Upstart Clears Key OCC Hurdle To Launch AI-Powered National Bank
By CU Today Staff —
BURLINGAME, Calif.— Online lending platform Upstart Holdings has received conditional approval from the Office of the Comptroller of the Currency to establish Upstart Bank, N.A., clearing the first major regulatory hurdle in its effort to launch what it says would be the first nationally chartered bank built around artificial intelligence-powered underwriting, BankingDive reported.
Upstart submitted its de novo charter application in March, and the OCC completed its initial review in roughly four-and-a-half months, according to Upstart and Banking Dive.
The proposed branchless bank would be based in Delaware, originate consumer loans nationwide and accept FDIC-insured deposits. Upstart said the charter would reduce operational, regulatory and financial complexity and allow it to offer its full product lineup across all 50 states. The company’s platform currently connects borrowers with more than 100 banks and credit unions and offers personal loans, auto loans, home-equity lines of credit and revolving credit products.
The approval is conditional, however, and Upstart cannot begin operating the bank until it secures FDIC deposit insurance, receives Federal Reserve approval to become a bank holding company and satisfies OCC requirements involving capitalization, governance and operational readiness. Upstart Chief Risk Officer Annie Delgado, the proposed bank CEO, told American Banker the company’s next task is to execute the business plan and demonstrate to regulators that the institution is ready to open.
Upstart said creation of the bank is intended to complement rather than replace its existing relationships with banks, credit unions and institutional investors, which are expected to continue purchasing most loans originated through the platform. The decision comes as the OCC has accelerated consideration of fintech charter applications under Comptroller Jonathan Gould, although regulators have not approved every applicant; the agency granted Upstart conditional approval the same day it rejected Wise’s national trust bank application, Banking Dive reported.
Originally reported by CU Today.