Fintech company Square has officially commenced banking operations, nearly a year after receiving conditional approval to operate a bank.
What Happened: Square, historically known for its card reader and point-of-sale solutions, said Monday that its industrial bank has commenced operations after completing the charter approval process with the Federal Deposit Insurance Corp. and the Utah Department of Financial Institutions.
Known as Square Financial Services, the primary purpose of the Salt Lake City, Utah-based bank will be to offer business loan and deposit products. The bank will initially underwrite and originate business loans for Square Capital’s existing lending product.
Moving forward, Square Financial Services will be the primary provider of financing for Square sellers across the United States.
Square Financial Services will continue to sell loans to third-party investors and limit balance sheet exposure. Square said it does not expect the bank to have a material impact on its consolidated balance sheet, total net revenue, gross profit, or adjusted EBITDA in 2021.
Why It Matters: Square CFO Amrita Ahuja noted that bringing banking capability in-house will enable the company to “operate more nimbly.” Earlier, Square Capital used to issue loans under a partnership with Celtic Bank, another Utah-based industrial bank.
Fintech companies are increasingly looking to get approval to operate banks. Some of these companies already offer products typically offered by banks, including credit products to small businesses, in order to diversify their source of revenue. The products are intended to provide their customers with quick access to funding to meet their business needs.
The vision of Square Co-Founder and CEO Jack Dorsey is for the company to become a collection of multiple businesses under one corporate structure, Bloomberg reported in December last year.
Square announced purchasing 3,318 bitcoins in February over the 4,709 bitcoins purchased in October last year.
This story originally appeared on Benzinga. © 2021 Benzinga.com.
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