• Subscribe
  • Contact Us
  • About LendIt Fintech News
  • Home
  • Menu Item
  • Menu Item
  • Menu Item
  • Menu Item

Lend Academy

LendIt Fintech News: Daily Coverage of Fintech & Online Lending


  • Editorial
  • Daily News
  • Podcast
  • Investor Forum
  • Events

SoFi Applies for a National Bank Charter

The leading fintech has filed a de novo bank application with the OCC this week

July 9, 2020 By Peter Renton 1 Comment

Views: 1,175

SoFi CEO Anthony Noto speaking at LendIt Fintech USA

SoFi has become the latest fintech to apply for a full national bank charter. They filed a de novo bank application with the OCC on Wednesday.

You may remember that back in 2017, when co-founder Mike Cagney was still CEO, that SoFi applied for an industrial loan charter. They pulled the plug on that application a few months later after Cagney resigned from the company.

The interesting difference is that SoFi has decided to pursue a full bank charter this time rather than the ILC as they did before and as fellow fintech Square has done. Of course, it could be that ILCs are somewhat controversial, with many banks, large and small, opposing their very existence.

I reached out to SoFi today and they responded back with this official statement:

We can confirm that SoFi has formally submitted an application to the OCC for a proposed de novo national bank, SoFi Bank, National Association. We look forward to working closely with the Office of the Comptroller of the Currency, as well as with the Fed and FDIC, as they review our application.

CEO Anthony Noto had this to say:

SoFi is on a mission to help our members achieve financial independence to realize their ambitions. 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.

SoFi will no doubt be leaning on the experience of Varo, the digital bank that is three years ahead of SoFi on this journey, having filed with the OCC in the summer of 2017. They are still waiting for final approval from the OCC (the FDIC has given their approval) . Hopefully, SoFi will not have to wait three years before getting their approval as they should be able to follow a similar playbook. The other fintech that has applied for a full banking charter is Robinhood, a company that has been in the news for many of the wrong reasons lately. LendingClub decided to go down the acquisition route as they announced in February that they intend to acquire Radius Bank.

One advantage that SoFi has now is that Brian Brooks, the new Acting head of the OCC, is intimately familiar with fintech, having previously been on the board of Avant. FDIC Chairman Jelena McWilliams is also very innovation minded, so for the first time the heads of both banking regulators are very reform minded and SoFi should receive a more receptive audience for their ideas.

For any non-bank the big advantage of getting a banking license is that it should lead to a cheaper cost of capital. Today, SoFi has to get bank funding lines to finance their loans but a bank charter will allow them to offer deposits directly. Right now, anyone can open a SoFi Money account which accepts deposits but that account is officially a cash management account with deposits being held with SoFi’s partner banks. This obviously has a cost involved and SoFi cannot lend this capital directly.

Another benefit is lending licenses. SoFi does not work with a partner bank to originate loans, instead it has obtained consumer and mortgage lending licenses separately in every state where it is required. National banks can lend with just one license simplifying the licensing process. Now, there is obviously a much bigger compliance burden overall when becoming a national bank.

The entire industry will be watching SoFi’s progress here with great interest. It is clear that fintech leaders are moving towards offering more bank-like features and many will likely end up becoming banks themselves (or be acquired by a bank). By applying to become a bank SoFi is cementing their position as a fintech leader and one that will continue to blaze their own trail as fintech goes mainstream.

Filed Under: Fintech Tagged With: Anthony Noto, banking license, FDIC, OCC, SoFi, Varo

Views: 1,175

Trackbacks

  1. MonJa Blog | Digital Banking | Digital Lending | monjaco.com says:
    August 1, 2020 at 7:58 pm

    […] SoFi Applies for a Full Bank Charter with OCC (Lend […]

    Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Investor Intelligence

Peter Renton's Returns

Investor Forum

Lending Club Review

Prosper Review

Investor Resources

Most Popular Editorials

The Pure Marketplace Lending Model is Dead, the Hybrid Takes its Place

The 2018 Lending Club and Prosper Tax Guide

My Returns at Lending Club and Prosper

Map of Available States for Lending Club and Prosper Investors

Banks and Marketplace Lending Platforms: Ideal Partners?

Subscribe to the Podcast

Subscribe to the Lend Academy Podcast on iTunes
Subscribe to the Lend Academy Podcast
List of Podcast Episodes

Archives

Follow @LendAcademy Follow @LendIt

ABOUT LENDIT FINTECH NEWS

LendIt Fintech News, Powered by Lend Academy, has been bringing you all the news and information about fintech and online lending since 2010 when it was founded by Peter Renton. We not only have the industry’s most active news site, but also the largest investor forum and the first and most popular podcast.

We are a team of fintech enthusiasts who have been covering the industry for many years. With a deep knowledge of online lending, digital banking, blockchain, artificial intelligence and more our team covers the daily news and writes in-depth editorials.

Recent Editorials

  • Top 10 Fintech News Stories for the Week Ending April 17, 2021
  • Podcast 294: Rhett Roberts of LoanPro
  • PitchIt Podcast Episode 2: Billie Simmons of Daylight
  • LendIt Fintech USA is Just Two Weeks Away
  • Top 10 Fintech News Stories for the Week Ending April 10, 2021

Copyright © 2021 · Metro Pro Theme on Genesis Framework · WordPress · Log in