SoFi gets preliminary approval for US national bank charter

October 28, 2020.
General exterior view of SoFi Stadium, the future home of the Los Angeles Rams Saturday, Aug. 29, 2020, in Inglewood, Calif. (AP Photo/Kyusung Gong)

General exterior view of SoFi Stadium, the future home of the Los Angeles Rams Saturday, Aug. 29, 2020, in Inglewood, Calif. (AP Photo/Kyusung Gong)

Fintech SoFi received a preliminary, conditional approval from the U.S. Office of the regarding the creation of a national bank, the startup said Wednesday, as the company looks to grow its financial capabilities without the need for a bank partner.

The company’s application for “SoFi Bank, National Association” was first filed in July, and the next steps of the process require that application to be reviewed by the Federal Reserve and the Federal Deposit Insurance Corporation.

The pursuit of the national bank charter has the goal of giving “consumers more choices and enhanced value when it comes to a full suite of financial services, which can help even more people achieve financial independence,” said SoFi CEO Anthony Noto.

The banking license would enable SoFi to hold deposits and make loans without the need for a separate banking partner. By being able to act fully independently, the company would be able to better serve its existing customer base, SoFi said.

“SoFi is on a mission to help consumers get their money right all in one app,” Noto added. “This preliminary conditional approval from the OCC is a testament to the mission-driven company we have built, the employees who help it grow, and the over 1.5 million members we currently serve.”

Seeking a bank charter to compete on more equal footing with traditional lenders has grown increasingly popular for fintechs since the OCC lifted a ban on such companies receiving charters in 2018. In July, Varo Bank, a subsidiary of fintech Varo Money, became the first startup to obtain a full-service charter, and others like SoFi are eager to follow.

Separately, SoFi also said Wednesday that it launched its first-ever credit card, aimed at incentivizing “healthy financial habits.” The card, which exists on the Mastercard network, features no annual fee, and provides up to 2% cash back when redeemed into SoFi Money or SoFi Invest accounts, or when used to pay down student loans or personal loans, the company said.

The company said that the card allows for its members to set up automated systems for a “frictionless” redemption process into the account of their choosing. SoFi added that its new card rewards responsible payback patterns by featuring a sustained 1% APR reduction after 12 consecutive on-time card payments, so long as those on-time payments continue.

“Based on feedback from our members, we designed a credit card that helps our members pay down debt or invest in the future with every purchase, while building holistic, healthy money habits,” Noto said. “Through simply using the SoFi Credit Card and following the same daily spending patterns that our members do today, we are making ‘getting your money right’ the most intuitive and convenient choice.”

As SoFi is still in the process of receiving its national bank charter, the SoFi Credit card is issued by the Bank of Missouri.

Applications for the card opened on Oct. 28, and will roll out in phases to existing SoFi members before becoming available to the general public in early 2021, SoFi said.