Upgrade has applied to the Nevada Financial Institutions Division and the FDIC to establish Upgrade Bank, an industrial loan bank.
Upgrade has submitted applications to the Nevada Financial Institutions Division and the Federal Deposit Insurance Corporation (FDIC) to establish Upgrade Bank, a proposed Nevada-chartered industrial loan bank. If approved, Upgrade Bank would operate as a wholly owned, FDIC-insured subsidiary of Upgrade, with its own governance and internal controls. The applications remain subject to regulatory review, and there is no guarantee that either will be approved or of when any approval might be granted.
Funding flexibility alongside bank partners
According to Upgrade, the proposed bank would complement its existing relationships with bank partners and loan buyers, giving the company greater flexibility and more options to fund its credit products. Upgrade currently relies on partner banks: its loans and credit lines are issued, and its banking services provided, by Cross River Bank, a New Jersey state-chartered commercial bank, and Celtic Bank, a Utah state-chartered industrial bank. Upgrade Bank would add to these partnerships rather than replace them.
Upgrade offers credit, mobile banking, and payment products to mainstream consumers through five core products: mobile banking, Buy Now, Pay Later (BNPL), personal loans, credit cards, and auto financing. The company has delivered more than USD 53 billion in credit to more than 8.5 million customers. A charter of its own would give Upgrade a direct funding route for these products alongside the capacity provided by its partner banks and loan buyers.
Governance and approval process
Upgrade Bank’s proposed initial board would include Upgrade executives alongside three independent directors. Virginia Varela, CEO of Upgrade Bank, described the proposed bank as a way to advance Upgrade’s mission of providing responsible and affordable credit to consumers.
The application uses the industrial loan company structure, the same type of charter held by one of Upgrade’s existing partners, Celtic Bank in Utah. Establishing Upgrade Bank will require approval from both the Nevada state regulator and the FDIC. Until then, Upgrade will continue to operate through its current bank partnerships, and no timeline for a decision has been given.
