SoFi Becomes First Major Fintech With Bank Charter, Gaining Deposit Advantage Over Upstart and Affirm
Fintech companies like SoFi Technologies (SOFI), Upstart (UPST), and Affirm (AFRM) typically rely on third-party banks to fund their loans due to the lack of bank charters. This arrangement incurs fees that reduce profit margins. A federal bank charter allows fintechs to take deposits, which can be used internally for lending without relying on external funding sources or paying intermediary fees. SoFi was one of the first major fintech companies to obtain a bank charter in January 2022 by acquiring Golden Pacific Bank. This move enabled SoFi to start taking deposits and fund its own loans, significantly altering its business model. Despite initial challenges due to rising inflation and interest rates at that time, SoFi has since grown rapidly, accumulating $45.5 billion in deposits as of Q2 2026 compared to just $1.2 billion when it first obtained the charter. The ability to take deposits gives fintechs like SoFi a competitive edge by allowing them to offer better rates and reduce overhead costs. This development could reshape the banking industry, especially with more fintech companies now applying for bank charters as regulatory barriers ease.
Topics: bank charter deposits fintech lending regulation