Affirm Seeks Nevada Bank Charter
Affirm Holdings, a buy now, pay later company based in San Francisco, has made a significant move by applying for a bank charter in Nevada. The company announced its intentions in a news release, stating that it has submitted applications to the Nevada Financial Institutions Division and the Federal Deposit Insurance Corp. to establish Affirm Bank as a Nevada-chartered industrial loan company.
Details of the Application
While Affirm has been relatively sparse on details regarding the new entity, the company mentioned that starting a bank will allow them to introduce new products and services over time. Affirm’s CEO, Max Levchin, expressed that a banking subsidiary would strengthen and diversify the company’s platform, enabling them to offer honest financial products to a wider audience.
Affirm already offers various services that are typically associated with banks, such as a debit card. The company provides consumers with buy now, pay later financing options, including interest-free installment loans and longer-term, interest-bearing loans. Currently, Affirm operates through partnerships with banks like Cross River Bank and Celtic Bank.
Industry Trends
The move by Affirm to establish a bank in Nevada is part of a larger trend within the buy now, pay later industry. Competitors like Klarna have also ventured into the banking space by offering deposit accounts and debit cards. Similarly, digital payments giant PayPal has applied for a bank charter in Utah, signaling a shift towards non-traditional financial services providers entering the banking sector.
However, opponents of the industrial loan company (ILC) charter have raised concerns about nonbanks exploiting loopholes to bypass Federal Reserve oversight, potentially undermining the separation of banking and commerce. The debate over ILC charters continues to be a contentious issue within the financial industry.
Overall, Affirm’s decision to seek a bank charter in Nevada reflects the company’s strategic vision to expand its offerings and reach a broader customer base. As the financial landscape continues to evolve, it will be interesting to see how Affirm navigates the regulatory environment and shapes the future of the buy now, pay later industry.
Sources: Here
