A year after receiving Federal Deposit Insurance Corp (FDIC) approval, Square Financial Services, Square’s state-chartered industrial bank has begun operations.
Operating as a subsidiary of Square, which also owns the Cash App, the bank unit is working on providing financing for Square sellers in the US.
Headquartered in Salt Lake City, Utah, Square Financial Services will offer banking services like business loans and deposits for a nationwide market of small businesses, including those which already operate on the Square payment processing platform.
Furthermore, enabling banking capability in-house will allow the FinTech firm to operate more nimbly. It would aim to expand access to loans as well as banking tools to underserved populations. For instance, 58% of loans through Square Capital go to women-owned businesses, it said.
Square plans to operate Square Financial Services under an asset-light business model by selling loans to third-party investors and limit balance sheet exposure.
While Square was known for its card reader and point-of-sale payment system used by small businesses, it also began enabling credit for entrepreneurs and small businesses.
Square had submitted its application in September 2017 which was amended in December 2018 and after having satisfied all opening requirements finally got the green light to operate as a bank as of March 17, 2020.
Square Financial Services will now be the 16th FDIC-insured industrial bank operating in Utah and the second de novo industrial bank to open since 2008. Utah industrial banks had total assets of $171bn as of December 31, 2020.
Square Financial Services CEO Lewis Goodwin and chief financial officer Brandon Soto, both of whom have a wealth of experience in the FinTech field, will lead the bank.
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