As of 2023, about 19 million households are considered underbanked. Instead of helping these consumers achieve access to the financial services they need, attorneys general from 19 states and the District of Columbia are advocating to prevent consumer access. Consumer protection is about safeguarding consumers using a service without preventing access to the service itself.
Two non-bank financial technology (fintech) companies have sought to acquire banks and are waiting for approval. Enova, began a merger agreement with Grasshopper Bancorp, Inc. Additionally, Opportunity Financial (OppFi) seeks to acquire BNCCORP, Inc and its wholly owned subsidiary BNC National Bank.
In a letter from Illinois Attorney General Kwame Raoul and undersigned by 19 other attorneys general, they warn of the danger of allowing non-bank digital lending platforms, which specialize in extending credit to nonprime borrowers, to acquire banks.
This letter echoes similar calls to end what some have called “rent-a-bank” schemes, an attempt by non-bank lenders to use banks to circumvent state usury laws. As a result, these attorneys general are calling for federal banking regulators to reject the charter.
Preventing online lenders from acquiring banks under suspicion of fraudulent lending, such as rent-a-bank schemes, does not consider the existing regulation that occurs under a national bank charter. These prudential regulations cover capital requirements and examinations, including those under the Community Reinvestment Act, which determine how a bank responds to its customer’s credit needs. If regulation is a concern, blocking the charter isn’t the way to achieve this.
OppFi and Enova specialize in nonprime lending and offer credit reporting to help individuals build credit as they pay off their loans. This is the exact consumer population who most needs access to financial services. Lawmakers should facilitate access, not block it.
Instead of allowing consumers the autonomy to choose lending that works for them, this effort to prevent a national bank charter restricts lending to those in need altogether.
A 2025 report by the FINRA Investor Education Foundation observes that consumers “with incomes of less than $25,000 are over four times as likely as those with incomes of $75,000 or more to have trouble covering an unexpected expense,” noting 46 percent of 18- to 34-year-olds would have trouble coming up with $2,000. Non-bank lending, such as through these digital lending platforms like Enova and OppFi, can meet this need. Non-bank borrowing increased from 12 percent in 2012 to 15 percent in 2024 for short-term loans.
These companies fill a need better than traditional banks. Some have argued that since banks now offer small loans with low interest rates, higher annual percentage rates (APR) loans are filling a gap. While banks do offer small dollar loans, the ability to qualify is constrained and many low-income borrowers would not qualify.
Given that nonprime borrowers may be underbanked or unbanked, these consumers often find nowhere else to turn. Fintech loans can be lifelines during an unexpected life event. OppLoans by OppFi, in the state of Alabama, can charge between 99 and 195 percent APR for loans between $500 and $5,000 for 9 to 18 months. Even with higher APR’s, non-bank loans, like OppLoans, are easier to obtain, without the restrictions required by banks, while still serving the needs of the consumer.
Conversely, traditional payday loans can require up to 400 percent APR to which nonprime borrowers have historically been known to turn because of the difficulty in qualifying for loans through traditional methods. According to the Consumer Financial Protection Bureau (CFPB), about 4.7 percent of households in 2023,used payday loans. Allowing alternatives offers both cost savings and increased access.
Consumers should be able to make their own lending decisions. These attorneys general do not understand that their brand of “consumer protection” is really going to end in consumer exclusion.
Leah Locke is a Policy Analyst with the American Consumer Institute, a nonprofit education and research organization. Follow Leah on X @leahmlocke