Mission Lane Credit Card Startup Wants to Become National Bank

Credit card startup Mission Lane has reportedly applied to become a U.S. bank.

The company has applied to federal regulators in hopes of reaching this goal, Bloomberg News reported Monday (April 20), citing its banking application.

If approved by the Office of the Comptroller of the Currency (OCC) and Federal Deposit Insurance Corporation (FDIC), the company would focus solely on credit card operations and offer an optional credit protection service, but not accept deposits or make commercial loans, the report said.

“The bank will focus on a specific market niche: an estimated 70 million Americans geographically dispersed across the country who are systematically underserved by traditional financial institutions and have a demonstrated need for affordable access to credit,” Mission Lane said in its application.

As Bloomberg notes, Mission Lane is among several FinTechs and non-traditional finance companies hoping to carve out a space in the American banking system, with some of these firms already gaining conditional approval.

In fact, as PYMNTS wrote in March, the situation has led a lobbying group for the traditional financial space, the Bank Policy Institute, was considering taking the OCC to court over its decisions to approve charters from so many crypto, payment and FinTech companies.

At the time of that writing — 11 days into March — OCC had granted four new applications and gotten north of seven.

“And while conditional approvals and actual operational status are two very different things, the direction of travel across banking implies that regulated infrastructure providers, not consumer interfaces, could be the most valuable layer of finance,” that report said.

PYMNTS took a closer look at this trend in a report in February, arguing that FinTechs had traditionally built themselves around banks without actually becoming banks.

“The strategy was simple: partner for access to payments rails, deposit insurance and compliance infrastructure; don’t built it from the ground up yourself,” that report said.

“That model delivered speed but also fragility. Sponsor banks could change terms, regulators could reinterpret guidance and public scrutiny intensified after high-profile failures exposed the limits of ‘banking-as-a-service.’”

However, PYMNTS added, landing a banking charter is not a “monolith,” as de novo charters in the U.S. cover a range of banking business models.

“Each answer to different regulators, operate under different statutes and carry different privileges,” the report added. “While the headlines can blur these lines, the operational consequences are anything but vague.”