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Former SoFi CEO Mike Cagney’s Fintech Startup Pursues Bank Charter

BNN Bloomberg | Adam Tempkin | Nov 6, 2020

camk 300x196 - Former SoFi CEO Mike Cagney’s Fintech Startup Pursues Bank Charter Mike Cagney’s blockchain lending startup Figure Technologies Inc. became the latest of a handful of fintech firms to apply for a bank charter in a push to expand its product lines to consumers with less access to traditional credit.

The firm is seeking a national bank charter granted by the Office of the Comptroller of the Currency. The designation would reduce the company’s need for a myriad of state-by-state licenses, allowing it to more easily lend to consumers, Cagney, the former chief executive of Social Finance Inc., commonly known as SoFi, said in an telephone interview.

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If Friday’s application is granted, the company would be able to market a wider set of consumer products nationwide while focusing its compliance efforts on the requirements of a single regulator.

“It will drive down the cost of delivering our product to those underserved by the financial sector,” Cagney said. “It will allow the consumer to build a credit history and become a mainstream prime borrower.”

A representative for the OCC declined to comment.

Figure, the latest fintech non-bank lender to seek a national bank charter, has plans to securitize some consumer debt generated from the effort. While the OCC has recently become friendlier to fintech companies, bank trade groups and others have pushed back because they fear that the Amazons and Googles of the world will encroach on traditional banking.

The company plans on piloting a small-dollar installment-loan product in January through either credit lines or point-of-sale offerings built on blockchain, Cagney said. The loans will be fed through a master trust, and potentially back revolving asset-backed securities.

Figure joins the likes of Square Inc. and Varo Money Inc. and other fintech firms pursuing traditional banking charters. Other firms such as LendingClub Corp. and Jiko have acquired charters through bank acquisitions.

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Entry into the national banking industry by fintechs and other challengers has met pushback. The New York Department of Financial Services pursued legal action against the Office of the Comptroller of the Currency for offering special-purpose charters for non-depository fintechs.

“There could be some pushback, as the industry is somewhat mixed on it,” Cagney said, noting that the fear is that companies such as Google would enter into traditional banking. “But our idea is that we generate consistent assets at a lower cost, which would be good for the broader banking system.”


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