By
Chimamanda U. Martha
May 3rd, 2024
FinTech startup SoFi that is popular for offering online student loan refinancing facilities says that acquiring the national banking charter will help it expand in other financial services areas and streamline its regulatory operations.
Popular FinTech startup SoFi is now looking to make a major move to becoming a national bank. As per the latest Business Insider report, SoFi has applied for a national bank charter with the Office of the Comptroller of the Currency (OCC).
If SoFi secures this license, it will become a national bank operating under federal regulations. Currently, as SoFi expands its operations, it has to deal with all the state regulators separately. Thus, getting national banking would SoFi to streamline its regulatory operations to a great extent.
Besides, the charter will also allow to accept customer deposits and lend money independently without needing any partner banks. The FinTech startup is popular for offering its online student loan refinancing facilities and has recently expanded into mortgages and personal loans.
This is for the second time that SoFi is applying for a national banking charter. Earlier, it withdrew its application after former CEO Mike Cagney left the company after a sexual harassment scandal. Informing his company through an email about the latest development, SoFi current CEO Anthony Noto wrote:
“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.”
Way of SoFi to Becoming National Bank
SoFi is a nine-year-old FinTech startup founded in 2011 and has made a good standing for itself in the financial services market. Its popularity with offering student loan refinancing at a time when there were only a few players has helped it climb up the ranks. Since its inception, SoFi has managed to raise $2.3 billion.
Getting the national bank charter will help SoFi to expand its services in a swift and easy manner. The OCC, the Federal Deposit Insurance Corporation and the Federal Reserve will collectively review SoFi’s application.
“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,” said Noto.
Along with SoFi, there are other FinTech startups as well who have applied for a banking charter. This includes companies like LendinClub, digital payments company Square and many others.