The U.S. banking charter is becoming increasingly attractive to fintech companies.
Revolut has just cleared another major hurdle, receiving conditional approval from the Office of the Comptroller of the Currency (OCC) for a U.S. national bank charter. That doesn’t mean Revolut can simply start operating as a bank tomorrow. The approval is conditional, and the company still has a number of regulatory steps to complete before it can launch.
It will also need separate supervisory sign-off for four activities: retail foreign-exchange trading, FX forward contracts, merchant acquiring and correspondent banking for foreign banks.
That’s important because these aren’t exactly side projects for Revolut.
Foreign exchange and payments are at the heart of what the company does. So the regulatory process isn’t just about whether Revolut can become a bank. It’s also about whether regulators are comfortable with how it plans to operate some of its most important products in the U.S.
And that tells us something about where fintech is heading. For years, fintech companies have been able to build financial products without actually being banks. The model was relatively simple. A fintech built the technology, owned the customer relationship and designed the experience, while a licensed bank provided the regulated infrastructure behind the scenes. It was a good model for moving quickly.
But it came with a trade-off: the fintech didn’t fully control the banking infrastructure it was building on. Now some of the biggest companies in the sector are starting to ask whether that trade-off still makes sense. What happens when the bank itself becomes part of the product?
Chime Takes a Different Route
Chime is taking a different approach. Rather than applying for a new charter, Chime has agreed to acquire Stride Bank, one of its existing banking partners. The deal still needs regulatory approval, but if completed, it would give Chime much more control over the banking infrastructure behind its business.
The reason is fairly obvious. As a fintech gets bigger, its relationship with its banking partners becomes increasingly important. Owning that infrastructure can mean more control over the products it offers, how they are developed and, potentially, the economics behind them.
But there’s a catch. More control also means more responsibility.
Once a fintech moves closer to becoming a bank, it takes on more of the regulatory burden that comes with it. Capital, governance, compliance, risk management, consumer protection and operational resilience all become much more important.
The things that could previously sit with a banking partner are now much harder to leave to someone else. And this isn’t just happening in consumer fintech.
Checkout.com Wants More Control Too
Checkout.com is another interesting example.
The payments company has been growing rapidly in the U.S., and it has also been moving further into the infrastructure behind its payments business.
Its approach is different again. Rather than becoming a traditional consumer bank, Checkout.com has received approval for a specialised banking charter in Georgia that will allow it to operate as a merchant acquirer in the U.S. The underlying idea is similar. The bigger the payments business becomes, the more valuable control over the infrastructure underneath it can be.
And that is perhaps the bigger story here.
- Revolut is pursuing a national bank charter.
- Chime is buying an existing bank.
- Checkout.com is getting a specialised charter for payments.
Three different approaches, but all moving in broadly the same direction: more control over the regulated infrastructure that sits underneath the fintech product.
The Next Phase of fintech
This feels like another shift in the fintech model. The first wave was largely about building a better interface for financial services.
Then came the wave of companies building new products on top of existing banking infrastructure.
Now some of the biggest fintechs are starting to look underneath that infrastructure itself.
And there is a good reason for it.
At a certain point, relying on a third-party bank can become a constraint. The more customers you have, the more products you offer and the more money moving through your platform, the more important that underlying infrastructure becomes.
Owning more of it gives you more control. But it also means taking on more of the responsibility. That’s the interesting part of this shift. Fintech companies spent years trying to separate themselves from the complexity of traditional banking. Now, as they get bigger, some are voluntarily taking that complexity back on.
The irony is that fintech started by trying to make banking simpler.
Now some of the biggest fintechs are discovering that to control the product, they may have to become much more like the banks they set out to disrupt.
That could be the next phase of fintech.
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