- Personal finance startup SoFi has filed an application for a national bank charter, Business Insider has learned.
- Obtaining a national bank charter could allow SoFi to have more competitive pricing and offer more products, specifically regarding deposits.
- National bank charters have been hard to come by for fintechs. Varo Money is the only startup to receive preliminary approval for one in recent years.
- Visit Business Insider’s homepage for more stories.
Another fintech is making a push to receive regulatory approval to operate as a national bank.
Personal finance startup SoFi has filed an application for a national bank charter with the Office of the Comptroller of the Currency (OCC), Business Insider has learned.
Approval would allow the fintech to lend money and accept deposits on its own. Currently, SoFi works with partner banks to offer those capabilities to customers.
Anthony Noto, SoFi’s CEO, highlighted three benefits of a national charter when announcing the application to employees in a company-wide email seen by Business Insider.
Following approval, SoFi would be able to operate under a unified set of national regulations instead of managing 50 different state regulations. The fintech would have more flexibility with the products it could offer, specifically relating to deposits. SoFi would also be able to offer more competitive pricing on interest rates for loans, checking and savings.
“We thought long and hard about embarking on this path, and are proud of what we have accomplished in the last 2+ years to position ourselves to take this next critical strategic step in our development,” the note read. “We have the right infrastructure and the right capabilities in place to make this happen.”
A spokesperson for SoFi confirmed the application has been filed.
Banking charters have been an appealing prize for fintechs
It’s not the first time SoFi has gone for a banking charter.
Under cofounder and former CEO Mike Cagney, SoFi applied for a bank license in Utah and with the US Federal Deposit Insurance Corp in June 2017. However, the startup withdrew its application in October of that year following the departure of several senior executives, including Cagney, who resigned amid sexual harassment allegations from two former SoFi employees.
In March, Square received conditional approval from the FDIC Board for its Industrial Loan Company bank charter, which is geared toward non-traditional financial firms.
National banking charters, however, have been much harder to come by.
In April 2019, Robinhood applied for one, but withdraw the application less than a year later.
And while others have considered it, Varo Money is the only modern fintech to have received preliminary approval from the OCC.
In February, Varo nabbed approval for FDIC insurance, the final step before achieving a full bank charter approval. It’s been a three-year journey for the startup, which initially applied in 2017.
SoFi’s application comes on the heels of a major deal for the fintech. In April, SoFi announced plans to acquire payments startup Galileo, which powers other fintechs like Robinhood, Chime, and Monzo, in a deal worth $1.2 billion.
The following month Business Insider reported that SoFi cut 7% of its staff based on performance reviews.