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US corporate card provider Brex applies for banking licence in Utah – FinTech Futures

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Brex, the US-based corporate credit card provider tailored to start-ups, has filed an application in Utah to establish “Brex Bank”.

The San Francisco fintech is hoping to obtain an Industrial Loan Company (ILC) licence from the Federal Deposit Insurance Corporation (FDIC).

Brex cards

“Without having a banking license, it is far more challenging […] to offer financing solutions,” says Brex Bank CEO

This is the same licence US digital payments firm Square landed just shy of a year ago. Square had also applied for the licence in the Beehive State.

Silicon Valley Bank’s former chief digital officer Bruce Wallace will head up Brex Bank as its CEO. Whilst Jean Perschon, UBS’s former chief financial officer (CFO) for its US arm, will now serve as Brex Bank’s CFO.

In Brex’s FDIC application, it also says Doyle Arnold, Zions Bancorp’s ex-chief financial officer, will serve as the bank’s chairman.

Expanding on credit

Brex’s application, filed last Wednesday, will – once approved – allow it to hold FDIC-insured deposits. In a statement, the company says Brex Bank will be “a wholly-owned subsidiary of Brex”.

“Brex Bank will expand upon Brex’s existing suite of financial products and business software,” the firm says, referring to its credit solutions.

The fintech also offers “Brex Cash”, which helps small and medium-sized enterprises (SMEs) manage their cash inflows and outflows.

“Without having a banking license, it is far more challenging […] to offer financing solutions,” Wallace tells American Banker. He also thinks the licence will improve Brex’s profitability in the future.

So far, the fintech has partnered with the likes of UMB Financial, Bank of the West, and – most recently – Radius Bancorp, to offer its corporate credit cards and hold deposits.

In the years since its inception, Brex has been raising substantial capital to turbocharge growth. Both through acquisitions, and now, through an expensive banking charter.

Steady capital raising

Brex launched its product back in June 2018 with $57 million in funding from investors such as PayPal’s founders and Y Combinator.

The start-up went on to raise a $125 million Series C round in October 2018, at a valuation of $1.1 billion, and made its first acquisition.

Then in June 2019, it raised $100 million at a $2.6 billion valuation, having raised an additional $100 million debt round just a couple of months prior with Barclays. That same year, it made its first acquisition – blockchain-based digital payments solution, Elph Network.

Then in March 2020, it bought three more start-ups in San Francisco. These included fellow blockchain-focused firm Neji, edtech Compose Labs, and Landria – a firm producing internal knowledge databases.

And two months later, it landed $150 million – marking its most recent funding round. But just a week after this raise, the fintech cut 62 staff members.

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