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The Office of the Comptroller of the Currency (OCC) granted the conditional approval, allowing Upstart Bank, N.A. to operate nationwide without physical branches. The company initially applied for the national bank charter in March.

Upstart described the decision as a major step toward establishing the first federally chartered bank built around AI-driven lending. In a statement, the company explained that the new structure would streamline operations, reduce regulatory complexity, and lower financial costs for both Upstart and its third-party capital partners.

Paul Gu, who succeeded co-founder Dave Girouard as CEO in April, called the OCC’s approval significant but acknowledged remaining challenges. “We will continue working with the OCC, the FDIC, and the Federal Reserve to complete the process,” he said.

Operations remain on hold until full approval

Upstart Bank will not open until it satisfies all regulatory conditions, including capitalization, governance, and operational readiness standards. The company has also applied for FDIC deposit insurance and Federal Reserve authorization to become a bank holding company—both applications are still pending.

Once approved, the bank will be headquartered in Delaware under the leadership of Annie Delgado, Upstart’s chief risk officer since 2015. Her team will manage a lending model that has originated over $57 billion in loans since the company’s 2012 founding. These loans include personal lending, home equity lines of credit, and auto financing, serving more than 4 million customers.

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The transition to a national bank charter does not signal an end to Upstart’s existing partnerships. The company stated that banks, credit unions, and institutional credit funds will still purchase most loans originated on its platform. The new bank is intended to support, not replace, these relationships.

For borrowers, the change may lead to quicker loan decisions and more reliable credit access, particularly in states where Upstart currently depends on partner banks with limited geographic reach. However, regulators must still determine whether AI-driven underwriting can serve as a fair and stable alternative to traditional credit scoring. Past skepticism remains, though the OCC’s conditional approval indicates openness to the approach.

Leadership shifts align with regulatory efforts

The OCC’s decision follows recent leadership changes at Upstart. Gu, formerly the chief technology officer, succeeded Girouard as CEO in April. Girouard remains executive chairman, while Grant Schneider now serves as CTO.

The timing reflects regulatory expectations for stable leadership during approval processes. The company’s push for a national bank charter required a clear chain of command. Delgado’s appointment to lead the bank reinforces continuity in risk management, a key consideration for regulators assessing a new bank’s viability.

Other fintech companies have pursued similar charters, though not all have succeeded. Earlier this year, the OCC denied an application from Wise, an international payments firm. The decision demonstrated the strict standards for non-traditional lenders seeking federal approval, even those with proven track records.