Can’t Wait to Become a Bank? Buy One
Major fintech companies can’t wait to become chartered banks, and some don’t have the patience to wait for the paperwork to go through.
Last week, SoFi bought California-based Golden Pacific Bank (GPB) for $22.3 million to speed up its mission to become a nationally chartered bank. SoFi paid for the cash purchase and will apply to take ownership of the bank’s OCC charter- swapping out their pending application to become a bank outright.
“By pursuing a national bank charter, we will be able to help even more people get their money right,” CEO Anthony Noto said. “We are thrilled to have found a partner in Golden Pacific Bank to both accelerate our pursuit to establish a national bank subsidiary, as well as begin to expand our offerings in SoFi’s financial products.”
SoFi, once an anti-bank fintech was preliminarily approved by the OCC for a charter earlier this year.
A year ago Varo started the buy/apply banking trend after receiving approval for an FDIC Bank Charter. LendingClub, a former Peer-to-Peer lender, soon after joined the club by picking up Radius Bank. Square just two weeks ago became a bank, announcing it received an industrial banking license.
Other lesser-known fintechs have been moving toward chartered banking as well. In February, Brex, an online banking fintech, began the process of opening a Utah Based industrial bank as well. Jiko, a small online banking and payments firm, bought Mid-Central National Bank in Minnesota.
There are other up-and-coming fintech banks, like Chime and even blockchain banking contenders, like Figure Technologies. Figure is a home equity lender that is currently applying for a banking charter without the normal FDIC-insured deposits but instead deposits over $250,000 that would act as uninsured high yield loans.
If Sofi’s plan works, the firm aims to contribute $750 million toward digital lending while maintaining GPB’s community banks’ business and branches. The deal should be completed before the end of 2021, and GPB will operate as a division of SoFi Bank.Last modified: March 15, 2021
Kevin Travers was a Reporter at deBanked.