Square, the mobile payment company founded by Twitter CEO Jack Dorsey, has submitted an application for a banking license in a move that looks to expand the company’s remit beyond payments services. The license would allow the company to fully engage in banking services, through which Dorsey is looking to construct a banking unit that offers loans and deposit facilities to small businesses.
Square, which was built on the premise of leveraging digital technology to enable convenient payments, has in fact already been extending loans to small businesses since 2014. However, at present it can only do so through its partnership with Celtic Bank, while the new license would enable it to offer loans independently of a partner bank. Indeed, as it stands, Square Capital has already lent over $1.8bn to over 140,000 small businesses throughout the US. Its average loan size amounts to just $6,000.
In an interview with The Wall Street Journal, Jacqueline Reses, who is set to become chairman of the new bank, explained: “As we scale, it’s becoming increasingly important that we have direct relationships with regulators.”
The Twitter co-founder’s foray into banking comes at a time when disruption from fintech companies is becoming a common trend across the banking industry. A comment on Twitter argued the decision to take on banking services consisted of a move into a “crowded space”, to which Dorsey responded by saying: “We did that eight years ago, too,” referring to the launch of Square in 2009.