Upstart: Lending’s oldest truism is not true for us

“At AI Day last year, I told you that lending’s oldest truism assumes the technology stays constant: that you can’t have growth, strong credit performance, and profitability all at once,” said Upstart CEO Paul Gu during the Q2 earnings call. “That’s not the case for Upstart. This quarter, we delivered all three: we grew, our credit performed, and we expanded margins. We didn’t have to trade one for another, and that combination — not any single metric in isolation — is the clearest evidence that our AI advantage is real and compounding.”

Upstart offers personal loans, auto loans, and home loans. The company said that it would double down in the second half of the year with the understanding that its “core personal loan” business is its “superpower” with “unusually strong margins.”

Upstart also received conditional approved by the OCC to establish its own bank. The company said that “the charter would allow Upstart to reduce operational, regulatory, and financial complexity for itself as well as for its third-party capital partners.”

Upstart is one of many fintechs in the process of applying for a bank charter or acquiring a chartered bank.