Upstart Holdings received conditional regulatory approval to start its own bank, the artificial intelligence marketplace said Thursday.
The Office of the Comptroller of the Currency conditionally approved Upstart’s charter application about four-and-a-half months after it was submitted.
The Burlingame, California-based firm seeks to originate loans nationwide and to accept Federal Deposit Insurance Corp.-insured deposits. However, other financial institutions will continue to purchase Upstart-originated loans, and Upstart Bank is meant to complement already established partnerships, the firm said.
Its applications for deposit insurance, and to the Fed to become a bank holding company, are still pending.
“Upstart Bank will allow us to lower the cost of lending and bring our full product offering to all 50 states, advancing our mission to radically reduce the cost and complexity of credit for all Americans,” said Upstart co-founder and new CEO Paul Gu in a prepared statement.
The bank-hopeful will continue to work with the OCC, the FDIC and the Federal Reserve on the remaining steps needed to become a bank, he said.
Upstart Chief Risk Officer Annie Delgado is the proposed bank’s CEO.
“It's important for the public to understand that efficiency doesn't diminish oversight,” she said in a prepared statement. “A well-run charter process can be both timely and rigorous. We've been challenged extensively throughout the process, and that's exactly what should happen when an institution is seeking the privilege of becoming a national bank."
Upstart, which doesn’t plan to open physical branches, was advised on its application by regulatory consultant Klaros Group.
Michele Alt, co-founder at Klaros, called Upstart’s conditional approval “speedy,” in an emailed statement to Banking Dive. She noted that another recent charter applicant, from the fintech Wise, landed the OCC’s first charter denial since at least 2010.
“This administration is far more welcoming of financial innovators than we've seen for a while,” she said, and “an open door is an invitation, not a guarantee. The application process is rigorous and examiner standards remain very high. We're proud to have worked with Upstart and gratified that their application met with conditional approval, as that remains a very high bar."
The OCC has received and approved many more charter applications under Comptroller Jonathan Gould than prior leadership. While several of those charters are national trust charters, which is a limited charter, Upstart is among those conditionally granted a full charter. Nubank, Mercury and Valt Bank have also received conditional approval, with Erebor Bank landing full approval.
