A fintech’s charter pursuit will only be successful when it’s the company’s overriding objective, Mercury Bank CEO and President Jon Auxier said Friday at the Federal Reserve Bank of Philadelphia’s annual fintech conference.
Chartering “affects the operations of the business a ton, as it should,” said Auxier, who joined the fintech Mercury as its chief banking officer last year and will lead Mercury Bank – currently conditionally chartered – when it’s up and running by late 2027.
“When people ask, ‘What is the right stage of life to sort of even consider this if you're a fintech company?’ … My response is, when you can make this the top priority of your company because that's what it will take,” he said.
Preparing for a charter extends to every function within an organization, he said. When a fintech is “at the scale to where you can take that on and treat it with that kind of respect,” they can consider seeking one, he said.
Mercury applied for a national bank charter in December. But it had long been the plan, according to Auxier, who said getting a charter was in Mercury’s original pitch deck nearly 10 years ago. After several years of work, “now is the right moment to go after it,” he said.
This isn’t Auxier’s first rodeo. He helped lead the implementation of SoFi’s national bank charter, which it filed for in 2020 and conditionally received in 2022, at a time when far fewer fintechs were making that leap.
The transition from fintech to chartered bank starts with the right mindset and hiring people who “get it,” Eric Schuppenhauer, an executive vice president at SoFi Bank, said at the conference.
“Go get the folks that have done it before, put them into the seats, and make sure that they're driving the processes forward, because people who don't get it just never get it,” he said.
Doing this at SoFi “paid massive dividends,” he said, “and then the process carries you through, and then it just becomes part of your DNA.”
When SoFi became a bank, it had around 3 million users. Now, SoFi Bank has 15.8 million customers, and it adds about 1 million members per quarter, Schuppenhauer said.
SoFi “needed to be our own bank” to achieve that growth,” he said. With the regulation it’s subject to as a chartered bank,“we can build faster with more certainty.”
“Strong supervision provides strong innovation,” he said.
A charter – and the regulation that comes along with it – is “a feature” said Richard Rosenthal, CEO and president of Square Financial Services. Square got an industrial loan company charter in 2020 and launched its bank the following year. The legwork that went into building controls and “doing it the right way” to become a bank set Square up in a place where it can now move quickly, he said.
“If you have the foundation straight and you're learning from your customer, the speed at which you can move, I think, is really differentiating,” he said.
