Upstart Holdings has received conditional approval from the Office of the Comptroller of the Currency to establish Upstart Bank.
The initiative marks a step towards operating what the company describes as the first nationally chartered bank built on AI-based underwriting from inception.
The conditional approval is one part of a broader regulatory process. Upstart's applications to the Federal Deposit Insurance Corporation (FDIC) for deposit insurance and to the Federal Reserve to become a bank holding company remain pending. According to the official press release, Upstart Bank will not commence operations until all required approvals are obtained and the conditions attached to the OCC's approval are met, including requirements around capitalisation, governance, and operational readiness that are customary for de novo national bank charters. Upstart has been advised by Klaros Group on matters related to the de novo charter application.
Company representatives said the charter is intended to reduce operational, regulatory, and financial complexity for Upstart and for its third-party capital partners. Paul Gu, Upstart's co-founder and chief executive officer, said the company would continue working with the OCC, the FDIC, and the Federal Reserve on the remaining steps, adding that the bank charter is expected to support lower lending costs and allow Upstart's full product offering to be extended to all 50 US states.
Moreover, Annie Delgado, Upstart's chief risk officer and proposed chief executive officer of Upstart Bank, said the process had been subject to extensive scrutiny, noting that a charter process can be both timely and rigorous.
Structure and scope of the planned bank
As previously disclosed, Upstart Bank is expected to be based in Delaware and will operate without physical branches. It is designed to originate loans to consumers nationwide and to accept FDIC-insured deposits. Banks, credit unions, and institutional credit funds are expected to continue purchasing the majority of loans originated on the Upstart platform, with the bank positioned to complement rather than replace these existing funding partnerships.
The OCC's de novo charter process for national banks typically involves conditions related to capital adequacy, governance structures, and operational readiness before a chartered entity can begin operations. In addition, Upstart's parallel applications to the FDIC and the Federal Reserve reflect the additional layers of approval required before a newly chartered bank can accept insured deposits or operate as part of a bank holding company structure. The completion of all three regulatory processes, OCC, FDIC, and Federal Reserve, would be required before Upstart Bank becomes operational.
