SoFi Technologies Inc. announced late Tuesday that it scored the final regulatory approval to become a bank holding company.
The Office of the Comptroller of the Currency (OCC) and Federal Reserve granted the online lending platform a US banking charter.
The financial-tech company must acquire California community lender Golden Pacific Bancorp Inc in conditional approval.
At the same time, it will operate its subsidiary as SoFi Bank, limiting its ability to engage in crypto-asset activities.
Accordingly, SoFi’s official entrance into the banking business will also spark more regulatory oversight.
Nevertheless, the firm predicted the charter to improve its economics as it gets a bigger slice of each transaction made on the platform.
In addition, it could offer more competitive rates on its lending products and grant high-yield interest across checking and savings accounts to its members.
In the past three years, SoFi notably exerted efforts towards the bank charter.
Before its acquisition route, the company applied for the charter with the Office of the Comptroller of the Currency.
Then, the regulatory body consented to a preliminary approval in October last year.
Consequently, analysts anticipated that SoFi’s banking progress would have a good recognition in Wall Street.
SoFi Shares Surge in Post-Trading Market
Eventually, NASDAQ-listed shares of SoFi significantly surged on Tuesday’s extended trading.
The firm edged up 16.67% or 2.01 points to $14.07 per share, reversing its drop of 8.64% in the regular market session. It also stands firmly with a market capitalization of $9.37 billion.
However, its shares are still 23.09% lower year-to-date as investors rotate away from high-growth tech companies.
Setting-up affordable alternatives initially operated SoFi for student lending.
Subsequently, the company rapidly grew and became one of the major financial technology businesses.
It currently offers banking products, including loans, cash accounts, and debit cards.
Before the approval, SoFi relied only on partnerships with FDIC-insured banks to hold customer deposits and issue loans.
Its long-expected development into the US financial system could boost its earnings this year.