Fintech company Upgrade has filed an application to establish its own industrial loan bank in Nevada. The firm has facilitated over $53 billion in credit through its existing model, which relies on partnerships with various financial institutions and loan buyers.
Upgrade intends for the new bank to complement, rather than replace, its current network of partners. This strategy reflects a broader trend where scaling fintechs diversify their funding sources, including warehouse facilities, securitizations, and forward-flow agreements.
Market data highlights this shift in scale. For instance, Affirm currently maintains relationships with approximately 200 funding partners and holds $13 billion in forward-flow capacity. Larger lenders can negotiate bigger commitments and distribute loan production across multiple institutions.
Credit unions are also increasing their reliance on external providers, using an average of nine products from outside partners as of September, compared to six in November 2024. Research indicates that 61% of credit unions with assets between $1 billion and $5 billion use partners to accelerate innovation.
Upstart is pursuing a similar path, having received conditional approval from the Office of the Comptroller of the Currency in July to launch Upstart Bank. CEO Paul Gu stated that the bank will serve to streamline existing partnerships with credit unions and institutional funds.
