**SmartBiz Becomes First Fintech Bank Since Trump Administration**
SmartBiz has made history by becoming the first financial-technology firm to receive regulatory approval to operate as a bank since President Donald Trump took office in January. This development signals a potential shift in the regulatory landscape, suggesting that other fintech companies may soon follow suit in establishing their presence in the financial services sector. The Office of the Comptroller of the Currency (OCC) and the Federal Reserve Bank of Chicago have approved SmartBiz’s acquisition of Centrust Bank NA, based in Northbrook, Illinois. This marks the first instance of a fintech company transitioning to a bank since 2021, during Trump’s presidency.
### Regulatory Approval for Fintech Banks
– **Rare Occurrence**: It has been uncommon for fintech firms to gain regulatory approval to become banks, with no approvals granted under President Joe Biden and only a handful before that, including LendingClub Corp. and SoFi Technologies Inc.
– **Time-Consuming Process**: The journey to becoming a bank, whether through acquiring an existing institution or applying for a new charter, is often lengthy and costly. However, the advantages include access to low-cost funding through insured deposits and stronger relationships with regulators.
### SmartBiz’s Mission
Evan Singer, CEO of SmartBiz, emphasized that the primary motivation behind this acquisition is to better serve small businesses that are currently underserved by traditional banks. He noted, “There’s a huge opportunity to do that.” The acting comptroller of the currency, Rodney Hood, affirmed that a “safe, sound and fair fintech business model has a place in today’s federal banking system.”
### Growth in Small Business Lending
SmartBiz specializes in small-business lending, a sector that saw significant growth during the pandemic. According to the U.S. Chamber of Commerce, 5.4 million new business applications were filed in the U.S. in 2021 alone. Singer began pursuing the bank acquisition approximately three years ago, formally applying to the OCC in October 2023 and to the Federal Reserve in February of the previous year. He enlisted experienced advisors from LendingClub’s bank acquisition to assist in the process.
Michele Alt, a partner at Klaros Group, who advised SmartBiz throughout the acquisition, suggested that more approvals for fintech banks are likely under the current administration, stating, “the gate has been lowered again.”
### Conclusion
As SmartBiz sets a precedent for fintech companies seeking to become banks, what implications will this have for the future of small business lending and the broader financial services industry?
**FAQ:**
**Q: What is SmartBiz’s primary goal with its new banking status?**
A: SmartBiz aims to better serve small businesses that are currently underserved by traditional banks, leveraging its new banking status to provide more effective financial solutions.
