Overview of Let's play ... Who Wants To Be a Bank!
This NPR Indicator episode uses a game-show format to explain why fintech companies are racing to become banks, what they gain from a banking charter, and why the approval process is so demanding. The episode centers on Mercury, a fintech company seeking a full U.S. bank license, and contrasts it with Square Financial Services, which already won approval as a “nontraditional” bank tied to a larger tech business.
Why Fintech Companies Want to Become Banks
Fintech firms already handle money in ways that resemble banks, but without a charter they must rely on partner banks for key services. Becoming a bank can unlock:
- FDIC deposit insurance for customer funds up to $250,000
- Access to the Fed discount window for emergency borrowing
- A Fed master account, which enables direct payment processing and interbank access
The episode frames this as a tradeoff: fintechs want the benefits of banking, even if it means more regulation, compliance, and oversight.
Featured Companies and Examples
Mercury
- Mercury serves startups and small businesses with checking accounts, credit cards, and short-term loans.
- It is not currently a bank, but works through bank partners.
- Its CEO, Ahmad Akhund, says Mercury wants a charter so it can offer features like:
- Zelle
- Cashier’s checks
- More complete banking services that customers expect from a real bank
- Mercury filed for a charter and received conditional approval from one regulator.
Square Financial Services
- Square received approval to become a bank in 2021.
- It uses its charter to grow deposits and expand lending and savings products.
- Its bank model is different from Mercury’s because Square is a tech/business platform with banking as a supporting function.
Other Applicants Mentioned
- PayPal
- Klarna
- World Liberty Financial, whose approval drew scrutiny because of ties to the Trump family
How Hard Is It to Become a Bank?
The episode emphasizes that getting a bank charter is a long, bureaucratic, and highly scrutinized process. Michelle Ault of the Kleros Group, who advises fintechs on bank licensing, describes the process as navigating a “perplexing and cumbersome” regulatory maze.
Key Regulatory Points
- Approval can involve multiple agencies, including:
- OCC (Office of the Comptroller of the Currency)
- FDIC
- Federal Reserve
- The OCC has recently become more open to new bank applications, but it is not handing out approvals casually.
- Michelle Ault, a former OCC lawyer, summarizes the agency’s message bluntly:
- “Stop sending us crap.”
The underlying concern is safety: regulators want to make sure new banks can protect customer money and not create systemic risk.
Main Takeaways
- Fintech companies want bank charters for cheaper funding, stronger infrastructure, and broader product offerings.
- A banking charter comes with major privileges, especially FDIC insurance and access to the Federal Reserve system.
- The approval process is still rigorous, despite a friendlier regulatory climate.
- The episode suggests a growing trend: more fintechs are trying to cross the line from “bank-like” to actual bank.