Dive Brief:
- Buy now, pay later player Affirm Holdings is trying to start a bank in Nevada, and has applied for a charter in that state to do so.
- The San Francisco-based company said Friday that it had submitted applications to the Nevada Financial Institutions Division and the Federal Deposit Insurance Corporation to start Affirm Bank.
- The entity will be a “Nevada-chartered industrial loan company,” a news release from Affirm said Friday, but was sparse on details.
Dive Insight:
Affirm is one of many fintechs that have increasingly sought to offer services that banks have traditionally sold in the U.S.
Starting a bank will let Affirm “spur opportunities to introduce new products and services over time,” the release said, although it did not elaborate.
An Affirm spokesperson declined to provide further details on the products and services Affirm will offer through the bank, or to provide more information on the timing of the application’s approval.
“A banking subsidiary would strengthen and diversify Affirm’s platform, and help us bring honest financial products to more people,” Max Levchin, Founder and CEO of Affirm, said in the news release.
Affirm already offers some services typically associated with banks, such as a debit card. The buy now, pay later firm provides consumers the BNPL industry’s signature pay-in-four financing — an interest-free installment loan repaid over a few weeks — and they can also take out longer-term, interest bearing loans through Affirm.
To offer its current lending services, Affirm works through several banks, including Fort Lee, New Jersey-based Cross River Bank and Salt Lake City-based Celtic Bank.
Affirm is hardly the only buy now, pay later player to intrude on territory traditionally dominated by banks.
Competitor Klarna has also made moves into the banking space in recent years, such as offering deposit accounts and its own debit card. Klarna even refers to itself as a “global digital bank” in its news releases.
Digital payments giant PayPal also applied for a bank charter in Utah in December. In addition, Sezzle CEO Charlie Youakim said in a November interview that his BNPL company has discussed applying for a charter.
