There are now applications pending at the FDIC for deposit insurance for five proposed industrial banks — four by auto companies and one by OneMain Financial, a finance company that serves nonprime borrowers. Nissan Motor Acceptance Co. — NMAC — an arm of the Japanese automaker Nissan Motor Co., is joining bids by Ford, Stellantis and General Motors. The proposed Nissan Bank U.S. would provide expanded commercial financing options for both Nissan dealers as well as other auto dealer. NMAC would continue to handle the manufacturer’s consumer auto financing activities. The latest application came from Nissan Motor
Acceptance Co. — NMAC — an arm of the Japanese automaker Nissan Motor Co., joining bids by Ford, Stellantis and General Motors. The proposed Nissan Bank U.S. would provide expanded commercial financing options for both Nissan dealers as well as other auto dealer. NMAC would continue to handle the manufacturer’s consumer auto financing activities. Ordinarily, five applications wouldn’t seem like a surge. But the population of existing industrial banks is small. At yearend 2024 there were 15 in Utah, three in Nevada and five in other states, according to a study on the state of industrial banks by the Utah Center for Financial Services at the University of Utah. (Industrial banks are also called industrial loan companies, or ILCs.) So, if all five applications receive insurance approval and obtain charters, that would mark a rise in the tally of about 21%. In 2025, SmartBiz Bank resulted from a fintech’s acquisition of a community bank and its charter. Alt worked with SmartBiz on that. While not an industrial bank, it is seen as an harbinger of loosening federal attitudes on nonbank entrance into banking in general. In general, the Trump administration has made it clear it is open to more charters and that applications for charters and mergers and acquisitions will proceed more quickly than during the Biden administration years. Much attention has centered on the potential of the industrial bank charter, which appeals to nonbank companies particularly because they can own one and avoid coming under oversight and regulation by the Federal Reserve as a bank holding company. These state-chartered entities exist in a handful of states but depend on federal deposit insurance, which is granted, or not, by FDIC. During the Biden years, especially, policy was clearly against permitting more of them to open. The banking lobby has been fighting encroachment by industrial banks for years. Michele Alt, a former regulator and now partner at Klaros Group. Alt has been working with Nissan on its application and has worked with other nonbanks and fintechs on charters. Presently much of the activity that’s been seen in both the industrial bank and traditional bank chartering (and deposit insurance coverage) reflects deals that were in the works prior to the election, notes Alt. Fresh activity driven by the thawing regulatory environment is coming. Alt says it will be led by refilings of proposals withdrawn earlier. Gradually completely new proposals, already being discussed with Alt’s firm and others, will begin to emerge. Alt points out that while four auto companies are in the regulatory process for industrial bank charters, that’s a limited universe. She believes fintechs will be candidates soon, as more clarity emerges. “But remember it is a rare charter type and politically controversial,” says Alt. Some in Washington don’t like the fact that these charters allow nonbanks to own banks and yet be out from under the Fed. As more fintechs investigate bank charters of all kinds — industrial banks, full-service charters, limited-purpose charters — Alt says the concept of “community,” in terms of serving the needs and convenience of a community in exchange for a charter, may evolve. “In fairness, the regulators have absolutely been going to school on innovation and figuring out how to supervise innovative models,” says Alt. “They’ve really done a lot of work there.” From the viewpoint of incumbent banks and credit unions, such new players getting charters represents a challenge, especially in the ability to raise insured deposits. Alt says 95% of applicants see the deposit powers as a key feature.