Upstart Receives Conditional Approval for De Novo Bank Charter – Finovate

• The OCC conditionally approved Upstart to establish a branchless, full-service national bank just four months after the company applied.
• The charter would let Upstart originate loans nationwide, accept FDIC-insured deposits, and reduce its reliance on third-party banking partners while preserving its existing loan-purchaser network.
• The approval reflects growing fintech interest in bank charters, but the OCC’s rejection of Wise’s application shows that regulatory approval is still far from guaranteed.

Lending marketplace Upstart has been granted conditional approval from the US Office of the Comptroller of the Currency (OCC) to establish Upstart Bank. The news comes four months after Upstart submitted its initial application.

Upstart is pursuing a de novo bank charter, which is a newly formed, full-service national bank and is accepting the accompanying bank holding company oversight. The charter will allow Upstart to reduce operational complexity as well as reliance on third party partners.

“Conditional approval from the OCC is an important milestone for Upstart Bank and we will continue to work with the OCC, the FDIC, and the Federal Reserve on the remaining steps,” said Upstart Co-Founder and CEO Paul Gu. “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.”

While the newly formed bank will be headquartered in Delaware, it will not have any physical branches. The new charter will allow it to originate loans to all US consumers and accept FDIC insured deposits. Upstart emphasized that the new bank is intended to complement its existing funding model instead of replace it. Banks, credit unions, and institutional investors are expected to continue purchasing the vast majority of loans originated on the Upstart platform.

California-based Upstart was founded in 2012 and leverages AI to price credit and automate the borrowing process. The company closed its IPO in 2020 and is currently traded on the NASDAQ under the ticker UPST with a market capitalization of $2.67 billion.

Upstart’s conditional approval comes as bank charter activity is accelerating under a more fintech-friendly regulatory environment. At the same time, regulators are demonstrating that approvals are far from automatic. Just one day after Upstart’s announcement, the OCC rejected Wise’s application for a national trust bank charter, underscoring that applicants must still satisfy supervisory and compliance expectations.

Photo by Erik Mclean

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