Known for its innovations in the payments industry, Square is now officially a bank.
Almost a year after receiving conditional approval, Square said Monday afternoon that its industrial bank, Square Financial Services, had operations started. Square Financial Services has completed the charter approval process with the FDIC and the Utah Department of Financial Institutions, which means it’s ready to go.
The bank, headquartered in Salt Lake City, Utah, will offer business loan and deposit products, starting with underwriting and providing business loans for Square Capital’s existing lending product.
Historically, Square has been known for its card reader and point-of-sale payment system, widely used by small businesses – but it has also started to facilitate credit for entrepreneurs and small businesses who use its products in recent years. years.
Going forward, Square said its bank will be the “primary provider of funding for Square sellers across the United States.”
In a statement, Square CFO and Executive Chairman of Square Financial Services, Amrita Ahuja, said integrating in-house banking capacity would allow fintech to “run faster.”
Square Financial Services will continue to sell loans to third party investors and limit balance sheet exposure. The company said it did not expect the bank to have a significant impact on its consolidated balance sheet, total net revenue, gross margin or adjusted EBITDA in 2021.
The opening of the bank “strengthens Square’s unique ability to expand access to loans and banking tools to underserved populations,” the company said.
Lewis Goodwin had been asked for the post of CEO of the bank and Brandon Soto its chief financial officer. With today’s announcement, Square also announced the following new appointments:
- Sharad Bhasker, Chief Risk Officer
- Samantha Ku, Chief Operating Officer
- Homam Maalouf, director of credit
- David Grodsky, Chief Compliance Officer
- Jessica Jiang, Head of Financial Markets and Investor Relations
The trend for fintechs to become banks continues. In February, TechCrunch reported that Brex had requested a banking charter.
The fast-growing company, which sells a credit card suitable for startups with Emigrant Bank currently acting as the issuer, said it has submitted an application to the Federal Deposit Insurance Corporation (FDIC) and the Department of Institutions Utah Financial Services (UDFI) to create the Brex Bank.
A number of fintech companies, or those offering fintech services, have created products typically offered by banks, including deposit and checking accounts as well as credit offers. Often these are designed to provide capital to clients who might not be able to obtain financing on favorable terms from traditional banking institutions, but who might qualify for start-up loans from from a vendor who knows their business, like Square, inside and out.