Upstart Holdings Inc. (NASDAQ: UPST) announced it will submit applications to federal banking regulators to establish an insured national bank called Upstart Bank, N.A. The company plans to file with the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation for the bank charter, while also applying to the Federal Reserve to become a bank holding company.

Annie Delgado, currently Upstart's Chief Risk Officer, has been named as the proposed Chief Executive Officer of the new bank. The company stated that regulatory approval would allow it to reduce operational, regulatory, and financial costs for itself and its third-party capital sources.

"The time is right to launch the first bank built from the ground up on AI," said Paul Gu, Upstart's Chief Technology Officer and incoming CEO. "Applying for a bank charter is the natural evolution of our business as we've grown in size, scale, and product offerings."

The national bank charter would place Upstart's lending activities under a federal prudential framework and allow the bank to access deposit funding while lending directly to consumers. According to the company, this structure could result in a single, consistent rate and fee structure that may translate to lower costs in certain jurisdictions.

Sanjay Datta, President and Chief Capital Officer, stated that banks, credit unions, and institutional funds will continue to provide capital for most loans originated on the Upstart platform. "We are not seeking to compete with our depository partners for local customer deposits and checking accounts," Datta said.

Upstart worked with advisory firm Klaros Group in preparing the application. The San Mateo, California-based company operates an AI lending marketplace connecting consumers to more than 100 banks and credit unions.