Square Officially Launches its Own Bank

Square, a company widely recognized for its advancements in the payments industry, has officially established a banking institution.

Following nearly a year after receiving preliminary approval, Square announced on Monday that Square Financial Services, its industrial bank, has commenced operations.

The bank has successfully completed the charter approval process with both the FDIC and the Utah Department of Financial Institutions, signifying its readiness to conduct business.

Focus on Business Lending

Headquartered in Salt Lake City, Utah, the bank will initially concentrate on providing business loan and deposit products.

Its primary function will be the underwriting and origination of business loans specifically for Square Capital’s existing lending programs.

Previously known for its innovative card reader and point-of-sale systems, particularly among small businesses, Square has increasingly extended credit facilities to the entrepreneurs and small businesses utilizing its services.

Square anticipates its bank will become the leading source of financing for its sellers throughout the United States.

Amrita Ahuja, Square’s CFO and executive chairman for Square Financial Services, stated that internalizing banking capabilities will enable the fintech company to function with greater agility.

Square Financial Services will continue to sell loans to external investors, thereby limiting its exposure on the balance sheet.

The company projects that the bank will not significantly impact its consolidated balance sheet, overall net revenue, gross profit, or adjusted EBITDA for the year 2021.

The launch of the bank is expected to enhance Square’s capacity to broaden access to loans and banking services for underserved communities.

Leadership Appointments

Lewis Goodwin previously held the position of CEO for the bank, with Brandon Soto serving as CFO.

With this announcement, Square has also revealed the following new leadership appointments:

• Sharad Bhasker, Chief Risk Officer
• Samantha Ku, Chief Operating Officer
• Homam Maalouf, Chief Credit Officer
• David Grodsky, Chief Compliance Officer
• Jessica Jiang, Capital Markets and Investor Relations Lead

Fintechs and Banking Trends

The trend of fintech companies establishing their own banks is gaining momentum.

In February, reports indicated that Brex had submitted an application for a bank charter.

The rapidly expanding company, which offers a credit card specifically designed for startups, currently relies on Emigrant Bank as the card issuer.

Brex submitted its application to both the Federal Deposit Insurance Corporation (FDIC) and the Utah Department of Financial Institutions (UDFI) to create Brex Bank.

Numerous fintech companies are now offering products traditionally provided by banks, including deposit accounts, checking accounts, and credit options.

These services often aim to provide capital to customers who may face difficulties securing funding from conventional banks, but who may qualify for business loans from a provider familiar with their operations, such as Square.

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