Known for its innovations in payments, Square is now officially a bank.
Almost a year after receiving conditional approvalSquare said Monday afternoon that its industrial bank has Square Financial Services put into operation. Square Financial Services has completed the charter approval process with the FDIC and the Utah Department of the Treasury, which means the company is operational.
Headquartered in Salt Lake City, Utah, the bank will begin offering business loans and deposits effective immediately Underwriting and origination of business loans for Square Capital’s existing loan product.
In the past, Square was known for its card reader and POS payment system, which is mostly used by small businesses. However, in recent years it has also started lending to entrepreneurs and small businesses that use its products.
Going forward, Square said its bank would be the “primary financier for Square sellers in the US.”
In a statement, Amrita Ahuja, CFO of Square and Executive Chairman of Square Financial Services, Amrita Ahuja said that fintech will enable fintech to “operate more nimbly” when banking is built into the company.
Square Financial Services will continue to sell loans to third party investors and limit its accounting exposure. The company expects the bank will not have a material impact on its consolidated balance sheet, total revenue, gross profit, or Adjusted EBITDA in 2021.
The bank’s opening “deepens Square’s unique ability to expand access to credit and banking instruments to underserved populations,” the company said.
Lewis Goodwin had been won as CEO of the bank and Brandon Soto as CFO. With today’s announcement, Square also announced the following new dates:
- Sharad Bhasker, Chief Risk Officer
- Samantha Ku, chief operating officer
- Homam Maalouf, Chief Credit Officer
- David Grodsky, Chief Compliance Officer
- Jessica Jiang, Head of Capital Markets and Investor Relations
The trend towards fintechs becoming banks continues. TechCrunch reported on it in February Had Brex applied for a bank charter.
The fast-growing company, which sells a credit card tailored for startups, with Emigrant Bank currently serving as the issuer, announced it had filed an application with the Federal Deposit Insurance Corporation (FDIC) and the Utah Department of Treasury (UDFI) set up Brex Bank.
A number of fintech companies or companies providing fintech services have launched products that are normally offered by banks, including deposit and checking accounts and loan offers. These are often designed to provide capital for customers who may not be able to get affordable finance from traditional banking institutions but may qualify for business-building loans from a provider who knows their business like Square inside out.