Square Will Reapply for Banking License with the FDIC After Last Week’s Withdrawal
Payment processor Square has withdrawn its application to become a deposit-taking bank, a move similar to online lender Social Finance or SoFi, which withdrew its application last fall. However, unlike SoFI, Square plans to refile its application, attributing Thursday’s withdrawal to mere procedural issues. It plans to reapply with the FDIC, but did not reveal a timeline.
In a statement released to Reuters Friday, Square said:
We have been engaged in constructive dialogue with the FDIC, and our decision to withdraw and refile was a procedural step in the review process that will allow us to amend and strengthen some areas of our FDIC insurance application…. We continue to work closely with the FDIC and Utah DFI on our applications.
The details around this “procedural step” have not been disclosed. Bank Innovation has reached out to Square and is awaiting response.
Based in San Francisco, Square applied for an industrial loan company (ILC) with the Federal Insurance Corp. or FDIC to form a new bank called Square Financial Services Inc. in September. The bank was to be headed by former Green Dot CEO Lewis Goodwin and chaired by Jacqueline Reses, who currently heads Square’s lending arm, Square Capital. Its ILC application with the State of Utah Department of Financial Institutions is still intact.