SoFi Applies for a US National Banking Charter

American flag,  united states of America

SoFi, an online student lender, has filed for a national bank charter with the Office of the Comptroller of the Currency, taking a step towards becoming a bank, Business Insider reported on Thursday.

If approved, this will enable the fintech company to directly offer loans to its customers without the involvement of any partner banks.

“We firmly believe that by pursuing a national bank charter, we will be able to help even more people get their money right with enhanced value and more products and services, ” Anthony Noto, chief executive at SoFi, said.

This the second attempt of the fintech to gain a banking license as it also applied for the same in 2017, but later withdrew following the departure of its senior executives including its former CEO Mike Cagney for allegations of sexual harassment.

The recent application to form “SoFi Bank, National Association” is being reviewed by the OCC, the Federal Reserve, and the Federal Deposit Insurance Corporation (FDIC).

Fintechs are taking a direct shot at banking

SoFi is one of the most well-funded Silicon Valley fintech to date, raising $2.3 billion since its inception. The company made its name by offering cheap refinancing options to college students during the Great Recession of 2008 and 2009 when the big banks were cautious in any risky financial step.

Apart from its core offerings, SoFi was also jumped into other areas of business including crypto trading. The company also bought Galileo, a digital payments company, earlier this year, for a $1.2 billion cash-and-stock deal.

The startup also expanded into Asia after the acquisition of the parent firm of Hong Kong-based online brokerage 8 Securities.

Meanwhile, SoFi is not the only US fintech to attempt for a banking license. LendingClub, anther online lending platform, gained the same license with a $185 million acquisition deal of Radius Bancorp. Twitter CEO’s fintech startup Square also received approval from FDIC for launching a bank charter.

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