A trend is emerging in the increasingly crowded financial services industry: fintechs are acquiring banks rather than the other way around.  

Why? A single word: “Speed,” Richard Rosenthal, principal at consultancy Deloitte, told Bank Automation News. 

“For fintechs, buying a bank offers a faster path to a charter than building one from scratch,” Rosenthal said.

Why own a charter? 

Owning a bank charter helps level the playing field, he said. It gives fintechs:  

• Access to cheaper money through deposits, providing stability through economic cycles;  

• Access to the payment system; 

• Regulatory legitimacy; and  

• Greater customer trust. 

“Competing with large FIs will still require more than just a bank charter,” Rosenthal said. “But for the right fintechs, acquiring a bank can be a game-changing step toward becoming a full-service financial platform.” 

Fintechs acquiring banks

Bank acquisitions this year by fintechs include: 

• Fintech SmartBiz’s March acquisition of $164 million Centrust Bank for $31 million;  

• Commercial lender OakNorth’s acquisition in March of $70 million Community United Bank for an undisclosed amount; and 

• British neobank Revolut intends to acquire Argentina-based $11.4 million Banco Cetelem for an undisclosed amount. 

Revolut, the UK’s most valuable fintech, received a banking license in July 2024 but remains in a “mobilization” phase, limiting it to holding only £50,000 ($57,850) in customer deposits, far less than major banks like Barclays or HSBC. Regulatory concerns around fraud complaints involving automated push payment tactics are one reason why policymakers are slow to grant a license to the fintech, as first reported by Payments Journal last week.

Financial services M&A activity in North America and Europe recorded a 5% year-over-year increase to 400 deals in the first half of 2025, according to a June 4 report from investment banking company Cornerstone Partners. M&A in the U.S. is expected to increase as President Donald Trump’s administration charts a de-regulatory course for the financial services industry, the report notes.

Path to charter

There are usually two paths for a fintech to become a bank: acquiring an existing bank or applying for a banking charter, Eyal Lifshitz, chief executive at SMB banking provider Bluevine, told BAN.  

Most fintechs opt for acquisition to take advantage of existing infrastructure, Lifshitz said. 

“There are over 4,000 FIs in the U.S., which makes it easier for many fintechs to acquire a banking entity as the industry is also looking for consolidation,” Lifshitz said.

“Under the current [presidential] administration, I would think acquiring a banking entity would be easier than applying for a license.” — Eyal Lifshitz, CEO, Bluevine

Fintech acquiring banks started picking up steam since the pandemic after a few notable deals were approved by regulators. 

The $32 billion SoFi acquired Golden Pacific Bank for $22.3 million in 2022 while LendingClub acquired Radius Bank for $185 million in 2021. 

Bank-to-bank acquisitions have also picked up recently. Huntington Bancshares announced in July an agreement to acquire Veritex Holdings in a $1.9 billion all-stock deal. 

Fintechs have focused on acquiring smaller banks as their business models tend to be narrow and there is less need to own legacy businesses, James Siciliano, managing director at Deloitte, told BAN. 

“Larger banks require significant resources, including capital, regulatory expertise and operational expertise. Not every fintech is ready for that kind of integration.” — James Siciliano, Managing Director, Deloitte

Application process

While existing infrastructure and speed to business are pros of acquiring a bank charter, other fintechs have decided to apply for a bank charter with the Office of the Comptroller of the Currency (OCC). 

The $486 million Varo Bank, for one, applied for a national bank charter in 2017, but it wasn’t until August 2020 that it could start operating as a bank.  

Applications filed by fintechs this summer that are awaiting approval include: 

• BitGo applied for a bank charter with the OCC on July 14; 

• Payments company Wise applied on July 2; 

• Crypto platform Ripple filed on July 2; 

• Crypto company First National Digital Currency applied June 30; 

• Crypto company Erebor applied June 12; 

• Crypto company Fidelity Digital Assets applied June 11; and 

• Crypto company National Digital Trust applied May 28. 

Coinbase is also “actively considering” a bank charter but “has not made any formal decisions yet,” a Coinbase spokesperson told BAN. 

Why acquire?

Despite the hurdles involved, acquiring a bank comes with built-in benefits, including: 

• An existing regulatory framework;  

• An experienced team;  

• Existing banking relationships; and  

• Infrastructure. 

Fintechs that operate at a large scale have a loyal consumer base with existing BaaS relationships are prime candidates for bank acquisition, Deloitte’s Rosenthal said. 

“The business of fractional banking has to make sense. The core of the bank business model is taking deposits and making loans — these core functions need to be demonstrated in a profitable and sustainable way.”  — Richard Rosenthal, Principal, Deloitte 

Most banks worldwide use fractional-reserve banking, wherein they are required to keep only a fraction of their customers’ deposits in reserve and can lend out the rest. 

The most successful fintech model, Rosenthal said:  

• Has a sustainable and diverse lending base; and  

• Can take in deposits from its customers. 

Regulatory hurdles

Whether acquiring a banking charter or a bank itself, neither path is easy for a fintech.  

Regulators pay close attention to the transition due to the risks associated, Lifshitz said.  

Deloitte’s Rosenthal agreed. 

Regulators “want to be sure fintechs understand what it means to operate a regulated financial institution and the obligations that come with a charter, including having the capabilities to run a regulated bank,” he said. 

This, he added, includes compliance with:  

• Anti-money laundering laws;  

• Fair lending;  

• Consumer protection;  

• Being well capitalized; and  

• Maintaining strong governance. 

For fintechs to acquire banks, they should not treat compliance as an afterthought but rather “engage with regulators early, and run their operations like a regulated bank, not just a tech company with a charter,” Rosenthal said. 

Acquiring a bank makes compliance easier because the existing institution is already in compliance with the regulatory framework expected of a bank, Rosenthal said. 

According to financial services consultant group Ludwig Advisors, acquiring a U.S. bank “is not simply a workaround to enter the system.” 

Ludwig Advisors broke down the three steps to acquiring a bank for fintechs:

1. Planning and strategy ahead of acquisition: Identify the intention of the acquisition.

2. Integration and readiness: What risks and controls are in place, what will leadership look like, what operational capabilities will migrate to the bank?

3. Operation and innovation: How will product launches adhere to a higher regulatory bar post-acquisition?

CX edge

Fintechs that acquire banks can have an edge over banks that acquire fintechs because “they have a better consumer experience offering,” Dan Goerlich, U.S. banking deals leader at consultancy PwC, told BAN. 

While building compliance and regulatory structures are essential, they do not drive revenue for a financial services entity, Goerlich said.  

“You know what drives revenue? A good CX to get the consumer in the door.” — Dan Goerlich, Leader US Banking Deals, PwC

“Fintechs are only as capable as either their banking partners or their ability to take part in the banking ecosystem,” Goerlich said. “Having a charter creates flexibility in their business platforms to be able to either give loans or take deposits or do payments.” 

Fintechs have an opportunity to integrate their technology into the bank they are acquiring, adding speed with new systems, rather than upgrading legacy platforms, he said. 

Tech integration

However, purchasing a bank is just the start of the bank journey for fintechs, which must be able to integrate with the bank to make the most out of their acquisition. 

Before London-based SMB banking service provider OakNorth acquired Birmingham, Mich.-based Community United Bank (CUB) in March, OakNorth had looked at about a dozen M&A opportunities during the previous two years.  

OakNorth applied for and received a banking charter in the United Kingdom in 2015, and decided to acquire a U.S. bank because regulations and market conditions seemed more favorable for an acquisition than applying for a charter, an OakNorth spokesperson said. 

CUB presented a strategic alignment in terms of culture, pace and the focus on customers, the spokesperson told BAN. 

“This acquisition of CUB will help us accelerate our lending further and support businesses across the U.S., including in Michigan,” they said.  

Once the transaction is completed, OakNorth will look to integrate all key bank and fintech platforms, including the use of OakNorth’s sister entity, the commercial lending platform ONCI, the spokesperson said.  

ONCI, which helps fintechs and FIs digitalize and automate lending processes, will use CUB’s banking infrastructure due to CUB’s decades-long tech strategy, they said. 

“We built our tech stack from scratch and have updated it countless times over the last decade,” the spokesperson said. “We were also the first U.K. bank to be fully cloud-hosted, so have no legacy tech or spaghetti infrastructure.” 

U.K.-based challenger bank Starling may be following OakNorth’s lead by looking for a U.S. bank to acquire, according to a Financial Times report published July 18.  

Becoming a bank

Bluevine is another fintech that also may one day contemplate acquiring a bank or applying for a charter, but that depends on its needs and growth, Lifshitz told BAN.  

For now, Bluevine has to wait for its banking partner, $4 billion Everett, Wash. Coastal Community Bank, to lead the charge. 

For example, for Bluevine to offer new payments capabilities, that must come from the bank side, Lifshitz said.  

Once a fintech gains a license, it doesn’t have to wait for a banking partner to opt for new tech before providing features to clients, he added. “By becoming a bank, you can control your own destiny.”