Affirm Targets Bank Charter With $350M Nevada Capital Pledge

At its 12 May investor forum, Affirm laid out plans to pump $350 million into a Nevada-chartered industrial bank — a move the San Francisco fintech argues will trim funding costs, claw back fees currently paid to partner banks, and lift returns on equity toward a 20 per cent target by the end of the de novo period.

Submitted in January 2026 as a Nevada industrial loan company application, the charter would let the buy-now-pay-later firm originate 40 to 50 per cent of its total loan volume in-house, funded by customer deposits rather than the wholesale borrowing it leans on today. CFO Rob O’Hare told investors the proposed bank could reach net-income-positive status in its second year of operation.

“We’ve built a network,” CEO and co-founder Max Levchin said at the forum. “It is a network that is real in a sense that it is fully closed loop. We are both the issuer of credit, the transmitter of the credit information, the acquirer and the risk manager.”

For Levchin, the bank slots into a long-stated ambition: Affirm sitting alongside the card networks. “The goal of Affirm has always been to become as important to merchants as Visa, Mastercard, American Express,” he said, according to PYMNTS.

The scale numbers behind the pitch are not small. Affirm processed $46 billion in trailing-12-month gross merchandise volume, with O’Hare setting a medium-term target of $100 billion annually. Some 27 million consumers were active on the platform over the past year, including 4.4 million cardholders who spent an average of $2,400 each. Slated to run the new bank is John Marion, a 25-year banking veteran previously at LendingClub and Wells Fargo, who will serve as president-designate.

The ILC gambit

Industrial loan companies are a peculiar feature of US banking law. State-chartered and FDIC-insured, they let nonbanks originate loans and take deposits without forming a bank holding company, sidestepping Federal Reserve consolidated supervision. Banking trade groups have long argued the loophole lets commercial firms own insured depositories outside the regulatory perimeter Congress intended.

Affirm is hardly alone in the queue. PayPal submitted its own Utah ILC application in December 2025; Ford and GM secured conditional approvals for Utah ILCs across 2025 and 2026; and Block’s Square Financial Services won approval earlier. In July 2025 the FDIC issued a request for information on its ILC oversight framework, and Acting Chair Travis Hill has signalled support for the structure as a pathway to restart de novo bank formation after a decade-long drought. Treasury Secretary Bessent struck a similar note in February 2026 testimony, framing new bank charters as overdue.

Organised pushback has not waited. The Independent Community Bankers of America and the Bank Policy Institute have urged the FDIC to halt PayPal’s application, arguing ILCs tilt the playing field between chartered banks under Fed oversight and commercial firms running insured depositories without it. A legislative moratorium on new ILC charters, proposed by Senators Elizabeth Warren and Andy Kim, would — if it passed — cut directly across Affirm’s timeline.

None of the regulatory calculus is settled. Affirm’s January filing landed before Hill’s tenure runs out, and a change in agency leadership could swing the political mood on ILC approvals either way. In the meantime, the Nevada route hands the company a plausible on-ramp to bank status without the capital and governance demands of a full bank holding company conversion.

Why the economics work

The business case, viewed from inside Affirm, is straightforward. BNPL loans currently get funded through warehouse lines, securitisations, and partner-bank arrangements — all of which carry costs that deposits, particularly in today’s rate environment, comfortably undercut. Shifting 40 to 50 per cent of originations onto a bank balance sheet funded by customer deposits would compress funding costs, widen net interest margins, and let Affirm hold on to interchange and servicing fees it currently shares with sponsor banks.

That 20 per cent return-on-equity target — disclosed in investor forum materials reviewed by Hoodline — is aggressive for a de novo institution. Most newly chartered banks take three to five years to crack double-digit ROE. Affirm’s closed-loop model, as Levchin emphasised, gives it visibility across the credit lifecycle that a traditional consumer lender lacks: the company originates the loan, underwrites the risk, processes the payment, and manages collections on its own rails.

Phil Lehner, president of consumer lending at Old National Bank, told American Banker the BNPL model has proven durable. “Our customers are using it, plain and simple. Last year, we did over 60 million in transactions through buy now, pay later,” he said.

Whether regulators will agree that a fintech extending unsecured instalment credit to consumers can safely fund itself with insured deposits is the question the FDIC now has to answer. PayPal’s parallel Utah application may set the template.