Upstart Wins Key Banking Approval in AI Lending Push

Artificial intelligence lending platform Upstart has moved a step closer to becoming a fully regulated bank after receiving conditional approval from the Office of the Comptroller of the Currency (OCC) to establish a national bank.

The decision represents a major milestone for the California-based fintech as it seeks to broaden its lending capabilities while operating under a federal banking charter.

The conditional approval was granted around four and a half months after Upstart submitted its application, allowing the company to continue progressing toward its ambition of originating loans nationwide and accepting deposits insured by the Federal Deposit Insurance Corporation.

Despite the development, Upstart emphasized that it will continue working alongside its existing network of financial institution partners, which will remain purchasers of loans originated through the platform.

The company's applications for federal deposit insurance and approval from the Federal Reserve to become a bank holding company are still under review, meaning additional regulatory hurdles must be cleared before the institution can begin operating as a national bank.

Upstart co-founder and newly appointed Chief Executive Officer Paul Gu described the OCC's decision as an important step toward expanding access to credit while reducing costs for consumers.

"Upstart Bank will allow us to lower the cost of lending and bring our full product offering to all 50 states, advancing our mission to radically reduce the cost and complexity of credit for all Americans," Gu said in a prepared statement.

He added that the company would continue working closely with the OCC, the Federal Deposit Insurance Corporation and the Federal Reserve to satisfy the remaining requirements necessary to complete the chartering process.

The proposed bank will be led by Chief Risk Officer Annie Delgado, who has been nominated to serve as its Chief Executive Officer. Delgado sought to reassure stakeholders that an accelerated approval timeline should not be mistaken for reduced regulatory scrutiny.

"It’s important for the public to understand that efficiency doesn’t diminish oversight," Delgado said. "A well-run charter process can be both timely and rigorous.

“We’ve been challenged extensively throughout the process, and that’s exactly what should happen when an institution is seeking the privilege of becoming a national bank."

Unlike many traditional lenders, Upstart does not intend to operate a network of physical branches, reflecting the company's digital-first business model.

Instead, it plans to leverage technology and artificial intelligence to deliver lending services across the United States while maintaining relationships with partner banks that have supported its marketplace model since its launch.

The company was advised throughout the application process by regulatory consultancy Klaros Group. Michele Alt, co-founder of Klaros, described the OCC's decision as a notably swift outcome while cautioning against interpreting it as evidence of a less demanding regulatory process.

Alt noted that another recent fintech applicant, Wise, received the OCC's first charter denial in more than a decade, illustrating that approval remains far from automatic.

"This administration is far more welcoming of financial innovators than we've seen for a while," Alt said. "An open door is an invitation, not a guarantee.

The application process is rigorous and examiner standards remain very high. We're proud to have worked with Upstart and gratified that their application met with conditional approval, as that remains a very high bar."

The decision is likely to be watched closely across the fintech sector, where firms increasingly view bank charters as a route to expanding product offerings, lowering funding costs and strengthening customer relationships.