Sep 9, 2026 · 9 min
Fintechs seek bank charters for control and credibility
Let's play ... Who Wants To Be a Bank!
Bank status can unlock insured deposits and Federal Reserve access, but it also subjects fintech companies to demanding oversight and compliance.
- 1Bank charters offer fintechs FDIC insurance, Federal Reserve access, and greater control over financial products.
- 2Mercury is pursuing a broad charter because bank partnerships constrain its startup-focused services and financial workflows.
- 3Square chose a specialized bank structure, while applicants still face extensive paperwork, scrutiny, and approval hurdles.
Don't miss
Mercury’s unresolved charter application crystallizes the episode’s central tension between greater control and regulatory risk.
The brief
The episode turns bank licensing into a game show, asking why fintech companies would accept heavier oversight in exchange for the privileges of a charter.
Michelle Ault outlines the prizes: FDIC deposit insurance, access to the Federal Reserve discount window, and a Fed master account, all alongside stricter supervision.
Mercury CEO Ahmad Moustak says partnerships with existing banks limit the company’s startup and small-business services; Mercury is seeking a broader charter and has conditional approval from one agency.
Square Financial Services CEO Dick Rosenthal describes a different route: a specialized bank charter designed to attract deposits and support competitive products.
The unresolved question is whether Mercury can clear the remaining approvals, as applicants including PayPal, Klarna, and Mercury confront paperwork, compliance demands, and scrutiny.
The episode’s central tradeoff is clear: a charter gives fintechs more control over money and products, but turns regulatory oversight into the price of entry.
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