Upstart Holdings filed an application with the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) to establish an insured national bank, Upstart Bank, N.A.
Upstart, a leading artificial intelligence (AI) lending marketplace, will also apply to the Federal Reserve for approval to become a bank holding company.
“The time is right to launch the first bank built from the ground up on AI,” Paul Gu, Upstart’s chief technology officer and incoming CEO, said. “Applying for a bank charter is the natural evolution of our business as we’ve grown in size, scale, and product offerings. This will allow us to save borrowers even more time and money, and streamline our partnerships with banks, credit unions, and institutional credit funds.”
The bank charter will allow fintech to reduce operational, regulatory, and financial costs and complexity for itself as well as for its third-party capital sources. Annie Delgado, currently Upstart’s chief risk officer, is the proposed CEO of Upstart Bank, N.A.
“AI-based lending is the future of credit,” Delgado said. “As more and more lenders are looking to adopt AI tools for these critical functions, engagement with regulators is critical. If approved, we look forward to working directly with the OCC, FDIC and the Fed to set the standard for modern AI model deployment within the banking system.”
With a national bank charter, Upstart Bank will be able to access deposit funding and lend to consumers directly via a single, consistent rate and fee structure. This could translate to lower costs and greater lending opportunities in certain jurisdictions.
“Banks, credit unions, and institutional funds will continue to be the capital source for the vast majority of all loans originated on the Upstart platform,” Sanjay Datta, president and chief capital officer. At Upstart, said. “We are not seeking to compete with our depository partners for local customer deposits and checking accounts.”
Klaros Group helped Upstart prepare the application.