Rent-Splitting App Flex Wants to Become an FDIC-Insured Bank

Flex Rent has helped more than 3 million consumers split their rent payments since it launched in 2020. Now the company behind it wants to become a chartered bank.

Flexible Finance Inc., the company behind Flex Rent and also known as Flex, has applied to the Utah Department of Financial Institutions for a bank charter and to the Federal Deposit Insurance Corporation (FDIC) for deposit insurance.

If the applications are approved, Flex Bank would become a Utah state-chartered industrial bank and an FDIC-insured subsidiary of Flex.

Flex products are currently provided by Lead Bank or Column N.A. But having its own bank would allow Flex to directly issue its core credit products, including Flex Rent, and offer customers access to FDIC-insured deposit accounts.Flex Bank would issue Flex’s core credit products such as Flex Rent directly and provide Flex customers with access to FDIC-insured deposit accounts.

Why Flex Wants Its Banking Charter

Flex Co-Founder and CEO Shragie Lichtenstein said the charter would give the company an FDIC-insured bank to support its products while bringing the bank under state and federal regulatory oversight.

“Rent is the single biggest bill in most people’s lives, and it’s often the one least adapted to how they’re actually paid,” Lichtenstein said.

If approved, Flex Bank would be headquartered in the Salt Lake City area and serve customers nationwide through digital-only channels.

Flex Says It Helps Renters Avoid Late Fees

Flex has reportedly processed more than $40 billion in rent payments for more than 3.2 million renters nationwide since the company launched in 2019. The company says it has helped those renters avoid more than $780 million in late fees.

According to Flex, renters who use the service incur fewer late fees and penalties, undergo fewer credit inquiries, experience fewer serious delinquencies, and rely less on payday loans and other high-cost forms of credit.

“Rent is the single biggest bill in most people’s lives, and it’s often the one least adapted to how they’re actually paid.” — Shragie Lichtenstein, Co-Founder and CEO of Flex

A study commissioned by Flex also found benefits for landlords and property managers. Properties offering Flex Rent were associated with higher on-time payment rates, fewer short-term delinquencies, lower vacancy, longer resident tenure, and improved net operating income.

Flex isn’t the only fintech to pursue a banking charter in recent months.

Buy Now, Pay Later provider Klarna filed for one earlier this summer, also in Utah. The state offers industrial bank charters that can allow financial services companies to operate their own banks without becoming traditional bank holding companies.

Rent Splitting Comes With Its Own Costs

Flex Rent is only available to Flex members, who may pay a monthly membership fee of up to $5.99. Payments also come with a 0.5% processing fee and a split fee of up to 3% on the second payment, depending on how much the renter borrows.

Renters who pay Flex with a credit card may be charged an additional 2.5% surcharge, and other third-party fees may apply.

Flex does not allow customers to stack Flex Rent loans, and the company does not charge late fees or compound interest. It also reports on-time rent payments to TransUnion, which may help renters build their credit histories.

Rent isn’t the only expense Flex customers can split. The company also allows users to break mortgage payments and everyday bills, including car payments, utilities, and phone bills, into smaller payments.