerings and stand out from the competition. Two recent fintech acquisitions made by Walmart’s startup Hazel and Oportun’s acquisition of Digit are examples.

Amount was drawn to Linear because of the opportunity it gave the company to grow, Adam Hughes, CEO of Amount's CEO, said in an interview.

“We are always looking for ways to be that one-stop-shop platform for banks,” he said. Offering buy now/pay later credit, other consumer products, and small business lending under one roof “makes [Amount] an extremely attractive partner for a bank looking to digitize.”

Sam Graziano, CEO of Linear, echoes the thought. “Banking institutions are looking to simplify their vendor portfolios,” he said. “To provide an institution with a broader set of capabilities strengthens your overall value proposition as a software or technology vendor.”

Linear will rebrand as Amount Small Business in 2022 and Graziano will oversee this division.

In May, Amount announced that it had raised nearly $100 million in a Series D funding round. The company then began to look more seriously at merger and acquisitions opportunities.

Amount has eight financial institution clients; Linear has 12. PNC Financial Services Group is a shared client. Both CEOs say they have had a lot of success partnering with banks of $50 billion of assets or above that are trying to compete with money-center institutions as well as stand out from challenger banks. But they plan to pursue smaller and midsize banks this year as well.