Upgrade’s Bank Ambitions Show How FinTech Growth Expands Choices

Upgrade is moving to become a chartered bank, a shift that could significantly change how consumer credit is funded at the point of sale. Currently, Upgrade acts as a bridge between consumers and partner banks to facilitate over $53 billion in credit. By seeking its own charter, the company aims to move away from relying entirely on third-party banks for its infrastructure and funding. For retailers and service providers, this signals a maturing fintech market where lenders are seeking more stability and lower costs. When a fintech lender becomes a bank, it gains access to cheaper capital through consumer deposits. This move usually allows a lender to offer more competitive rates or more flexible credit products to your customers. It also reduces the 'middleman' risk. In the past, many fintechs have struggled when their partner banks faced regulatory scrutiny or financial instability. Upgrade’s shift toward a banking charter suggests they are doubling down on long-term stability. This ensures that the credit programs you offer your customers remain active and reliable even during market volatility. Expect to see more fintech lenders follow this path to gain more control over their lending standards and product features.

Source: PYMNTS

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