US fintech moves into traditional banking

San Francisco-based fintech Social Finance Inc confirmed this week that it has applied for a new bank charter with the U.S. Federal Deposit Insurance Corporation under the name SoFi Bank.

SoFi Bank will continue to operate as a digital-only operation, with no physical branches – however the application marks the first step towards it becoming a more traditional lender.

Originally set up to offer student loan financing to recent high-earning graduates, SoFi has already begun to expand its offering to include mortgages and wealth management. If the application is successful, the industrial bank charter will allow them to also offer services like deposits, checking and savings accounts in order to mature with this millennial customer base.

Given that this would be the first new charter of its kind in eight years, we will be keeping a close eye to see whether SoFi are allowed to move into the mainstream banking system. The development certainly marks an interesting point in the evolution of the fintech ecosystem, as startups progress from major bank disruptors to equals.