Figure Technologies has applied to the Office of the Controller of the Currency (OCC) for a national banking charter. The blockchain lending company has raised more than $233 million in equity funding and offers retail loans, especially home equity and mortgage refinancing. But the license is also likely for Figure Pay.
“Figure is pursuing the charter to reduce the complexity of our business – we’ll have over 200 state licenses next year without such a charter,” said Mike Cagney, co-founder and CEO of Figure. “By reducing complexity, we can leverage the technology efficiencies we have to deliver financial solutions to traditionally underserved and underrepresented consumers, driving real financial inclusion.”
Figure Bank will be headed by C.D. Davies, who spent almost five years at Citi as CEO of Citi Mortgage. He joined Figure just over a year ago.
Targeting the unbanked – Figure Pay
In the announcement, Figure added another angle to its expanding list of services. It says it plans to use blockchain to create payment and “point of sale” financing services. More specifically, the solution will be targeted at the unbanked or those who have limited credit histories. Elsewhere it has a job advert for Figure Pay, which it describes as an alternative banking solution.
Figure already has several offerings. Apart from advancing loans where it has lent more than $1 billion, it has its Provenance blockchain, which is used by all of its offerings. It claims that more than $1 billion in digital loan assets have been traded on the blockchain. Provenance was used for Figure to package off some of its loans as Asset Backed Securities (ABS). In September, it launched Figure Asset Management and the Figure World Equity Fund. The latter is an actively managed fund.
At the same time, it launched technology solutions for fund managers called its Digital Fund Services. By using blockchain, it aims to help fund managers create, raise and manage private funds. It also created a marketplace for funds. Elsewhere, blockchain has been embraced in the funds sector by the likes of Calastone, FNZ and, more recently, AllFunds.
Plus Figure is getting into the security token sector with adnales that targets the issuance and transfer of equity and options with real-time settlement. Although Figure’s website refers to it as cap table management, the adnales website talks about primary and secondary liquidity and says a marketplace is coming soon. This has some similarities with Securitize and many others in the security token sector.
Figure was founded by Mike Cagney, who also founded unicorn SoFi.
A quick analysis
Many finance platforms start with the payments side and push added value services afterwards. Think Alipay, PayPal and Square. Although arguably Square has a particularly strong point of sale (PoS) presence by pushing its retail acceptance hardware devices.
Figure is sort of doing it the other way around. It started with lending. Then selling the the loans and also securitizing them. After that it went into funds and fund solutions. And now it’s adding the consumer payment app and PoS. Its initial target market is the underbanked which may have less appetite for investment services but a far greater desire for lending services. And by definition it’s underserved so once established it’s a good base from which to later move up market.
Update: The quick analysis was added after initial publication.