In a press release Square said the Federal Deposit Insurance Corp. voted to conditionally approve Square’s application and that it received charter approval from Utah Department of Financial Institutions. Square is aiming to launch a bank in 2021 called Square Financial Services. The bank will be supervised by the FDIC and the Utah Department of Financial Institutions.
The main purpose of the bank is to provide loans and deposit products for small businesses. Square said in the release it plans to continue selling loans to third party investors and that it doesn’t expect the bank to have a material impact on its balance sheet this year.
Square is the second fintech to gain a banking charter from the Federal government in recent weeks. Varo Money gained approval by the FDIC. in February 2020. Meanwhile, in the same month LendingClub, a player in online lending, made its first fintech acquisition, spending USD 185 million in cash and stock to acquire Radius Bancorp.
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