Brex is the latest fintech to apply for a bank charter.
The fast-growing company, which sells credit cards to startups with Amigant Bank, currently operating as an issuer, announced on Friday that it had signed off with the Federal Deposit Insurance Corporation (FDIC) and the Utah Department of Financial Institutions (UDFI) have submitted an application with. To set up Brex Bank.
The industrial bank will be located in Draper, Utah, and will be a wholly owned subsidiary of Brex.
The company has executed former Silicon Valley Bank (SVB) Bruce Bruce Wallace to serve as the CEO of the subsidiary. He served in several roles at SVB, including COO, Chief Digital Officer and Head of Global Services. It has also named Brex Bank CFO, former CFO Jean Perscon for UBS Bank USA.
Last May, Brex announced that it raised $ 150 million in a Series C extension from a group of existing investors, including DST Global and Lone Pine Capital.
With that growth, Brex, which was co-founded by Henrik Dubgrass and Pedro Franceschi, had to date generated $ 465 million in venture capital funds.
The company said in a statement today that “Brex Bank will expand its existing financial products and business software, credit solutions and FDIC insured products to small and medium-sized businesses (SMBs).”
Offering credit products to small businesses has become a popular product offering and source of revenue for tech companies serving entrepreneurs in the commerce sector, including Shopify and Square. Similarly, offering business-focused bank accounts, such as Shopify Balance, which is currently under development with plans to launch sometime in the US.
These financial products may provide additional opportunities for these companies to generate revenue on borrowing interest and costs, which may be a better insight into the risk profile of their types of businesses than traditional lenders and FIs.
“Brex and Brex Bank will work together to help SMB realize its full potential,” Wallace said.
Brex is based in San Francisco and counts Kleiner Perkins Growth, YC Continuity Fund, Greenox Capital, Rebbit Capital, IVP and DST Global as well as Peter Thiel and Affair CEO Max Levchin among its investors. It currently has more than 400 employees, and although it had significant layoffs in mid-year in 2020, it cited restructuring rather than financial crisis.
Other fintechs headed to bank charters include Waro Bank, which raised another $ 63 million this week, and SoFi, which was granted initial approval for a national bank charter last October.