Upstart Holdings has announced plans to apply for a national bank charter, submitting applications to both the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) to establish Upstart Bank, N.A.
The firm will also seek approval from the Federal Reserve to become a bank holding company.
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The company said that this move could lower operational and financial costs as well as complexity for itself and its third-party funding partners by bringing its lending activities under a federal regulatory structure.
Annie Delgado, currently chief risk officer at Upstart, has been named as the proposed CEO for the new bank.
The planned national bank would enable Upstart to use deposit funding and directly provide loans to consumers with a unified rate and fee framework.
This, according to the company, may lead to reduced costs and increased lending capacity in certain regions.
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By GlobalDataUpstart chief technology officer and incoming CEO Paul Gu said: “The time is right to launch the first bank built from the ground up on AI.
“Applying for a bank charter is the natural evolution of our business as we’ve grown in size, scale, and product offerings. This will allow us to save borrowers even more time and money, and streamline our partnerships with banks, credit unions, and institutional credit funds.”
Upstart president and chief capital officer Sanjay Datta commented: “Banks, credit unions, and institutional funds will continue to be the capital source for the vast majority of all loans originated on the Upstart platform.
“We are not seeking to compete with our depository partners for local customer deposits and checking accounts.”
Upstart has collaborated with Klaros Group advisors in preparing its application.
Founded in 2012 and headquartered in California, Upstart connects consumers with banks and credit unions through AI-based lending services spanning personal loans, automotive loans, home equity lines of credit, and a soon-to-be-launched revolving credit product.
