Amid a shift in the approach of U.S. bank regulators, more non-financial companies are applying for, and receiving, banking licences, reports Fitch Ratings. But it says that big tech companies may face opposition to joining them, from the traditional banking industry and regulators.
In a report Tuesday, the rating agency said applications for so-called industrial loan company bank charters (ILCs) — a provision that allows non-banks to own banks and accept deposits, without attracting the same oversight and capital requirements as federally-regulated banks — have “increased notably over the past year,” as has the approval of those applications.
Already this year, three new charters have been approved and there are five applications currently pending, Fitch said.
Prior to 2026, companies have had a hard time securing these kinds of licences.
According to the report, between 2006 to 2020, “all applications were either withdrawn or not approved due to intense industry and political opposition.” And, between 2020 and 2026, three charters were granted, after the Federal Deposit Insurance Corporation adopted a new rule for the supervision of these companies.
With that total already matched this year, Fitch said it expects the trend to continue, given the more industry-friendly stance of bank regulators and the prospect of enhanced competition from fintechs and other non-bank financial institutions.
“ILCs reduce the need for non-banks to partner with banks, affording them access to deposit funding and the ability to perform certain banking services in-house … increasing efficiency and reducing costs,” the report noted.
Additionally, companies in a variety of other sectors — including retailers, services firms, manufacturers and tech companies — have expressed an interest in seeking these kinds of licences, it noted. Several auto manufacturers have or are applying for these charters, Fitch said.
However, applications from large tech companies could face continued resistance from regulators and the banking industry, the rating agency said, given concerns that these kinds of companies could have a competitive or a regulatory advantage, particularly due to their access to extensive consumer data.
“… critics argue that large commercial or technology firms acquiring bank charters could result in a concentration of financial and technological assets, increase potential conflicts of interest, weaken underwriting standards and potentially undermine financial stability for the U.S. banking system,” the report noted.