AI accelerating, complicating bank charter applications

While AI is accelerating charter applications as fintechs work to prove regulatory prowess and accelerate growth, it also opens the door to increased scrutiny. State and national bank charter applications reached a record 34 in 2025 and application volume is on pace to set another record in 2026, according to an April report by financial services advisory firm Klaros Group . [caption id="attachment_57387417" align="aligncenter" width="768"] (Courtesy/Klaros Group)[/caption] While control over product roadmap and economics are the primary driver for charter applications, “having more of an AI-driven ecosystem is certainly accelerating charters,” Annie DeStefano , founder and chief executive of Ann DeStefano Advisory , which provides consulting to banks and fintechs, told FinAi News . “Tactically, [AI] is helping people meet the regulatory pieces that they will need to meet,” she said, noting the emergence of compliance tools related to AI. Chris Sidler , partner at financial services-focused consulting firm FS Vector , similarly told FinAi News that AI is compressing application review timelines by helping fintechs establish a compliance framework that satisfies the Office of the Comptroller of the Currency (OCC). President Donald Trump ’s initiative to streamline charter approvals also is contributing to an increasing number of applications, Destefano said. Increased scrutiny Although AI is becoming a larger part of fintechs’ platforms, regulators are paying closer attention to the tech as they evaluate model-risk guidelines for banks, FS Vector’s Sidler said. “You'll have to answer lots of questions [with the OCC] about what you want to do with that bank, how you intend to run it, how you're thinking about AI … and the agentic nature of some of the things you may wish to do,” he said. Proving model-risk management during the approval process is especially important because federal legislators are giving FIs and fintechs liberties to shape AI governance policies, Sarah Biller , co-founder of Fintech Sandbox , a nonprofit that gives startups free access to financial data, told FinAi News . “We are in a place where innovation — specifically AI-enabled innovation in the banking sector— is moving a lot faster than the regulators,” she said. “There's going to be a point where this conversation about what it really means to be an AI-enabled bank comes to a head and I'm betting it's the fintechs, not the regulators, that are going to have to figure out how to create the Rosetta Stone about using AI.” — Sarah Biller, co-founder, Fintech Sandbox When it makes sense, when it doesn’t Obtaining a charter requires prospective banks to submit extensive compliance and business plans, raise substantial capital and undergo various examinations. After receiving conditional approval, the OCC often mandates certain actions by a set date — whether that's solidifying an executive team, boosting liquidity or addressing other operational needs — followed by a final exam, Sidler said. Fintechs that have received conditional charter approval from the OCC this year include: AI lending marketplace Upstart ; AI-native clearing bank Augustus ; and Digital business-banking platform Mercury . Applying for charters makes sense for fintechs that are far beyond the startup stage and navigating a patchwork of money transmitter-license requirements and exams across numerous states, Sidler said. “At times, the transition into a bank environment allows them to sort of consolidate that supervision under a single primary regulator,” he said. Some fintechs also reach a point when they’re ready to disassociate from partner banks to control their product roadmap and “capture those economics ourselves,” rather than sharing revenue, Sidler said. Fintechs should not pursue a charter if they lack compliance expertise and only have one component of a banking technology stack in place, Fintech Sandbox’s Biller said. For example, if a payments company hasn’t built “a money-movement capability within a regulated and scrutinized environment, you're in for a really long haul,” she said. Banks that plan to have a holding company also must consider the Bank Holding Company Act, which “basically forces the separation of banking and commerce in certain circumstances,” Sidler said. “I think that can cause some firms to be like, ‘Wait a minute, it may actually just be best for us to stay as a fintech ... because under the Bank Holding Company Act ... we're limited and we become something that maybe we didn't expect.’” Register here for the FinAi Lending Summit, set for Oct. 7-8 in Las Vegas. This inaugural event will include speakers from Fifth Third and Capital One as well as a fireside chat with Piermont Bank founder and Chief Executive Wendy Cai-Lee .

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AI accelerating, complicating bank charter applications

2026 number on pace to set new record as government scrutiny grows

Banks must balance caution, customer inconvenience

Francisco to buy payments firm Moneris from RBC, BMO for $1.4B

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