SAN FRANCISCO–Another fintech launched in part to challenge traditional financial institutions has been granted a charter to become—a traditional financial institution.
Social Finance, better known as SoFi, has obtained from the Office of the Comptroller preliminary approval of its application to establish a full-service national bank to be known as SoFi Bank, National Association and based in Utah.
“The decision to grant preliminary conditional approval was made with the understanding that the proposed bank will apply for Federal Reserve membership and will obtain deposit insurance from the Federal Deposit Insurance Corporation,” the OCC said.
The OCC announcement came on the same day SoFi launched a new Mastercard that offers cash back that users can use to deposit into their accounts or to pay down personal or student loan balances with the company.
Social Finance was launched as a solution for paying down student debt before expanding into other lending using a model similar to credit unions.
OCC Responds to CRA Question
In its statement, the OCC also responded to concerns raised by one person who had objected that Social Finance had offered an insufficient plan to comply with CRA, saying it does not expect a bank to have a fully developed CRA plan “at this stage.”
“The CRA plan should be finalized after a bank has received preliminary conditional approval from the OCC, but prior to final approval of the charter application,” the OCC stated. “The Bank has demonstrated in its charter application and through discussions with OCC staff that it understands the requirements of the CRA and has begun to develop a CRA plan.”
If the SoFi charter gets final approval, SoFi will be working under an operating agreement with the OCC for its first three years of operation, the letter notes.