SoFi Becomes First Major Fintech to Obtain Bank Charter and Take Deposits
Fintech companies like Upstart, Affirm, and SoFi lend to similar customer bases but differ in how they fund their loans. Most fintechs rely on third-party banks for funding due to the lack of a federal bank charter, which limits profitability by requiring fees or interest income sharing with partners. A bank charter allows firms to take deposits directly from customers, enabling internal loan funding and higher profit margins. SoFi Technologies became one of the first major fintechs to obtain a bank charter in January 2022 through its acquisition of Golden Pacific Bank. This milestone allowed SoFi to begin taking customer deposits and fund loans internally without relying on third-party banks. Since then, SoFi has grown significantly, with deposits rising from $1.2 billion in Q1 2022 to $45.5 billion by Q2 2026. Despite its strong financial growth—moving from a net loss of $110 million four years ago to a profit of $156 million in the latest quarter—SoFi's stock has declined year-to-date due to high valuations and short-seller scrutiny. Meanwhile, Upstart and Affirm remain without bank charters and continue relying on external funding sources for their lending operations.
Topics: bank charter deposits fintech lending regulatory changes