Financial technology company SoFi applied for a national bank charter with the U.S. Office of the Comptroller of the Currency on Thursday, after an earlier attempt in 2017 for an industrial loan charter was withdrawn amid controversy involving former executives.
The fintech confirmed to Fastinform that it formally submitted an application to the OCC for a proposed de novo national bank, to be named SoFi Bank, National Association. A bank is classified as de novo if it has been in operation for less than five years.
Formally named Social Finance, SoFi was founded in 2011 and primarily deals in refinancing student loans, mortgages, personal loans and investment services. In 2015 it was the first US-based fintech to receive a $1 billion funding round.
"SoFi is on a mission to help our members achieve financial independence to realize their ambitions,” said Anthony Noto, CEO of SoFi. “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.”
In its second attempt for permission to operate as a bank, SoFi requested a national charter. To apply for a de novo national bank charter, institutions must submit a business plan with three years of financial projections, a mission statement and policies for loans and investments, according to the U.S. Federal Deposit Insurance Corporation.
"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," SoFi said.
As a national bank, SoFi would have the capability to accept deposits and lend money without relying on traditional bank partners. It would also eliminate the hassle of complying with 50 different state regulations, and allow SoFi to operate under one group of federal regulations.
In 2017, SoFi first applied for an industrial loan charter with the Federal Deposit Insurance Corporation under the name SoFi Bank. It intended to operate only online, without opening physical branches or ATMs. The 2017 application said the company wanted to provide its customers with FDIC-insured accounts and credit card products.
However, shortly after the application was filed, SoFi was mired in controversy over the company’s then-CEO, who resigned amid allegations of sexual harassment. Other senior executives departed, and the company withdrew its application following the scandal, according to American Banker.
SoFi will need approval from the OCC, as well as the FDIC and the Fed before it can operate as a bank. The OCC formally began accepting national bank charter applications from fintechs in 2018.
The company said the shift into banking would encourage innovation and give customers and businesses more financial choice
"The federal banking system must continue to evolve and embrace innovation to meet the changing customer needs and serve as a source of strength for the nation's economy," said Comptroller of the Currency Joseph Otting.