Upgrade, the personal loan and credit card service provider, plans to launch a mobile bank account by quarter’s end, on the heels of raising another $40 million of venture funding from Santander InnoVentures yesterday.  

“We’re launching the Upgrade Account, a mobile banking product, where we will be taking deposits along with all the functionalities that you’d expect from a mobile banking app,” said Renaud Laplanche, CEO and co-founder of Upgrade. 

Laplanche, famously, is the founder of LendingClub, now a publicly traded online lender with a market capitalization of $358 million. In 2016, Laplanche resigned from the LendingClub CEO position following an internal investigation that found a violation of the company’s business practices. Laplanche later entered into an agreement with the Securities and Exchange Commission to settle the issue with no admission of responsibility. 

The Upgrade Account will accept deposits, pay recurring bills and offer savings account features later this year. Cross River Bank will be providing the “banking-as-a-service” for the Upgrade Account. 

Upgrade, which after this latest Series D funding round has a valuation of $1 billion, plans on expanding its personal loan and credit card offerings. The fintech is on pace to process $2 billion in personal loans and $1 billion in credit card lines by yearend, Laplanche said. 

“We are seeing a meteoric rise in our credit card consumption and expect it to rise nearly double by the end of next year in terms of users and volume,” Laplanche said. 

The Upgrade card functions like a credit card, but outstanding balances are turned into payment plans that can last one, two, three or five years at a fixed interest rate with fixed monthly payments. The credit card offers an interest rate of 6.9% as compared to a market average of 12%, Laplanche said. Upgrade uses Cross River Bank for its credit originations, while Sutton Bank, based in Attica, Ohio, is the card issuer. 

In a time when neobanks are struggling to turn profits, investor interest is waning and well-known brands like Monzo are seeing their valuations plunge, Upgrade is embracing the neobank tag. With more than 10 million active accounts and total originations exceeding $3 billion, Laplanche is confident Upgrade can scale and attract investors, despite the market uncertainty for digital banking brands.  

“The issue with neobanks is that they struggle monetizing their account holder by offering them credit products,” Laplanche said. “We started off as credit lenders first and have a strong monetizing model, which should help us in offering customers bank accounts for deposits.” 

Also Read: Upgrade bridges the gap between credit cards, installment loans 

The company has posted $100 million in annual revenue in the past 12 months and expects its operation to remain cash-flow positive. 

The new account product will act as an added service to the Upgrade lending model, and, according to Laplanche, attract more users and customers. Laplanche noted that the company plans to add auto financing services and mortgages to its credit platform by yearend, saying they constitute a huge growth opportunity. 

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