SmartBiz Is First Fintech to Become Bank Under Donald Trump

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(gudangmovies21) -- SmartBiz became the first financial-technology firm to receive regulatory approval to be a bank since President Donald Trump took office in January, a regulatory signal that other fintechs could also get the green light to cement their footholds in the financial-services industry.

The Office of the Comptroller of the Currency and the Federal Reserve Bank of Chicago approved SmartBiz’s acquisition of Northbrook, Illinois-based Centrust Bank NA, SmartBiz said in a statement Monday. It’s the first time a fintech company has become a bank since 2021, during Trump’s first term as president.

It’s been rare for a fintech to win regulatory approval to become a bank, with none receiving approval under President Joe Biden and only a few successfully obtaining charters before that. LendingClub Corp. and SoFi Technologies Inc. are among the few. The process of becoming a bank, either by buying an existing institution or applying for a new charter, can be time-consuming and expensive, but the benefits are alluring, including low-cost funding via insured deposits and closer ties with regulators to get ahead of any issues.

“The main reason we’re doing this is ultimately to serve small businesses really well that aren’t being that well-served today by banks across the country,” SmartBiz Chief Executive Officer Evan Singer said in an interview. “There’s a huge opportunity to do that.”

The acting comptroller of the currency, Rodney Hood, stated afterward. statement that a “safe, sound and fair fintech business model has a place in today’s federal banking system.”

A representative for the Federal Reserve didn’t immediately respond to requests for comment on the approval.

San Francisco-based SmartBiz specializes in small-business lending, an offering that boomed during the pandemic, Singer said. In 2021 alone, 5.4 million new business applications were filed In the U.S., as stated by the US Chamber of Commerce.

The singer mentioned that he began exploring a bank acquisition approximately three years back. In October 2023, he submitted an official request to the OCC, followed by another submission to the Federal Reserve early last year. To lead this effort on the SmartBiz board, Singer enlisted seasoned professionals—Tim Bogan and Joe Schenone—who had previously assisted LendingClub in acquiring a bank; they have since taken up roles as key advisors at SmartBiz, with Schenone currently serving as CFO.

Michele Alt, a partner at Klaros Group and an advisor to SmartBiz during this process, suggested that additional approvals may be forthcoming under the Trump administration.

“She stated that after four years of regulators lifting the gate beyond the moat, the gate has now been lowered once more.”

(Updates with comment from OCC in fifth paragraph)

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