Klarna's Charter Bid Tests the FinTech Banking Model

Klarna’s charter application may pave the path toward gaining direct control over funding, deposits and payments infrastructure rather than relying on bank partners. An industrial bank charter offers broad banking powers, but it also brings FDIC oversight, capital requirements and ongoing regulatory obligations. Klarna is joining a small group of FinTechs that have concluded the benefits of becoming a regulated bank outweigh the added scrutiny.

FinTechs are treating banking licenses as strategic infrastructure. Klarna ’s decision to apply to establish Klarna Bank USA, a Utah-chartered industrial bank, illustrates that shift.

The Swedish company filed applications with both the Utah Department of Financial Institutions and the Federal Deposit Insurance Corp. , seeking authority to operate a federally insured industrial bank in the United States. The company said Monday (July 6) that the proposed institution would allow it to internalize banking functions that today are provided through partners while supporting payments, savings, lending and merchant services. Klarna already operates as a licensed bank across Europe. Today, much of Klarna’s U.S. banking activity depends on partner institutions. A charter would allow it to assume greater responsibility for deposits, funding and payment operations while remaining subject to banking regulation.