Conditional approval gives Upstart a path to create a national bank, but the AI lending marketplace still has two federal approvals unresolved before the charter can operate.

Banking Dive reported the Office of the Comptroller of the Currency approved the application about four-and-a-half months after it was submitted.

The decision puts Upstart closer to originating loans nationwide and accepting Federal Deposit Insurance Corp.-insured deposits.

The company’s applications for deposit insurance and for Federal Reserve approval to become a bank holding company remain pending.

OCC Approval Covers A Full Charter Path

The charter is not meant to replace Upstart’s lending partners immediately.

Other financial institutions will continue to purchase Upstart-originated loans, and Upstart Bank is intended to complement those existing partnerships.

Upstart co-founder and new CEO Paul Gu said in a prepared statement that the bank would allow the company to lower lending costs and offer its full product line across all 50 states.

No customer pricing data or measured borrower savings accompanied the prepared statement.

The proposed bank would not open physical branches.

Upstart Chief Risk Officer Annie Delgado would serve as the proposed CEO, while regulatory consultant Klaros Group advised the company on the application.

Wise Denial Shows Charter Risk For Fintechs

Klaros co-founder Michele Alt, in an emailed statement to Banking Dive, called the conditional approval speedy.

Banking Dive reported that fintech Wise received the OCC’s first charter denial since at least 2010.

Alt framed the current administration as more welcoming to financial innovators, but also said examiner standards remain high and that an open door is not a guarantee.

Partner Banks Stay In The Model

The operating model still depends on supervised bank infrastructure.

Upstart is seeking authority to originate loans nationally and accept insured deposits, while partner institutions continue buying loans originated through the platform.

Several other financial technology applicants have also moved through the OCC process under Comptroller Jonathan Gould.

The article named Nubank, Mercury and Valt Bank as firms with conditional approvals, and Erebor Bank as having full approval.

The remaining approvals determine when Upstart can move from a conditional charter decision to an operating bank with deposit insurance and Federal Reserve holding-company clearance.