Alt lender SoFi has reignited its plans for a national banking license

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The leading US alt lender has filed an application with the Office of the Comptroller of the Currency (OCC) for a national charter, which would allow it to roll out banking products nationwide without having to rely on banking partners or be subject to individual state regulations, per Business Insider.

It would also improve SoFi's lending products, as the fintech could accept deposits and lend money on those deposits at competitive rates. SoFi previously applied for an industrial bank license to operate in Utah in 2017 but abandoned the process following an exodus of senior executives. In addition to the OCC, the national bank charter application will need to be approved by the Federal Deposit Insurance Corp (FDIC).

The application is the culmination of SoFi's aggressive product expansion over recent years to meet all consumer financial needs under one roof. Initially focused on student loan refinancing when it launched in 2011, the fintech has since diversified its product suite within and beyond lending through a series of acquisitions, including the purchasing of neobank Zenbanx and payment processor Galileo. It has also partnered with insurtechs and Mastercard to provide additional services.

Against this backdrop, acquiring a license to provide banking services nationwide is the logical next step in SoFi's quest to rebundle finance and remain ahead of other fintech platforms that are also diversifying — Square recently acquired an industrial bank charter to set up a bank in Utah, for example.

Since SoFi's failed 2017 application, US regulators' perception of the fintech space has become more supportive, which we expect will make its latest endeavor more likely to succeed. The OCC is currently appealing a court decision that blocked its Fintech Charter proposal, which would allow fintechs to be licensed as national banks. And last month, Brian Brooks, former chief legal officer of crypto exchange Coinbase, became the head of the OCC and announced plans to level the playing field between banks and fintechs.

Meanwhile, the FDIC has released a new proposal to facilitate fintechs setting up industrial banks — a route that has already been leveraged by Square. These factors suggest a more welcoming regulatory environment for fintechs, removing obstacles in SoFi's path to becoming a licensed bank.

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